Questions To Ask Your Lending Officer

Some of the important questions you need to ask your lending officer about your home loan may involve:

• The Terms Of The Loan: It is best to start the application of with this question. It is always beneficial to understand the terms of the mortgage upfront rather than wait and be surprised with something that you should have cleared up at the very outset. Ask questions like, what are the terms of the mortgage, what is the interest only period, what are the undisclosed charges that could apply to this loan structure etc.

• Can I Pay Off The Mortgage Early?: Often consumers feel that there are no penalties, which apply to paying off their mortgage early. This could be a mistake. Quite often you will find that your mortgage provider will charge you penalty interest for paying off your mortgage early.

• What Interest Rates Are You Looking At: If you are looking at getting yourself a fixed interest mortgage loan, then it is easy to figure out what your payments are going to be now or a future date. If however, you decide to brave the market and get yourself a variable loan, you might want to quiz your mortgage officer on the kind of range you might be looking at with regards to interest rates and payments.

• Principal And Interest Break Ups:  Another thing that you might want to figure out is what is the principal and interest break up. You may want to ask your mortgage officer as to how much of your repayments go towards the principal component and how much goes towards the interest component. The reason this should be of interest to you is owing to the fact that you should want the majority of your payments to go towards the principal component thereby reducing your overall interest payments.

• Other Factors: In addition to the aforementioned questions you would should also ask your mortgage officer questions like, if there re any closing costs.  These are hidden costs and are sometimes added over the above the general costs associated with getting a mortgage. It is always beneficial to have these factors cleared up front as you find yourself short on the day of settlement. Further you should also enquire whether it is possible for you to get a fixed mortgage. If you can qualify for one, ask your mortgage officer to explain the terms and conditions of a fixed mortgage.

These are some of the questions you might want to ask your mortgage officer prior to settling down on a particular lender. As with any investment it is very essential that you do your research adequately.

References:

1. Ten Questions to Ask Your Mortgage Officer – Fine Tuned Finances
2. 10 questions for lenders – BankRate
3. Ask the Lender the Right Questions – Yahoo Finance

The 4 Cs A Loan Officer Looks For

Primarily when assessing your application, the four Cs are a pre-requisite to a mortgage officer. This tells mortgage officers a lot about they type of client you will shape up to be. The four C’s are:

1. Capacity:  This refers to the ability of an individual to meet the servicing requirements of a mortgage and how successfully will he/she be able to make the repayments.
2. Character / Credit:  This of course is proof of the fat that a borrower has not been a bankrupt, been foreclosed on been in arrears in the past or have a history not meeting debts. Most of this information is available on your credit report.
3. Capital: This is the down payment or the equity that the borrower holds in the property being offered as collateral.  Needless to say, that the higher the down payment or the more the equity in the property the better it looks on your application, not too mention the easier it is makes it you as far as loan repayments are concerned.
4. Collateral: This is pretty self explanatory, as it refers to the security being offered, its condition and of course it’s appraisal value. These elements put together constitute the type of security.

One factor that consumers often tend to make a mistake with is that, they feel either a strong income or a great credit score is sufficient to get you over the line. This however is not true. It is a combination of al four factors that make a customer exceptional. Moreover in a credit climate such as the one we have now, lenders are bound to be a bit nit picky.

Paperwork For A Lending Officer

Before applying for your mortgage loan, apart from having perfect credit scores, make sure you have the following paper work in order:

• The last 2 years W-2 forms
• Bank statements for 3 months
• If you are self employed all other relevant financials including the previous 2 tax returns
• The lender may ask for additional documentation, be prepared to give hand them over without any substantial delay

In addition to this remember never to change your circumstances post your loan application, your application could get knocked out the ballpark even if you are an exceptional customer, should you greatly change your situation. Some things to avoid in this regard are:

• Do not apply for new credit once you have applied for your loan, this will affect your serviceability.
• Remember, only float your interest rate once you know that you re comfortable with paying a higher repayment.
• Make sure that you are up to date with all your bills and expenses and your credit score is not hampered in any way.
• If the lender requires additional documentation get it to them as fast as you can, and do not question their request for more paperwork.
• One pivotal mistake consumers often make is that they change their job after having made a mortgage application, it is absolutely essential that you do not do this, as it will reset the clock on your new job and that in turn will greatly affect the mortgage officer’s decision.

Keeping these simple things in mind could be the difference between you getting an approval and you getting shown the door.