February 19, 2010, Newsletter Issue #206: What Questions Should I Ask?

Tip of the Week

Asking the right questions is critical in any mortgage transaction. Some examples of appropriate questions are

What is the origination fee or loan discount fee (Points) for each loan in which you have interest? How long is the rate being quoted locked? If less than 60 days, ask what the 60 day lock rate is for the loan you want? What are the appraisal, credit, and application fees? When should you receive a decision on your loan request? What are all other closing costs in addition to points? In addition to the title insurance for the lender, what is the cost of owner’s title insurance? What insurance and real estate tax escrows are required? How many months’ of each will have to be collected at closing? What miscellaneous fees are required, including any underwriting, processing, funding, warehousing, document preparation or review fees. What is the effective rate for the loan in question? Ask for a preliminary Truth-In-Lending (TIL) statement. Depending on the dates included in your Purchase and Sale (P&S) Agreement, ask if you can close near the end of a month to minimize your prepaid interest amount. Some of these costs can vary widely with different loan origination firms and mortgage lenders. Thousands of dollars can be spent or saved depending on the answers to the above questions.

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