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Latest posts by John English (see all)
- Kitchen Renovations: Here’s How Much it will Cost - June 19, 2018
- How Does Escrow Work in Real Estate Transactions? - June 15, 2018
- 10 Vital Questions New Yorker’s Should Ask their Mortgage Lender - June 14, 2018
Whether your applying for a mortgage or refinancing an existing one it definitely helps to be well prepared. Ask the right questions, and the whole process will go much smoother and quicker. These 10 questions are just the right ones so have then ready for that first meeting ahead with your chosen banks loan officer.
1. How much business do you do in NYC?
Don’t overlook this one if this is your first time buying or financing real estate in NYC. The property market here can be a little more complicated than the rest of the country so choosing a bank that understands it can be crucial to a deal. Choose a bank that has a lot of experience lending against co-ops and condos in NYC. You’ll then be less likely to meet any delays in closing the deal.
2. Can you explain what types of loans you offer?
There are many types of loans that banks offer. Chances are you’ll hear of a few that you won’t be familiar with. Have them explain each one carefully so that you understand their terms. The most common ones that people ask about are the portfolio, Fanny Mae, and conventional loans.
3. How can I get pre-qualified for a mortgage?
Being pre-qualified can boost your chances of getting your offer accepted. It usually only takes about 10 minutes and once done you can print out a pre-qualification letter as proof of it.
4. Is the building I want to buy in approved?
Once you’re pre-qualified, you’ll next want to find out if the building is as well. If it’s not, then the mortgage loan process will take longer as your bank will need to conduct due diligence. If it’s a reasonably sized building and isn’t brand new, then it’s likely that I’ll be approved from previous loans taken out on it.
5. What’s the difference between a pre-qualification letter and a mortgage commitment?
If it’s your first loan, then ensure you fully understand this difference. Pre-qualification only means you are qualified for a loan depending on the verification of specific items. All it verifies is your credit report. Before a commitment can be issued the bank will need to gather supporting documents for the information you gave in the pre-qualification, conduct due diligence and a host of other things
6. How long are your rate locks?
The most common rate locks that are offered are for between 30 and 60. However, large banks sometimes offer as much as 90 or even more. You’ll want to avoid having to extend your rate lock so try to get one as flexible as possible.
7. What is your mortgage underwriting process like?
You’ll want to know how much bureaucracy exists in the bank. Is the mortgage writer someone that can be quickly reached or is it an offshore team only reachable by email with a one-day lag time? The more lag time, the more delays in getting approval. What also makes this the great question is that it allows you to test out how knowledgeable the loan officer is.
8. Are there any relationship pricing incentives?
It’s very common for major banks to have relationship pricing incentives if you have a depository relationship with them. Depending on the amount of cash you have deposited with them you can get a reduced mortgage interest rate.
9. Do you have any home buyer closing incentives?
Some banks offer closing cost incentives to first time home buyers or those with a low income in conjunction with the government. These incentives can range from the small to the large. For instance, $500 added to your checking account when you begin a depository relationship with the bank in conjunction with the financing. Or a substantial $5,000 closing credit for first-time buyers.
10. How much must I put down and how high must my debt-to-income ratio be?
Every bank is different when it comes to these questions. In general, a 20% down payment will be needed without having mortgage insurance. Anything less will require mortgage insurance. Each bank has their way of calculating your debt-to-income ratio. In general, your debt-to-income ratio should be at or above 36%.