What to ask your loan officer

Whenever you are going to apply for a loan, you will probably have a lot of questions. Even if you have done your own homework about loans, there are questions you should ask your loan officer.

The article, “10 Questions To Ask Your Loan Officer,” published on themortgagewire.com, gives you 10 sample questions to ask your loan officer, that should make you feel more comfortable about taking out a large loan.

1. What's the loan's Interest Rate and Annual Percentage Rate?
   
   “The APR is a combination of the interest rate, points and other charges divided by the loan’s term to give an annualized rate.” It is the best way to compare loan costs.
   
2. How Many Points Will Be Charged?
   
   One point is equivalent to one percent of the original loan amount. Points are added on to the loan after the interest rate. As a result, a loan with a lower interest rate but higher points could end up costing you thousands of more dollars than a loan with higher interest rates and lower points.
   
3. What will be the Total Closing Cost Fees Charged?
   
   “Lenders charge fees for the services incurred to process and close your mortgage. By law, closing costs must be disclosed within 3 days of the loan application, however, there are different approaches to calculating them. Some brokers will initially disclose closing cost figures which are very appealing, only to provide much higher costs as your closing date approaches.”
   
4. Is There a "Lock-In" Policy?
   
   Basically, you should ask if there is an additional charge to “Lock-In” an interest rate and discount points. Even if there is an additional charge, choosing a lock-in feature could save you thousands of dollars in the future.
   
5. How Long Does it Take to Process My Mortgage?
   
   This will depend on type of loan. The loan process, meaning the time it takes from the completed paperwork to be approved, to eventually be funded, should take about seven to 10 business days.
   
6. Are You a VA Automatic or FHA Direct endorsement Lender?
   
   “VA automatic and FHA direct endorsement means that a lender has met all the government requirements for FHA/VA and the lender’s underwriter has completed mandatory education requirements. An automatic or direct endorsement lender can approve or disapprove a loan just as if the loan had been sent directly to the regional FHA or VA office.”
   
7. Can I Finance the Upfront Private Mortgage Insurance (PMI)
   
   “Premium into the Loan Amount? If your down payment is less than twenty percent of the sale price, to qualify, you will be charged PMI, an insurance premium to protect the lender in case you or someone else who assumes your loan defaults on the loan.”
   
8. Is There a Pre-Payment Penalty?
   
   There usually is no penalty to prepay a loan ask long as you give the loan officer notice that you are going to be selling or refinancing. But different loan officers have policies, so make sure you ask.
   
9. What is the Lender’s Track Record?
   
   “It’s important to rate your lenders reputation for speedy processing, knowledgeable loan service and meeting contract deadlines. You want to hire a mortgage broker who will treat you the way you want to be treated and has respect for your purchase.”
   
10. What Do You Offer to the First Time Buyer? (If applicable)
    
    “If you are a first time borrower, make sure your lender knows this. He or she will slowly explain everything in the documents and they sometimes offer special rates and discounts.”