5 Questions Every Pennsylvanian Should Ask a Mortgage Lender
Buying property is a major milestone, whether it’s your first home or an upgrade later in life. Before making the investment, it’s important to think ahead and answer any questions or concerns you have, which can help relieve the inevitable pressures that come with buying a home—especially those related to your finances.
Gaining expert knowledge can help you prep and plan long before you sign the final paperwork. This could mean consulting lenders, friends and family that have gone through the process, or even locals in the area you’re considering buying. One of the most important voices you want in the mix is a reputable lender. Before purchasing a home in Pennsylvania, consider asking that lender the following questions to ensure you’re getting the best deal.
1. What’s the minimum down payment required for my mortgage?
Different types of mortgages require different amounts for a down payment. This difference could range from thousands to tens-of-thousands of dollars, so it’s important to understand how much you’ll need saved before you buy, then consider saving. But not to worry—a bigger down payment may mean more money up front, but in some cases paying that higher down payment may qualify you for a lower interest rate. Some loans may also require mortgage insurance if your down payment is low, which could increase your monthly payments in the long run. Programs like Citadel’s First-Time Homebuyer offering may have a lower down payment that can help you own a home faster.
2. How can I qualify for this loan and what paperwork do I need?
Because all loans depend on your income, credit history, and liabilities, understanding those requirements is crucial. A knowledgeable and experienced mortgage lender will be able to help you compare different loans and understand how strict their standards are and whether or not you’ll qualify. A service like Citadel’s free HomeAdvantage program offers home buyers the opportunity to earn an average of $1,650 in Cash Rewards, which can help in repaying this loan. This service is also available to sellers looking to recoup some of the closing costs associated with the sale of their home.
Lenders also require proof of income and assets, which aren’t always quick reports to calculate or provide info for at the last minute. As soon as you start thinking about buying a home, consider prepping for that process like you would for tax season, because it’s best to know as much information as possible beforehand to prevent any delays.
3. What type of mortgage rate is best for me?
Understanding different mortgage rates can help you determine which loan option will save you money. There are two main types of rates available for your mortgage: fixed-rates and adjustable-rates. A fixed-rate mortgage is typically best for those who plan to stay in their home for a long period of time. It may mean a higher interest rate, but it also means an amount that doesn’t fluctuate over time. An adjustable-rate mortgage is best for those who plan to stay in their home for 5 years or less. This will initially have a low interest rate, but could increase throughout the duration of the loan.
4. What are the closing costs involved with my loan?
Every loan will have closing costs, which are fees the lender charges. Those closing costs are charged at the end of the transaction, and can fall between 2% and 5% of your total expenses. They vary based on contributing factors like where you’re buying your home or the property you purchase. Closing costs can account for a number of services and fees, including, but not limited to, homeowners insurance, inspection fees, escrow fees, and application fees.
What’s important is getting ahead of the game to understand these costs, when they’re due, and how much they’ll amount to so that you can budget for them on top of your future monthly payments.
5. Is there a way to lower my payments?
A reputable mortgage lender is always on your side. They’ll walk you through all possible options to help you afford a home and make sure that you’re not spending money you can’t afford to. They’re equipped to identify ways you can increase your credit score and qualify for discounts or programs like HomeAdvantage, which lower the various costs associated with home ownership. For example, your lender will help you identify how many origination points you’re responsible for calculating into your costs. These points mean that you can pay a certain amount upfront to get a discount on your interest rates.
As you start to navigate the process of buying a home, you’ll realize that these aren’t the only questions that will come up. Just remember: there is no such thing as a stupid question when it comes to being proactive.
Here at Citadel, our home loan experts are happy to walk you through all of our options for choosing on a loan.