20 Questions to Ask Your Mortgage Lender

General Questions

1. What Type of Mortgages Do You Offer?

There are several types of mortgage loans, each with unique features. Common examples include conventional loans, government-insured loans and jumbo loans.

• Conventional loans: Conventional loans are mortgages not backed by the government. They are the most popular type of mortgage, and they're offered by private lenders. These loans can have stricter qualification requirements than government-backed loans, so they're best for those with good credit and enough savings to make a down payment.
• Government-backed loans: Government-backed loans are insured by the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) or the Department of Veterans Affairs (VA). They are mostly offered by private lenders, but a few programs are provided by the government agencies directly. Government-backed loans typically have more lenient eligibility requirements compared to conventional loans.
• Jumbo loans: Jumbo loans allow you to purchase a more expensive home than other home loans, called conforming loans, allow. That said, they come with stricter eligibility requirements, requiring a credit score of at least 700 and a maximum debt-to-income ratio (DTI) of 36%.

If you have an idea of the types of mortgage loans you may want, you can easily rule out lenders that don't offer them.

2. Who Can I Contact With Questions?

It's crucial to be able to get your mortgage questions answered—both when comparing your options and after taking out your loan. There are plenty of reasons you may need to contact your lender. Maybe you want to refinance, reduce your payment or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. Regardless, make sure you know how to contact your lender. This may mean reaching out through the lender's online portal or calling a lending representative's direct line; ask your lender about the best method.

3. What Mortgage Is Right for Me?

With a variety of loan options available, you may want your lender's help in determining which type of mortgage is right for you. Your lender should have a solid understanding of how various loan types work, what their eligibility requirements are and who they're best for.

In learning about your situation—such as your location, credit score, income, DTI and desired down payment—your lender can help you choose the right type of mortgage that aligns with your needs.

4. What Are Your Credit Requirements?

Different types of mortgages have different credit requirements for buying a home. For example, the following are general credit score minimums for several loan types:

• Conventional conforming loans: 620 to 660
• Jumbo loans: 700 to 720
• FHA loans: 500 to 580
• USDA loans: 640

But credit score requirements can also vary by lender. Check with your lender to see if your credit score is sufficient to qualify for the type of loan you plan to get. If it's not, you may choose to take steps to improve your credit score or find a lender who is more willing to work with you.

5. How Much Will I Need to Put Down?

As you begin the process of buying a home, you'll want to make sure you have enough cash—both upfront and in your monthly budget—to afford it.

One obstacle buyers face is saving up enough money for the down payment. While a 20% down payment allows you to avoid private mortgage insurance, you don't necessarily need to put that much down. With VA loans, for example, you can buy a home with 0% down.

Talk with your lender to find out how much of a down payment you need. And keep in mind that even if you have the cash to make a larger down payment, it may be smart to keep some of that cash on hand for home repairs and emergencies.

Loan-Specific Questions

6. What Is the Interest Rate and APR?

You may confuse your mortgage interest rate and annual percentage rate (APR), but they aren't the same. Your mortgage interest rate expresses the annual cost of borrowing, excluding any fees. APR, meanwhile, represents the actual annual cost of borrowing, including interest and fees.

Your mortgage interest rate depends on a number of factors, including current market conditions, your credit score, mortgage type, down payment amount and more. APR depends on all of these factors—plus fees.

Your loan's APR is especially helpful to know because it can help you compare loan costs among lenders. Some lenders may offer lower interest rates but charge higher fees, resulting in a higher APR. Make sure you know your loan's interest rate and APR so you can accurately shop for the best deals.

7. How Long Does the Mortgage Process Take?

The standard timeline for getting a mortgage and closing on a home is generally anywhere from 45 to 60 days. Once you submit your application, the lender will review it and conduct an underwriting process before deciding whether to approve you for the loan. Finally, assuming the other components of your home sale go well, you'll close on the home and get the keys.

Various factors can affect how long this process takes, especially when the lender needs to request additional information from you during the underwriting process. Ask your lender how long the process typically takes, but remember both you and the seller can influence the timeline.

Tip: You should get preapproved by a few lenders before you apply for a mortgage so sellers will know you're serious and you'll know how much you can borrow.

8. What Are the Escrow Requirements?

An escrow account holds payment or assets between two parties until they fulfill their obligations. In real estate, escrow helps protect both buyer and seller by acting as a third-party intermediary until the transaction is complete.

After the mortgage closes, your lender may require an ongoing escrow account, also known as an impound account, as part of your mortgage payment. You'll pay your home insurance and property taxes as part of your mortgage payment each month, and the lender will hold those amounts in an escrow account and make the payments on your behalf when they're due. Escrow accounts are common with government-insured mortgages and conventional mortgages when you put less than 20% down. But the need for an escrow account depends on your lender.

9. Who Will Service My Loan?

While your mortgage lender is the entity that loans you money, there may be another company that actually manages your loan. This second company is known as the mortgage servicer and is responsible for processing and tracking payments, answering your questions and managing your escrow account.

Before taking out a mortgage, ask your lender if they'll be the ones servicing your loan or if another company will take over—that way, you know who to communicate with when it's time to make payments.

