10 Questions to ask a Mortgage Lender  

Finding the perfect mortgage lender isn’t always easy. You want someone who is going to look after your best interests and who has a lot of experience working with people like you. For example, if you are a first-time homebuyer, you want a mortgage lender who is familiar with first-time homebuyer programs and can give you information that applies to your particular situation. 

Even if someone recommends a mortgage lender, you still want to do your due diligence to see if they are the perfect fit. Here are 10 questions to ask a prospective mortgage lender before moving ahead.  

What is the best type of mortgage for my situation?  

All homebuyers are different and there is no one-size-fits-all mortgage. A mortgage lender should not only be able to tell you what type of mortgage you would be best suited for, but he or she should be able to tell you why. A mortgage lender should be specific in explaining how your financial situation would benefit from the type of mortgage he or she suggests.  

Have you helped people in my situation before? 

If you are a first-time homebuyer, ask the lender if they’ve worked with a lot of first-time homebuyers in the past. If you are looking for an investment property, ask if they’ve worked with investors in the past or if they tend to only work with primary residence buyers. When you are looking for a professional to guide you through an important process, you want someone who is familiar with your unique circumstances. 

Do I qualify for any down payment assistance programs?  

A lender that is looking out for your interests will want to save you money. There are programs that can save homebuyers thousands of dollars in down payment assistance and closing costs. Those funds can make homeownership possible for someone who doesn’t have a lot of cash, or they can allow a homebuyer to keep their money in the bank for other purposes.  

When it comes to asking the mortgage lender about payment assistance programs, don’t stop there. A HomeFree-USA advisor can also fill you in about possible sources of funding that you may qualify for.  

How much will I need for a downpayment? 

While you’re asking about money, don’t forget to ask what you will likely need to bring to the table for a downpayment. Don’t assume it will be a lot. While some lenders require 20 percent, there are programs that allow homebuyers to put down as little as 3 percent or even no money at all. Again, this goes back to finding a lender who works with people who have similar economic backgrounds as you. A mortgage lender should be able to identify programs that would be most beneficial to your particular situation.  

How much will I need for closing costs? 

Closing costs consist of a number of different fees. Some of these fees are charged by the lender while others are charged by outside service providers such as title companies. Ask a prospective mortgage lender what closing costs you will need to pay for at closing and also how much those costs will likely be. If you do decide to move forward and apply for a mortgage, the lender will give you a Good Faith Estimate, which is a document that lays out all the costs you are expected to pay for at closing.  

What interest rate will I likely qualify for?  

Even before a mortgage lender runs your credit, he or she should be able to give you an idea of what you will qualify for if you can tell them your credit score and some basic information about your finances. Of course there is a caveat – the information you provide must be accurate. Having that information can help you decide if you want to move forward – or if you should work with a Homeownership Advisor to improve your credit first. One of the benefits of working with a non-profit organization like HomeFree-USA is you get a partner who will help you prepare for homeownership and will stay by your side throughout the entire process. 

How much will my monthly payment be? 

When it comes to budgeting, it’s important to know what the numbers will be. How much will you be paying each month on your mortgage? A mortgage lender should be able to give you a ballpark figure and that can make a huge difference in your decision making. For example, you might want to move forward if the monthly payment will be around $1,800, but a $2,500 monthly payment may be too much for you to handle, leading you to look for a less expensive property. 

How often will you reach out to me to give me a progress update? 

The homebuying process can be long and it can be stressful. The last thing you want is a mortgage lender that meets with you once and then disappears for weeks leaving you wondering what’s going on with your loan. You want a mortgage lender who is going to update you regularly and be available whenever you have questions. By asking this question, you can determine if a mortgage lender intends to be accessible, and you can let him or her know that frequent communication is your preference.  

How long is the entire process likely to take? 

While there can always be snags and delays in the homebuying process, your mortgage lender can let you know how long it is expected to take, or how long similar transactions take to go through. While the estimate may be off a week or two, that still gives you some guidance so you aren’t stressing and wondering whether things are going wrong.  

Will the closing be in-person? 

In the past, closings typically took place in-person, though since the pandemic, virtual closings have become more prevalent than they were in the past. Ask your lender what you should expect from the closing process so you have a better idea of how your homebuying experience will play out.