The most challenging part of getting a good mortgage deal is to find out a reliable broker. The task becomes more difficult when you search for a broker online. There are so many frauds in the industry that it is really difficult to trust an agent. Though a large number of them have been weeded out of the industry during the last economic meltdown, it is still wise to practice caution. There are some simple ways to scan the credibility of a broker and deal with the right person. Ask a broker the following 5 questions and you can decide whether the person is worth relying or not.
Can you help me in getting the best interest mortgage loan?
It is important to go with the interest rate that you can afford comfortably. The broker gets commission once you sign up a deal. So, it is not in the best interest of the person to get you the lowest possible rate. That is why you should prioritize the broker who thinks what works in his clients’ favor. The broker must be patient to provide you with the latest updates on mortgage rate that keeps on changing frequently.
How much closing cost will I need to pay?
Lenders and other parties involved in mortgage loan transaction spin quite a goodly sum on processing fees. Your broker is required to inform you about the estimated fee before any deal is finalized. Ask the broker to give every piece of information in writing.
Can you get me any lock on mortgage interest rate?
Mortgage interest rate is very much volatile and keeps on sliding up and down almost day in and day out. You may want to place a lock on the rate if it shows any continuous upward rise. Locking may increase the interest rate by one percent or may keep it fixed. Also inquire if you have to pay any additional fees for locking and the time duration of ‘lock on mortgage’ rate.
How much is the prepayment penalty for mortgage loan?
Prepayment penalty can go up to 1% of what you have received as loan. It will be roughly $3,000 in figure on an average home. You may also pay six months’ interest as prepayment penalty. However, this will be much less than the amount what you pay as per current low rate. It is sometimes possible to avail the lowest mortgage rate if you agree to stringent prepayment penalties. Find out which penalty criteria suits your case and try to optimize benefits on it.
Will the down payment have any impact on the cost of total mortgage?
Your broker may ask you to make down payment 3-5% of mortgage loan. However, paying so little will cost you a heavy sum for bearing the consequent expenses. Majority of the lenders will require you to pay less than 20 percent as down payment for availing private mortgage insurance. It is better if you consider both the plus and minus points of making larger and smaller down payment.