10. Will You Sell My Loan After Closing?

Mortgage lenders can sell loans to other financial institutions on the secondary mortgage market. Your loan terms won't change, but the sale of your mortgage can lead to a different payment process. Ask your lender whether or not they'll sell your loan after closing, and if so, whether they plan to sell off the servicing rights too.

11. Do You Offer Mortgage Points?

Mortgage points allow you to buy down your loan's interest rate. If you plan to stay in your home long term, they can save you money in the long run. You can figure out exactly how long you need to stay in your home to make mortgage points worth it by calculating the breakeven point.

If you think mortgage points are worth it in your situation, ask your lender if they offer mortgage points.

Preapproval Questions

12. What Documents Do I Need for Preapproval?

A preapproval letter shows sellers you're a serious buyer, so it's important to have one before shopping for a house. Typically, the lender will require the following information as part of the preapproval process:

• Identification
• Proof of income
• Credit report
• Proof of assets
• List of debts
• List of expenses
• Proof of rental history

However, lenders may require additional documents for preapproval. Ask what you'll need to provide ahead of time to avoid delaying the preapproval process.

13. How Long Does Preapproval Last?

Because your financial situation can (and often does) change, mortgage preapproval letters have an expiration date. Generally, mortgage preapprovals last for 60 to 90 days, but this timeline varies by lender. Some lenders limit preapproval to just 30 days.

Make sure you know a lender's timeline before getting preapproved so you can act within the specified timeframe. If your mortgage preapproval letter expires, you may have to submit updated information regarding your income, and the lender may pull your credit again, which could hurt your credit scores.

14. How Long Does a Rate Lock Last?

A mortgage rate lock guarantees a specific mortgage interest rate for a period of time. This can give you some peace of mind while looking for a house, because even if mortgage interest rates rise, you've already locked in your rate. Typically, rate locks last for 30 to 60 days, but it's worth checking with your lender for their specific policy.

Payment Questions

15. How Much Will Closing Costs Be?

Closing costs are the fees you pay when finalizing a home sale transaction. Generally, you pay them upfront at closing, and they cost 2% to 5% of the home's sale price.

Closing costs may include the following:

• Loan origination fee
• Discount points
• Home appraisal fee
• Home inspection fee
• Title search fee
• Transfer tax
• Sales commission
• Homeowners insurance
• Mortgage insurance
• Property taxes

This list isn't exhaustive, and closing costs can include several other fees. Ask your lender what your closing costs will include and how much you can expect to pay.

16. What's Included in My Mortgage Payment, and How Much Will It Be?

The four typical parts of a mortgage payment include principal, interest, taxes and insurance (PITI). However, you may ask the lender not to include taxes and homeowners insurance and pay them directly.

Keep in mind the "insurance" part of PITI can vary by borrower. For example, if you put less than 20% down on a conventional mortgage, you'll have to pay for private mortgage insurance (PMI) in addition to homeowners insurance.

Check with your lender to see how much your mortgage payment will be, whether or not they require you to pay property taxes and insurance as part of your mortgage payment, and if you're required to pay for mortgage insurance.

17. When Are Payments Due?

Mortgage payments are often due on the first of the month, with the first payment due at the beginning of the second month after closing. However, many lenders offer a grace period of around 15 days, during which you can make your payment without having to pay a late fee. This structure is common, but it's not the rule, so ask your lender when payments are due and whether or not you can expect a grace period.

18. What Are the Payment Options?

Though it may sound obvious, it's worth asking your lender how to pay your monthly mortgage payments. Options may include paying:

• Over the phone
• Online
• By mail
• With a credit card
• By automatic transfer
• In person

Not all of these options may be available; for example, if you work with an online lender, you won't be able to pay in person.

Some of these options allow you to set up automatic payments. If you want to avoid any missed payments and skip the monthly task of paying your bill, ask your lender if they offer auto pay.

19. How Long Is the Grace Period?

Some lenders offer a grace period for monthly mortgage payments, allowing you time to make your payment without incurring late fees. This grace period often lasts about 15 days. Grace periods can vary by lender, so be sure to ask about specific lenders' policies to avoid late payments and the associated fees.

20. Is There a Prepayment Penalty?

Prepayment penalties are fees you may face if you pay off your mortgage ahead of schedule. Lenders may charge these fees to cover any loss of income that would result from a shorter mortgage term. (The faster you pay off your loan, the less you pay in interest.)

Prepayment fees vary by cost and structure. Fees can be flat, scaled, a percentage of your loan balance, or based on your loan's monthly interest.

Ask your lender whether or not they charge prepayment penalties, and if so, how they're structured.

The Bottom Line

Getting a mortgage is a huge financial commitment, so it's worth going above and beyond when researching different loans and lenders. Don't be afraid to ask lenders about anything you don't understand, and make sure you get clear, complete answers in return. Knowing what to expect can help you better compare lenders and be prepared for underwriting, closing and home ownership.

If you're starting to think about purchasing a home, start with a realistic budget. Experian's mortgage calculator can help you estimate monthly mortgage payments based on home price and interest rate.

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