10 Questions to Ask Your Lender to Qualify for the Lowest Mortgage Rate

There is one major financial priority for any home buyer or homeowner who is looking to refinance: get the lowest possible mortgage rate. A lower mortgage interest rate will help reduce your monthly mortgage payments and/or reduce the overall term of your loan.

So, how do you qualify for a lower mortgage rate? We’ll answer that important question with some questions of our own. Here are the 10 mortgage questions you should ask your lender when applying for a home loan or mortgage refinance:

What is the Best Mortgage Loan for Me?

There are many different types of mortgage loan options. You have conventional loans, FHA loans, USDA loans, VA loans, jumbo loans and more. There are various government-backed home loan programs for first-time home buyers and other mortgage products worth considering depending on your financial situation. Talk with a mortgage lender who offers multiple loan solutions, or get quotes from several lenders. Find the right mortgage option that suits your needs and will offer the best rates and terms.

Can I Qualify for Loan Assistance Programs?

There are a number of people who qualify for special loan assistance and down payment assistance programs. If you need some help qualifying for a mortgage loan or aren’t sure if your down payment is going to be high enough, ask your lender about available assistance programs. See what you might qualify for and how it could help you as a home buyer or as a homeowner trying to refinance at a lower mortgage rate.

Can I Get Pre-Approved for a Mortgage?

You will definitely want to ask your mortgage lender about loan pre-approval. This is an important step to take as the lender can tell you if you qualify and how much you will be able to borrow. You’ll be able to lock in a good mortgage rate when the timing is right. In addition, a mortgage pre-approval letter from a reputable lender will be beneficial when you are ready to make an offer on a property. It shows the seller your financing is solid and your final funding should go smoothly.

How Much Down Payment Do I Need?

It is ideal to have a down payment of at least 20%. However, not everybody has this kind of cash saved up. Different loan programs will have different down payment minimum requirements—most much lower than 20% and some that are even 0%. Then, there are potential down payment assistance programs as mentioned earlier. Your lender will provide guidance to help you with your down payment.

Will I Have to Pay Mortgage Insurance?

If your down payment is less than 20%, you can expect to pay private mortgage insurance (PMI) or a mortgage insurance premium (MIP). This is an extra fee added to your monthly mortgage payments that helps protect both you and lender in case of loan default. They are taking more risk when lending to a borrower with a lower down payment.

How Can I Get a Lower Mortgage Rate?

Ask your mortgage lender everything you can do to reduce your mortgage interest rate. The main factors affecting your mortgage rate are:

            • Mortgage Loan Type

            • Mortgage Loan Amount

            • Credit Rating (FICO Score)

            • Debt-to-Income Ratio (DTI)

            • Employment History

            • Income

            • Current Average Mortgage Rates

Is it Better to Apply Cash to the Down Payment or Points?

Whatever cash you do have available to put down toward your loan could be spent on different things. It could be applied to the down payment. It could go toward paying closing costs. Or, it could go toward paying down “points.” Essentially, you can buy down your fixed mortgage rate with a cash payment upfront. Ultimately, your mortgage lender can help you decide the best ways to utilize your money for better overall home loan terms.

How Can I Lock in My Mortgage Rate?

If you are pre-approved for a mortgage loan, your lender will work with you to decide when to “lock in” the rate. This is based on timing and anticipation of mortgage rate swings. An experienced lender will help you lock in a great rate when it makes the most sense.

What Will My Monthly Mortgage Payment Be?

Your qualified mortgage rate will directly affect your monthly mortgage payments, but there are other fees, taxes and premiums that go into each payment. Be sure to ask your lender to provide a monthly payment estimate. Just because you qualify for a larger loan amount doesn’t mean you can actually afford to pay that much month to month. Estimate your monthly payments to see what you will really be paying each month.

What is the Closing Process and Costs?

Understand how the closing process works, how long it will take and what closing costs are involved with your particular mortgage loan. Again, the mortgage rate is not the only thing affecting your monthly mortgage payments. And, the down payment is not the only cash you will be paying out-of-pocket when the loan closes.

Do not be afraid to ask a lot of questions of your mortgage lender when applying for a new home loan or refi. They are there to help and provide the necessary information and guidance. If your lender isn’t willing to answer your questions, then find another one who will. Owning a home is likely one of the biggest—if not the biggest—financial investments you will every make. Understand how the process works and do everything you can to get a lower mortgage rate, affordable closing costs and lower monthly mortgage payments.

If you are buying or refinancing a home in the Atlanta area, contact Moreira Team | MortgageRight today. We’ll be happy to answer every question you have and make sure you get the lowest mortgage rate possible!