8 Things To Ask Your Mortgage Officer
Are You Considering Home Ownership but Don’t Know What Questions To Ask?
Asking the right questions in the loan application process can help to alleviate frustration on both your part and the part of the mortgage officer, who may take it for granted that you know how the mortgage process works. Although according to the last survey that I conducted, most persons found their officers warm, trustable and knowledgeable, it helps if you come to the conversation prepared. Some of these questions may apply for any loan, not just a mortgage, but here are some things that I think should be asked if you are in the process of getting a loan:
- How much can I qualify for? Can I get a pre-qualification letter? The pre-qualification letter will be provided after you provide some preliminary information on your income. It will include a maximum amount that the financial institution will lend you. For a regular loan that has a much shorter transaction period, the pre-qualification letter may be unneccesary.
- What is the loan process like and what documents will I have to submit? Ask this question early so you can start gathering the documents to make the process easier. Here is a sample mortgage checklist that you can modify to keep yourself on track. If you want to understand more about the required documents like the surveyor’s report or the property valuation then read my article on the 1st time Home Owners Guide.
- (For Mortgages) Would I be able to use my NHT benefit by applying directly with your institution? If the bank/ building society is a part of the Joint Financing Mortgage Programme then you will be able to apply for the mortgage including the NHT portion by visiting one place. See my article on using your NHT benefit here. Ask about any other mortgage benefits you may qualify for as well.
- What are the terms of the loan? What is the interest rate? How long will I be required to repay? Do I have to pay monthly or are the terms flexible (i.e. paying bi-monthly or quarterly)? When you get the answers to those, put them in the Mortgage Calculator or figure out your monthly payment (if they have not told you) or put them in the Mortgage Amortization Calculator to see how much you will be paying towards Principal and Interest over time.
- What fees would I be required to pay? What are the closing costs? Many of the common fees are located in my article here but the bank may have fees that are not included in the fee calculator. Ask them how much your closing costs are expected to be.
- Are there any mandatory payments I need to make in additional to the loan repayment amount? E,g. Peril Insurance, Life Insurance etc.? This is usually the case but ask anyway.
- Do you require that the payments be deducted from my salary? Many institutions will also require this, or have you set up a standing order with your bank to make the payments.
- How long does the approval process take? I did a survey on this among Jamaican mortgagors, but the situation will vary by institution by circumstance. Most respondents said 1 to 2 months, so gauge your expectations accordingly.
Ask all these questions so that your expectations can be managed early and the process can be a smooth one. Happy house buying!