Make it a common practice to ask questions of potential mortgage brokers montreal before committing to a loan. Be it finding the right kind of loan or getting tangled up in unanticipated fees, years of your life might depend on these answers! Remember to continue looking for the right loan for you till you find the best suited mortgage broker who is willing to answer all your queries.
The more a mortgage broker knows about you and your situation, the better assistance, advice, and accurate information they can offer. Never hesitate to share personal details such as credit reports to help them understand what you expect out of their services.
Here are the 5 important questions you must ask your mortgage lender:
A reputable broker will always want to know more about you before offering tons of loan options, quite like a doctor will first gauge your complete health profile before suggesting surgeries. So, be on the lookout for brokers who gather ample information from you prior to recommending particular kinds of loans. Ask them for explanations regarding the pros and cons of adjustable, interest-only, fixed-rate, and negative amortization loans to understand how each fits in with your individual circumstances.
In fixed-rate mortgages, there will be no change in interest rates, so you will be aware of your monthly due amount till you pay it all off. With an adjustable mortgage rate, a lot depends on the market. Things can fluctuate but usually not in the first 5 years. With interest-only loans, you get a “balloon payment” of your entire principal balance all at once, while only paying interest meanwhile. In negative amortization loans, you defer some part of the interest for a certain period of time. Talking to your broker and questioning all options will help you understand which one is right for you and your financial situation.
What Will Your Interest Rate and Annual Percentage Rate Be?
You can find out your loan’s annual percentage rate (APR) through a rather complex calculation including the interest rate and other related broker fees, divided by your loan’s term. But remember, not all mortgage brokers calculate APR in the same way. Moreover, there is no way to accurately find out APR rates for an adjustable mortgage.
An APR will not account for early payoffs, so ask your broker about pinning down the adjustment frequency along with your maximum annual adjustment, highest index, rate, and margin.
How Much Down Payment Is Necessary?
The answer to this question is typically 20% but it is not always the case. If you are well-qualified, you could pay as little as 3% with a few loan varieties. But like everything that sounds this good, there are both pros and cons to it. First, you might have to pay for private mortgage insurance if you decide to put less than 20% down. This could entail more closing costs and a heightened monthly payment till you reach 80% loan-to-value ratio.
Can You Avail A Loan Rate Lock?
Interest rates tend to fluctuate and alter daily, so you might consider the option to lock your loan if you believe interest rates are going up. Brokers typically charge up to 1 point to lock in loan rates. Prior to doing this, find out if they charge a fee, or whether the lock-in shields all the loan costs, or for how long the rate shall be locked in. The other way is to simply pay the prevailing rate and points.
Will There Be A Prepayment Penalty?
Note that many states do not allow prepayment penalties anymore, so make sure you ask about it. These penalties let brokers collect an additional 6 months worth of unearned interest if you happen to pay your loan off as early as possible, either through sale of the property or refinance.
A few penalties only remain in effect during the first 2 to 5 years of getting the loan, so do get that clarified. Always know about the terms of the prepayment and whether a penalty would apply if you were refinancing through the same broker at a later date.
If you need mortgage brokers to help you out, get in touch with Best Mortgage Montreal for quick, easy, and secure services with no credit check required. You can get pre-qualified online within a few minutes and have your pre-qualification explained in 24 hours by our experts. Note that we do not share any information with 3rd parties and we guarantee zero obligation or extra cost. Call us today to know more!