5 Questions to Ask Your Loan Officer
5 Questions to Ask Your Loan Officer ~ As a real estate agent I know “of” the loan process, I do not qualify or pre-approve buyers. They must see a local loan officer in order to do that.
For many Borrowers/Buyers, especially first-time buyers, they have very little experience in the home buying process. They can miss asking important questions when talking with a loan officer.
Before a Buyer can become a Buyer —
Borrowers need to have their financing in place . . .
. . . unless paying with cash, of course
5 Questions Buyers Should Ask Their Loan Officer
During my no-obligation consultations, I talk at length about the loan process and the following are the 5 Basic Questions Buyers Should Ask Their Loan Officer . . . in no particular order:
1. Is my loan locked?
There are many types of loan products and each lender will have a plethora of loan products they’re familiar with. Some will lock a quoted loan interest rate, and that’s GREAT if the loan officer expects interest rates to rise. But, they can also float the rate. So be sure to ask them what your interest rate is . . . and if it’s locked or floating.
2. Will my pre-approval be reviewed by an Underwriter?
Loan officers do not pass final judgement on a loan application. While they know a heck of a lot, and certainly more than me, the Underwriter is the final decision marker. They’re similar to the Wizard of Oz: you never see them, but they call all the shots. Many lenders will not have a loan application run through underwriting, but this is the best method of obtaining a SOLID pre-approval. Ask your loan officer if you can get an underwriter’s pre-approval.
3. What is my P.I.T.I.?
Nope, P.I.T.I. isn’t a tasty flat bread from the Middle East, Pita — PITI are the four components that make up your monthly mortgage payment.
The first two parts are P.I. = Principal and Interest
The third part = Taxes, property taxes which can be paid through your mortgage at 1/12 payment per month. I recommend this, although on some loans you can pay your property taxes separately. This 1/12 payment is a great way to budget AND pay property taxes in an installment.
The fourth part = Insurance, hazard insurance. Hazard insurance is mandatory condition from the lender. You will have to have hazard insurance in place and you will have to keep the property insured.
HINT: The loan officer will let you know what you are qualified to borrow. But, how does this amount break-down to your monthly mortgage payments? Be sure to ask your loan officer what your P.I.T.I will be per month.
4. What will the loan cost me, what are the lender fees?
This is a huge question and it can save you thousands. Each lender charges for their services. Some will charge “a point” — which is to say, they will charge 1% of the overall borrowed funds for their lender fees. Some charge 2 points, or 2%. FIND OUT!! Ask your lender what the loan will cost you in terms of lender fees.
5. How long is my pre-approval good for?
Make sure you know when that pre-approval is good through . . . many have expiration dates. I once saw a pre-approval which had an expiration of mid-month . . . and the buyer was supposed to close at the end of the month. That meant, the loan quoted was not valid after the 15th. Buyer had to scramble to get their loan in place. This wasn’t my client, by the way, because I don’t let things like this happen. Be sure to ask how long the pre-approval is good for, and see #1 above as well.
These are 5 Basic Questions to Ask Your Loan Officer.*Consult with a Realtor® in your area for local standards of practice.