When you’re in the market for buying a home and are ready to discuss home loan options, your local mortgage lender will be your go-to person. But, if you’ve never taken out a mortgage loan before, you’ll probably have several questions to ask them regarding the loan process.
The Guaranty Bank Mortgage team is here to work their hardest for you, so the more information that you come equipped with, the easier it is for them to find the best mortgage that works for your needs. Below we’ve come up with 5 important questions for you to discuss with your mortgage lender in order to get the process started.
Will You Need to Pull My Credit Score?
When you are first searching for a home and discussing loan options, your loan officer will need to do a hard pull of your credit score to obtain your interest rate. However, it’s important to discuss with them when they will do this because it will show up on your credit report. If you are shopping multiple lenders and comparing their services, you’ll want to discuss this with them to minimize the risk to your credit. Credit scores used to determine mortgage loan decisions can range anywhere from 300 – 900, with the higher numbers being more attractive to financial institutions. Your credit score will show the lender your history of making payments on time, which will help them determine the types of loans that you can qualify for.
Will I Need to Make a Down Payment?
A down payment is a payment that is made on the loan before the loan begins. A larger down payment helps minimize the total amount borrowed and can thus lower your monthly payments. In an ideal situation, this would be 20% of the home price. However, you have plenty of options. Some loan programs don’t require a down payment, and others require a much smaller down payment. You can also speak with your loan officer about borrowing for the payment using another asset you own as collateral.
Note: Sometimes the amount that you use for a down payment will also affect if you need to pay mortgage insurance or not. Be sure to check with the loan officer so that you are prepared for any mortgage insurance fees up front!
What is the Interest Rate?
Interest rates fluctuate based upon several economic factors. Depending on what type of loan you are looking at, your payments could stay at a fixed rate, or an adjustable rate over time. It’s necessary to understand this so that there are no surprises. In a fixed rate mortgage, the interest rate stays fixed at what you start at over the entire life of your loan. However, in an adjustable rate mortgage (ARM) the interest rate could fluctuate up or down based upon what the interest rate is at the end of a certain period of time. When you speak to your loan officer about locking in an interest rate, please note that Guaranty Bank charges no fees for locking the rate for you, and the rate can stay locked for up to 45 days.
If you’d like a ballpark range of what you interest rate would be, use our form to check your interest rate and get a quote online!
What Will My Monthly Mortgage Payment Be?
One of the most important pieces of information you need to know is how much you’ll be paying each month so that you can ensure it fits within your budget. Visit our mortgage monthly payment calculator (where you are also able to add taxes and insurance) to get a better understanding of how much you can expect to pay each month. This tool will also show you the principal and interest broken down based upon the current interest rates.
Alongside monthly payments, many loan applicants ask about prepayment fees for paying off your loan before it’s due. Guaranty Bank never charges a fee for paying your loan off early.
What About Additional Home Loan Fees and Closing Costs?
A home loan is comprised of many fees. Often you will have the home appraisal fee, titling fees, title insurance, and depending on where you live flood certification fees to pay at the time of closing. These fees are collected by the bank on behalf of third-parties that assist in the home buying process.
State and local taxes are a part of the fees that you will also see in your final loan amount, as well as if you select to pay your home insurance and taxes through your monthly loan payments (escrow). To read more about the final fees you need to consider when buying a home, visit our mortgage frequently asked questions page. Closing costs are something that your loan officer will explain in full to you.
At Guaranty Bank, we are happy to always answer any questions that you may have about buying a new home and taking out a mortgage. Contact one of our Mortgage Loan Officers to schedule an appointment!