What to Ask about Your Loan
When shopping for home mortgage loans, you have to ask the right questions in order to find a loan that meets your needs. Here are the questions you should ask before taking out a loan.
What to Ask Your Lender
When you get quotes on home mortgage loans on our site, you should ask each prospective lender a series of questions to determine which is right for you. You should ask these questions regardless of the types of home mortgage loans you are considering:
- Do you charge points?
- What is the interest rate of my loan?
- What are the closing costs and any other fees?
- What is the APR (annual percentage rate) of the loan?
- Does the loan have a pre-payment penalty?
- How is the loan amortized? (This refers to how quickly the principal of home mortgage loans is paid off)
What to Ask Yourself
Choosing the right home mortgage loans also requires that you ask some questions of yourself, including:
- How long do I plan to stay in my home?
- What is my comfort level with risk?
- Do I have a secure job and income over the long term?
- Will I be able to afford higher mortgage payments in the future?
What to Ask about Adjustable-Rate Mortgages (ARMs)
Adjustable-rate home mortgage loans are riskier than fixed-rate mortgages, so they require that you ask some special questions:
- When does my rate adjust?
- What index and margin will determine my interest rate?
- What is the cap that limits the amount by which my rate can adjust?
- How often does my rate adjust?
- What would my monthly payments be if my interest rates hit the loan's cap?
- How does the introductory interest rate compare with the rates of 30-year fixed-rate home mortgage loans?
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