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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.