Did you know a lot of people are buying homes right now? If you need to apply for a mortgage and aren’t sure what questions to ask, we can help.
This guide will go over questions to ask a prospective broker when applying for a mortgage.
Want to learn more? Keep reading.
- What Do You Need For the Home Loan Application?
A mortgage broker will be able to provide you with a checklist of things you’ll need when applying for a loan. Gather the information you need, as it might take some time to get certain documents.
You might need your Medicare, a tax notice, or birth certificate to identify who you are. Then, you’ll need documentation about your assets, expenses, and income.
You can provide insight into your income with a letter from your employer, along with a new bank slip.
A letter from your employer will provide insight into the lender about how long you worked at your job. Tax returns can also work if you’re self-employed.
For expenses, include things like school bills, utility bills, and child support payments. Provide as much detail as possible.
For assets, show three months of bank statements to reveal your savings history. Provide information about your shares.
- You Should Ask About the Interest Rate
The lower interest rate could end up costing you more money when you calculate the extra fees.
There are fixed and variable interest rates. With a variable interest rate home loan, the interest rate will fall or rise throughout the loan.
Yet, a fixed-rate loan will provide you with an interest rate that stays the same for a certain period. The period tends to last between one and five years.
A comparison rate is something that lenders and banks have to advertise along with the regular interest rates. A comparison rate compares home loans and takes into account the charges you might have.
- What About the Extra Fees?
You should also ask the mortgage broker to explain or give you a complete list of fees. Ask the mortgage broker to explain fees you don’t understand. Ask if they have a ‘low fee’ or ‘no fee’ home loan.
You could have ongoing monthly fees, rate lock application fees, and once-off package fees. There are also settlement and valuation fees. Your mortgage broker will explain what these are and how much they will cost.
- What Mortgage Should You Choose?
Each mortgage type will help you reach the same goal, which is to buy a home. Your broker should understand your financial situation before they recommend a particular mortgage.
If you want to pay your mortgage down fast and cut interest, you might opt for a 15-year mortgage.
If you plan to sell, you shouldn’t choose that option. If you have a small down payment or credit challenges, consider FHA loans.
Your broker can determine what mortgage will work best for your situation. Reputable brokers can choose a mortgage that will line up with your long and short-term goals.
Look for a broker who’s willing to work with you and find the best option. Consider working with Hunter Galloway mortgage brokers.
- When Is the Broker Available?
Receiving a pre-approval in a few days and closing on a home fast are priorities for some people. Mortgage brokers don’t tend to work traditional hours, so they have more flexibility.
Most brokers will remain available by email, phone, or text. You want to feel confident knowing you can secure a pre-approval and close on time.
- Can You Make Extra Repayments?
You should ask the mortgage broker if you can make extra repayments on your home loan and save on interest.
In the past, it wasn’t available for fixed loans. Yet, now, different fixed-rate loans let you make extra repayments. Repayments allow you to pay your home off fast.
Ask if the home loan has a redraw feature. Redraw works with extra repayments.
You can withdraw extra repayments or lump sum payments you made. This is another essential thing to consider. If you can use the money after making extra payments, you’ll feel more relaxed.
There might be a cap per calendar year on how much extra you can repay with extra repayments. Ask the mortgage broker, so you know what to expect.
- How Long Will the Process Take?
There are three different levels of approval. A pre-approval can get obtained right away, but it isn’t binding. You should never use a pre-approval to make an offer on a property.
A conditional approval occurs when you complete an application form. You’ll also submit the supporting documentation that shows you can repay the loan.
An assessment will get made whether you can repay the loan. Approval’s conditional on the property you’d like to buy and takes two to three days.
A full approval occurs when the property and you have gotten approved by the lender. You can make a formal offer on the property. The full approval can take five to seven days after the conditional approval.
Now You Know More About Applying For a Mortgage
We hope this guide on questions to ask a prospective broker was helpful. Now that you know more about applying for a mortgage start the process.
Organize your paperwork before meeting with the broker. Ask about the repayment option, interest rate, and what loan would suit your situation.
Are you looking for more real estate tips? Check out the resources on our blog.