If you are heading towards a large loan commitment, it is best to ask your lender all the questions to clear off doubts. Your loan days will depend on your right decision on choosing the best lender. If you are unaware of which loan type will suit your needs better, it will be challenging for you to bear the financial burden for the rest of your life. When you are confident about your lender, you don’t hesitate to ask the important questions that matter the most.
It is best to confront your financial condition with a reliable mortgage broker to help you the best. Doing so will make things easier for them to give you special assistance according to your financial background. It will be all worthwhile to let your lender know about your credit report and ask for the potential loans that help you move forward.
Here are some loan-oriented questions you must ask your lender to make an informed decision.
- Which Loan Suits You The Best?
A knowledgeable lender cum financial advisor will give you the right answer to this question. When you want detailed information on each type of loan option, the lender will discuss every type with the gains and losses so that you can make the right decision according to your situation.
Renowned lenders always want to get into deep to suggest you the best option. You ask your doctor about your medical condition. Similarly, inquire your lender about the different types of loans to choose the best fit.
- How Much Down Payment Do You Need to Make?
In most cases, the maximum down payment on a loan is 20% of the principal amount. Qualified borrowers can also get the opportunity to pay 3% of the downpayment with some particular loans. When you take such an advantage, you have to pay for private insurance, which makes you pay higher closing costs. Hence, accepting the 20% equity in your property is always suggested to enjoy the lowest possible interest rate on your loan.
- What are the Costs That You Have to Bear Throughout Your Lending Period?
When you opt for a particular loan, you have to pay the lender fees and the associated costs for credit reports, appraisals, inspection reports, taxes, and other applicable fees. A trustworthy broker always gives you such a loan estimate on completing the loan application. This document contains important information like the borrower’s name, property address, social security number, loan amount, property value, and borrower’s earnings. To pre-estimate the total spending, you should request that your lender estimate the total upfront costs.
- Do You Have To Pay Penalty Charges for Prepayment?
In most states, prepayment penalties get obsolete. However, for your knowledge, it is best to ask your lender and avoid such undesirable penalties. Through these penalties, your lender will collect additional interest if you decide to pay off the loan early before the closing date.
Most penalties are applicable for the first five years of the loan acquisition. Therefore, it is most worthwhile to get all the clarification from your lender beforehand to not fall into some disastrous situations. Penalties are very hefty when applied to the loan account. So, it is wise to complete all the due payments in time.
- What Interest Rate Do You Have To Pay Throughout Your Loan Period?
The more you talk to the lenders available in the market, the greater your knowledge regarding the interest you need to pay. You can ask your lender whether they will allow you to pay the interest at a flexible or fixed rate. If they allow you to adjust the interest rate, it will be better for you to pay off the highest portion of the residue at your convenience.
- Do You Have to Pay Charges For Interest Rate Lock?
As you have already chosen a lender, it’s time to lock in your interest rate. Doing this ensures paying the interest at a fixed rate throughout the loan period. Neither the interest rate will go up nor go down. When going for a typical Bajaj Finserv personal loan, you have to make it a point that there will be no charge on the locked-in rates.
- How Much Time Will You Get to Get the Fund in Hand?
On average, most of the loan processing takes 43 days approx. When you sign the purchase contract, you need to mention a closing date for getting the fund. Always stay in touch with your lender to know about the turnaround time.
By doing this, you can find probable obstacles that can delay your closing. Regular coordination with your lending organization helps you know the final approval date to preplan the other important tasks.
- How Often Will You Get Updates on Your Loan Progress?
Whenever you opt to take loans, you need to ask your lender about the points of contact to stay informed about the progress of the loan application. You can inquire about the ways of getting updates. It might be through SMS, email, an online portal, or simple phone calls.
You need to make your lender understand what services you expect from them. Also, find out whether the lender is equally eager to share the updated information with you or not. It will help you make a clear comparison between the selected lenders
- Is There Any Possibility Of a Hard Inquiry on Your Credit Report?
It is better to acknowledge from your lender whether you are facing a hard credit check or not. When your lender checks your credit history, it will show off on your credit report for the next two years.
This will temporarily affect your credit score, which is not intended. Lenders do this to make a firm decision on the quoted interest. Always ensure limiting your hard inquiries so that they won’t negatively impact your credit score and your loan application gets approved easily.
- Do You Need To Sign the Closing Documents in Person?
Since the whole processing of a loan involves lots of paperwork, you must submit the documents with registered signatures. When you avail of the loan electronically, the processing becomes faster. Also, you don’t have to visit the lending organization in-person. Without your signatory, these online documents can’t be submitted. On the contrary, missing signatures on paper documents can cause delays and headaches.
Don’t Limit Yourself Only to These Questions
Not everyone has expertise in mortgage loans and their associated terms and conditions. Therefore, do your needful research and question anything you want from your lender. Since not all the available lenders are the same, you need to ensure which one will be perfectly suitable for your condition.
When you are heading towards applying for any loan, prepare a complete list of mortgage-related questions to ask your lender and make the most informed decision. Understand their attitude towards you to move forward with your loan processing.
For the things in which you are not confident enough, it is good to request clarification so that you can understand everything that helps you in deciding on a loan. Be open to your lender or mortgage broker so that whenever they ask you any question regarding your financial statements, work history, tax return, bank details, or income amounts – you should co-operate with them to secure your loan. Come up