14 Questions to Ask Your Loan Officer During Your Preapproval Process
Loan pre-approval is one of the first important steps of your home purchase process.
I recommend that you complete a thorough pre-approval with your loan officer BEFORE you start looking at homes.
4 Steps to Completing a Thorough Loan Preapproval:
Fill out a loan application
The lender runs your credit
Find and supply your loan officer with copies of your W2s, tax returns, recent bank statements, etc.
Discuss your loan options with your loan officer, and get the results in writing (preapproval letter, monthly payment breakdown, closing costs estimate, etc.)
Important Questions to Ask During Your Mortgage Preapproval Process:
1. What is the maximum purchase price I can qualify for?
2. What will my monthly housing payment be at that price? Does that include property taxes, insurance, HOA fees, and/or Mello Roos taxes (what's the breakdown)?
3. How much should I be prepared to pay in total closing costs for this transaction? Do those numbers change drastically if I close early vs. late in a given month and/or if I close now vs. a few months from now?
4. How do my options change if I put more money down or less money down? Does my interest rate change? How do my monthly payments change?
5. I don't want to spend the maximum, so what purchase price do I need to stay under to keep my monthly housing payment less than $____/month?
6. When can I LOCK my interest rate with you, and HOW MUCH does your company charge for me to obtain this loan?
7. Is my loan a slam dunk, or are there some potential hurdles/barriers that you envision with my loan scenario? What could delay my approval when I have a property under contract? What can I be working on or preparing for now to make this go more smoothly?
8. Are there any specialty programs that I might qualify for? What are the pros and cons of getting a 30-year fixed rate loan vs a 10/1, 7/1, 5/1 ARM, etc.?
9. Can I get part of my down payment from a family member or friend (and how does that work)?
10. Is this a 30-year fixed rate loan (vs. a 15 year fixed, ARM, etc.)? Is there a pre-payment penalty if I pay off the loan early?
11. Could you please give me breakdowns of my total monthly housing paymentAND my estimated closing costs for a few difference scenarios (if I buy at this price with this much down, vs. another price with another amount down, etc.)?
12. Do you have any personal recommendations for me based on my income/assets/etc.?
13. Could you please supply me with a pre-approval letter after I fill out the application and send you all the supporting documents? When I write an offer on a property, are you available to send me an updated pre-approval letter (even if it's on the weekend)?
14. I realize that rates change multiple times/day and that you will have different rates on different days. I'd like to get a competitive rate with fair fees, and ideally work with a proactive loan officer like you. My plan is to get in touch with you again once I have a property under contract to find out your rate and see if I'm ready to lock. How does that sound to you?
Learn Everything You Can About Your Loan Options
To sum it up, if you have a loan officer who is willing to spend extra time educating you during your pre-approval process, there is so much knowledge you can gain by asking the right questions.
You can accomplish all of this over the phone if you need to, but it's even better to take the time to meet in person (if you can).
The more informed you become up front about your loan, payment, approval process, etc., the smoother your purchase transaction will go.
Two More Tips for Getting the Best Deal on Your Mortgage and Finding the Best Lender for Your San Diego Home Purchase
As always, I'm here to help, so let me know if you have any questions. If you haven't already, you can contact me today and request a Buyer Strategy Session to go over the loan process and discuss how we could work together to achieve your home ownership goals.