When you’re gearing up to buy your first house, your mind is probably ablur with questions, expectations, and a laundry list of other things you somehow have to keep track of. To help you keep track of it all, here are some questions to ask a mortgage lender before you get too deep into the buying and mortgage process.
How Much Should My Down Payment Be?
This is one of the most important questions to ask a mortgage lender. There’s a lot of opinions out there on how substantial your down payment should be, which can make it difficult to get a straight answer from anyone. The tricky part is that, ultimately, a down payment can be a fairly flexible thing.
While the standard is 20%, some lenders (like Poli Mortgage) have first-time homebuyer programs that offer down payment options ranging from 0-20%. Here’s a glimpse at the average down payment requirements for the three primary programs Poli Mortgage offers:
- FHA Loan: An FHA down payment can go as low as 3.5% of the purchase price.
- VA Loan: With a VA loan, qualifying veterans can receive up to 100% financing, which means their down payment would be 0%.
- USDA Loan: Any property that falls under the USDA Rural Housing Program could qualify for a Rural Housing Loan. These loans usually carry an upfront fee, but also offer 100% financing, so you wouldn’t be required to make a down payment.
Asking about down payments is one of the best questions to ask your mortgage lender. Deciding on the option that works best for your situation won’t only help you set the right expectations, but it’ll also make it easier to find a home that can fit into those expectations.
What Will My Monthly Mortgage Payments Look Like?
Generally, your monthly housing expenses should be somewhere between 28-36% (the mortgage industry calls this the “front-end ratio”) of your overall monthly income. This is why you should absolutely talk with your mortgage lender about what loan programs will work best for you.
After you supply the lender with the required documents (W2 forms, pay stubs, checking/savings account statements), they’ll be able to help you outline a payment plan that fits your situation.
For example, if you have to put down less than 20% of the purchase price as a down payment, then you’re monthly payments may be higher. Additionally, “Your monthly payments will be less if you put down at least 20%, not only because you won’t have to pay PMI but because you’ll be paying interest on a smaller sum and the principal that you’re stretching out over the mortgage term will be less.”
If you want to get a baseline idea of what your monthly mortgage payments will look like, then there are plenty of mortgage calculators out there to help. These tools can be a great addition to your toolkit as you determine where you are (and where you want to be) in the home buying and mortgage process.
How Long Will the Overall Mortgage Process Take?
One of the most common questions to ask a mortgage lender, especially for first-time homebuyers, is how long will the process take? Again, the answer here can vary depending on your particular circumstance. Here’s what the mortgage process typically looks like:
- Preparation (self-assessment, gathering documents, etc.)
- Applying for the loan
- Processing the paperwork
- Loan underwriting and approval
- Closing the deal
In a normal market, this process usually takes around 30 days. But that fluctuates. Depending on the season, your particular situation, and if any issues need to be addressed before the deal is finalized, the process could be longer (or shorter).
Ultimately, though, the mortgage process is a straightforward one if you know what to expect. When you ask a mortgage lender these questions—and any others that come up—then you can streamline the process and get one step closer to moving into a house all your own.