Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

3 Must-Ask Questions When Getting a Mortgage

By Nathan Hamilton - Mar 2, 2017 at 6:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Asking lenders these three questions could help you close quickly and save money.

A smiling man and woman talking to another man at a table covered with pens, papers, a book, and a tablet.

Image source: Getty Images

The process of searching for a new home and securing a low mortgage rate can be time-consuming. But, finding the right mortgage for you doesn't need to be complicated, especially when you can ask lenders a handful of simple questions. Uncovering the answers will not only ensure you end up landing that house you've had your eye on but could also reduce out-of-pocket costs.

With that in mind, Motley Fool analysts, Kristine Harjes and Nathan Hamilton, discuss in the following video three questions new homebuyers and refinancers should ask their mortgage lenders. Understanding mortgage pre-approval, your lenders turnaround time, and origination fees could mean the difference between eventual homeowner bliss or falling short of budgeting goals. 

Kristine Harjes: All right, future homeowners. You are ready to get a mortgage and you're sitting down at the table with your lender. What are the most important questions to ask them?

Nathan Hamilton: So we've narrowed it down to three. These aren't all encompassing, but they are three very important questions to ask your mortgage lender. And the first one is if you're looking at a house, and you think the market's going to move quickly on it, and you need to close quickly, this is an important one. It's simply, "How long does it take to close a mortgage? What's your turnaround time?"

As I mentioned, it matters because there are a lot of hot markets across the U.S., housing-wise, and there may be multiple offers on a home. There may be cash offers and so forth. Understanding how long it takes to turn around that offer helps set expectations between the buyers and sellers.

Harjes: Exactly, and that's probably another way in which you can shop around.

Hamilton: Absolutely.

Harjes: What's another question that you should ask?

Hamilton: "What fees will I be on the hook for?" And this varies. I'd love it if there was some standardization in the mortgage industry, but you can't compare rate apples to apples anymore, and some mortgage lenders will include some fees. Some will negotiate other ones. It's just very hard to get down to the details without asking. So it should be something going through each line item that you ask your lender. What fees am I on the hook for? At closing, are these rolled into the mortgage, and so forth?

Harjes: And you're entitled to that information, but if you don't ask, you might not get it.

Hamilton: Exactly.

Harjes: What's the last question?

Hamilton: So I touched upon it briefly in the last one, but "Will any of those fees be rolled into the mortgage?" And what I mean by rolled into the mortgage is am I paying those fees up front, out of pocket, or are they fees that are going to be added on top of the actual mortgage amount, and essentially you'll be incurring interest on those. It's not an out-of-pocket cost, but it is an out-of-pocket cost over the life of that loan.

And why it's important is any number you're adding on top of your mortgage -- any more additional money that you're borrowing over 30 years -- can have a huge impact on the interest you're paying. So it is very important to think, "Do I have the money to pay these fees up front?" If you do, you're going to reduce the cost of your mortgage and the all-in costs. If you don't, think about which ones could be rolled in the mortgage, and what ones the lender does offer.

Harjes: Right. As you mentioned, this can make a huge difference, so when you're shopping around, make sure that you go calculator in hand, and prepare to ask these three questions.

Hamilton: Checklist, calculator, details. Be informed.

Harjes: Absolutely. And make sure that you check out fool.com/mortgages, where you can compare different rates and also get in contact with certified lenders. You can also download our free mortgage guide called "5 Tips to Increase Your Credit Score Over 800."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.