Questions To Ask Your
Phoenix Mortgage Lender

Typically, a mortgage home loan is the largest single loan that most people will ever request. It's important that you select the loan package that's best for you and that gives you future flexibility. When you meet with a lender, make sure you have a list of questions that will help you make final decisions.

Be prepared with some basic information that will help a loan officer suggest a unique package that fits your needs and requirements. Gross income, monthly debt service obligations, employment history and overview of credit history is the minimum information a lender will need to initially approximate the size of loan you that is likely to be approved and what loan conditions you may be facing.

What types of loans are available to me?

Today there are many loan package options that can be individualized to unique situations. The options are typically based upon affordability, credit score and how much down payment can be made. Typically the better the credit history, the higher the down payment and strong employment longiveity will give you the best selection of options and interest rate.

There are less options for those with poor credit, limited income and little cash for down payment. There a are also government funded programs that lend assistance to socio-economic groups and first-time buyers. These programs can be offered by both state and federal programs. A qualified lender can cite the varying loan programs with the terms and conditions of program qualification.

What are the terms of loan amoritization?

There are basic length of term choices including fixed interest rate loans for 15 and 30-year amortization periods. There are also adjustable rate mortgages where rates adjust to certain indicators and there are even interest-only payment options with limited durations. Ask your loan officer to explain the both the advantages and risks of the different term options and how they may best fit you unique situation.

Ask about Private Mortgage Insurance (PMI)

PMI is insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI premiums. The insurance protects the lender in case of loan default. PMI enables a borrower to put less down payment on a home purchase while giving the lender security against default.

The premium cost of this insurance is the responsibiltiy of the borrower and adds to the monthly payment. The premium rates depend upon how much down payment is applied to the home purchase. Ask your loan officer how much the premiums will add to your monthly payment and also ask what the lender's policy is for the future removal of the PMI requirement. There are federal laws that mandate when those premiums must be removed but some lenders offer more favorable situations.

Are there any prepayment penalties?

Mortgage interest rates rise and fall with time. At some point in the future there may be more favorable loan interest rates for you with another lender that may reduce your montly loan payment. Many lenders will require a prepayment penalty if you pay off your loan earlier than the specified term. This penalty could negatively impact your flexibility of securing a new more attractive loan with a different lender. Always ask your lender what its prepayment policy is and if the condition can be removed.

What is the difference between prequalify and preapproval?

Ask your loan officer for the specific differences. But basically a prequalification is a "non-binding" approximation of the size of loan you're likely to be approved for based upon information you provide to a lender. You can view that as an "affordability indicator". A preapproval is generally a binding commitment by a lender that you have been approved for a specific loan amount at set terms and conditions. A preapproval is based upon a lender's actual research of your credit worthiness and ability to service payments on the approved loan amount.

A formal preapproval creates several advantages. First, you know exactly how much you can afford so you can limit your house-hunting to only those homes in your price range. When you find your dream home, a preapproval gives you a negotiation advantage because the seller will already know you have been approved for a mortgage loan of that selling price. That benefits both you as the buyer and the seller because it sets a foundation for a quicker escrow closing.

What documentation to I need to provide?

Your mortgage lender will need certain documentation support for a formal application of a home loan. At minimum that will include W2s, employment history, bank account statements, tax returns and certain other documents that the lender requires to begin loan approval processing.

Helpful information and advice.

Always verify the credibility of the lender by checking with your Better Business Bureau for any compalint issues. Consult with you chosen Realtor for advice and recommendtions. Visit the Housing and Urban Developement (HUD) web page on "Buying A Home" for sound advice and a review of federal laws regarding homebuyer rights. And also visit our "Buyer's Center" for articles on buying a home in the Phoenix and Scottsdale, Arizona area.

For more information on buying a home in other areas, be sure to check out these sites:

www.nationalrentalproperties.com is a great source for Rental Properties all across the United States.

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