Buying and financing a home today can be overwhelming. Here are some questions to ask your lender so that you can make informed decisions.

Are both fixed-rate and adjustable mortgage loans available? What is the interest rate?

How long can I “lock-in” the financing at the current interest rate?

Is a float down lock available in case rates drop after I have locked in?

What are the other fees a lender may charge me in conjunction with my loan?

Are funds for a second mortgage available?

On adjustable loans:

• How often will the interest rate be adjusted?
• Is there a maximum limit on each rate change?
• How often will the monthly payment be adjusted?
• Is there a ceiling on payment adjustments?
• Can the term of the loan be extended?
• What is the maximum rate that can be charged over the life of the loan?
• Is there any potential for negative
  amortization?

Is there a pre-payment penalty clause?This involves extra charges for paying off the loan before maturity. About 80% of all loans in the United States are paid off early.

• What is the “grace” period? How late can a monthly payment be made before a late charge is assessed?
• What will happen if a payment is missed?
• If you sell your house, will the new buyer (if he/she qualifies) be able to assume your mortgage at the same interest rate?
• Do you have to pay “points” to get your new mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A “point” is 1% of the loan.
• Will the lender require mortgage insurance?
• Is the loan serviced locally or is the servicing sold?
• Ask for a written “good faith deposit”.

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