Real Estate

Questions to ask a Lender

Sat Apr 05, 2008 8:04 pm
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The Questions Buyers Need to Ask the Lender

Once a Buyer(s) have made the decision to make a real estate purchase, and have begun the process of looking for a lender, attorney and a Realtor, there are some relevant questions to ask.

First questions to a lender.

Can we lock into a rate?
Will we be able to get the lower rate at closing, should the rate go down, if we have already locked in a rate?

The answer should be yes to both of these questions.

Credit Scores and Rate Differences

The key to the best rate available is a good credit score. Credit scores can be obtained by checking with one of the credit scoring agency's. It is important to understand the difference between a fixed and adjustable rate. In most cases a fixed rate is the most desirable. Make certain you understand an adjustable rate has certain provisions that may cause a significant increase in your rate and payment at a preset time in the loan agreement. So, do not accept an adjustable rate unless you are totally comfortable with the consequences.

Second question to the lender.

What if any special conditions are we obligated to if we accept a loan from your lending institution?

Do not go to the closing table and be hit with any surprises. This is the purpose of a competent real estate attorney. If you have any concerns it is mandatory that you get the answers that suit your needs. Do not sign any documents without having the proper review by your attorney.

Make certain that you have all conditions in writing from the lender by way of a good faith estimate of closing costs prior to closing. Have your attorney review for accuracy.

Third Question to the lender

Will we be subject to any sudden changes in our loan just prior to closing, such as on the day of closing?

If you have a fixed or adjustable rate and you have not made any large purchase since you applied for the loan (bought a car or boat for example), there should not be any reason to have a problem on the day of closing. The loan ratios need to be essentially the same just prior to closing as they were when you applied for the loan. A car purchase would have a major negative impact on the loan/debt ratios. So be prudent, do not do anything that would raise this as an issue.

There are other questions that may be particular to your loan and that is another very good reason to have an attorney for guidance.

Other Articles

Step One:

The Decision to Purchase Property

Step Two:

Attorney and Buyers Agent

Step Three:

Involving a Real Estate Attorney

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