What Questions Should I Ask My Mortgage Lender?

If you are in the market to buy a new home, you need a lender. But all lenders are not the same. It is important to find the right lender for your specific needs. To do that, you need to ask potential lenders some very important questions. 

What Types of Home and Mortgage Loans Do You Offer?

There are many kinds of home and mortgage loans. Make sure to ask potential lenders if they offer conventional or government-backed mortgages.

Conventional Mortgage

Conventional mortgages are also be called "conforming loans." These loans are from private lenders or the federal companies Freddie Mac and Fannie Mae. Conventional loans come with different qualifying credit scores depending on the mortgage lender. 

Some lenders offer borrowers conventional mortgages based on their income. To qualify for a traditional mortgage loan, you must have a good credit score. Otherwise, you can look for government-backed mortgage loans. 

Government-Backed Mortgage Loan: FHA, VA, or USDA Loan

Government-backed home loans have fewer qualifications than conventional home loans. 

However, the federal government does not issue these loans directly. You must go through private lenders for a government-backed mortgage. 

How Much of a Down Payment Is Required?

Ideally, your down payment should be 20% of the home’s price. But that isn’t a hard and fast rule. You can put down as little as 3.5% or even zero down payment. 

Play around with a mortgage calculator when deciding how much down payment you need and can afford. You will see how it affects your monthly mortgage payment as you enter different down payment amounts. 

Make sure to ask your potential lender what they think a good down payment for you will be. 

What Will My Monthly Mortgage Payment Be?

Your monthly mortgage payment doesn’t just include money going toward the paying off the principle of your loan. It also includes the interest you pay the lender for getting the loan. It can also include home insurance, mortgage insurance, and property taxes.

It’s important to know exactly what your monthly payment will be. Make sure all your income isn’t going toward your mortgage payment.

What Is My Interest Rate?

There are several factors that determine your interest rate. Most of these are beyond your control. However, your credit score is the one you have the most control over. A credit score is a three-digit number ranging from 300-850. The higher the number, the better your score. A high score shows lenders you are a good lending risk, and the lower your interest rate from them will be.

Credit scores are calculated by looking at five aspects of your spending and debt habits: 

Payment history

How much debt you have

The length of your credit history

How much new credit you have taken on recently

What types of credit you have

Ask your lender what they will offer as your interest rate under your current financial situation.

Do You Offer a Mortgage Rate Lock?

A mortgage rate lock means your interest rate will not change between your offer and the closing. It is an insurance policy against a rising interest rate and protects you from costly fluctuations. Typically, mortgage rate locks are available for 30, 45, or 60 days and sometimes lenders accept extended rate locks. 

Will You Require Mortgage Insurance?

If you put less than 20% down for your down payment or if the lender thinks you might be high risk due to having a low credit score, they might require you to have mortgage insurance. This type of insurance protects the lender if you default on your loan.

In some cases, this insurance is included in your monthly mortgage payment until you reach 20% of your new home’s value.

What Will My Closing Costs Be?

Closing costs can run between 3-6% of your loan amount. The costs include things such as appraisal fees, attorney fees, title insurance, and property taxes. 

These costs can also vary by state, so ask lenders what the closing requirements are when you are purchasing your new home. 


MortgageWorks offers financing for new home purchase, refinance, home equity, investment property, construction and a wide variety of loan program options to fit your every need.

Servicing the state of California and the entire Coachella Valley, including Palm Springs, Cathedral City, Rancho Mirage, Indian Wells, Palm Desert, Desert Hot Springs, La Quinta, Indio and Coachella. Call Art today @ (760) 883-5700

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.