What Questions Should You Ask Before Signing a Mortgage?

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If you’re thinking about buying a home, you’re going to need to secure a good mortgage with a reputable lender. To ensure you get the best rates and terms possible, we’ve got four questions for you today that you should be asking before you sign a mortgage agreement with a lender. Here they are:

1.  What is the APR?
The APR really tells you the true cost of the loan. It includes all closing costs, underwriting costs, and processing fees.

2. Does the mortgage carry a pre-payment penalty?
If you end up getting penalized negatively for paying off a loan in advance, it could negatively affect your ability to have a profitable investment. Watch out for pre-payment penalties!

3. Can you review the GFE and the HUD-1 together?
The Good Faith Estimate, or GFE, is an estimate a lender gives you when you first speak with them. The HUD-1 is the settlement statement at the closing table. You want to make sure that the GFE matches up with the HUD-1 at the closing table.

4. How long will my rate lock and what’s the maximum cap?
You might sign an agreement with a lender when you start looking for a home, but not find a home for two or three months. It’s important when you get that initial approval from a lender, you know how long you are locked into that specific rate. A lot of times, there are time limits, and rates can change. You don’t want to have to pay more than you agreed to.
These are four key questions you need to ask your lender before signing a mortgage contract. Working with a trusted real estate advisor will really help the process become more smooth and easy. If you have any questions for us, or are looking to buy or sell in Austin, give us a call or send us an email. We would love to hear from you.