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If you need a mortgage (which just about everyone will) to buy a home in Chicago, you’ll need to find yourself an experienced, local loan officer to help guide you through the lending process. Buying a home is an enormous financial commitment, so it’s important that you find a loan officer who is knowledgeable and can truly be an asset for you. Here are some questions to ask when you’re meeting with a loan officer:
Which Loan is Best for Me?
If the answer comes before the loan officer knows anything about your financial situation, beware. For any lender (however experienced) to be able to determine which loan is the best fit for you, they need to gather and review all of the pertinent information before they can make a recommendation. Your mortgage advisor should be able to educate you on each of the loans you qualify for and run through the list of pros and cons for each. Specifically, they need to explain the differences between fixed-rate and adjustable-rate loans. They should tell you that an interest-only loan comes with a balloon payment, and which loans come with a prepayment penalty. All of these factors are crucial in choosing the loan that best suits your needs.
How Much Will I Need for a Down payment?
In most cases, lenders are going to require a down payment from you. It could be anywhere from 3% up to 20% depending on the loan terms. It’s important that your loan officer knows the exact amount of down payment you can afford. If 20% isn’t feasible, you’ll have fewer options and may have to pay private mortgage insurance (PMI). The amount you can put down up-front will dictate the types of loans you’ll qualify for. You’ll also want to make sure your loan officer has access to the widest variety of loan options.
What’s the Origination Fee?
The origination fee — what you’ll pay the loan officer for their work — is usually 1-2% of the loan amount, but that isn’t always the case. You should find out what your lender charges, along with any additional fees you may incur. There may be additional charges for pulling your credit reports and notary fees. Finding all of this out in the beginning will leave you free from surprises later on.
Can You Lock-In My Rate?
Interest rates fluctuate every day, so being able to lock-in a good rate is important to take advantage of the lowest-possible rate. There is sometimes a charge for this, so be sure to ask if there is a fee for locking-in a rate. You also want to find out how long the rate will remain locked — there’s no point in locking a rate for seven days if it will be a month before for your loan will fund.
How Long Until My Loan is Funded?
When you enter into a contract to purchase a home, the closing date — which the buyer and seller agree upon — is very important. If it’s stated in the contract that you’ll close in thirty days, your loan officer needs to be able to get everything done in that timeframe.
With the right loan officer, your real estate can go much more smoothly. Ask these questions — and any others you can think of — to make sure you’re making the right choice.
If you’d like to get preapproved for a mortgage, or talk more about the best strategy for you to move forward, please reach out. I’m always happy to help.