Brokers are an important link in the loan application process. They not only act as an intermediary between you and your lender but also present multiple loan options in front of you and further guide you with the loan verification process.
They provide upfront information and are well versed in the money lending market; they can steer you in the right direction. It is, therefore, advisable to contact a mortgage broker while applying for a mortgage loan because the process can be complicated if you do it by yourself. It is even more important to avail information from them by asking your quires.
So, here's a list of 7 important questions you must consider asking your broker before making a big move in the market.
1. What are all lending options available?
A mortgage broker will have a pool of lenders from which you can pick according to your convenience. The money lending business is handled by the bank and non-banking lenders.
As you get into the entire money-borrowing business, it is very important to know all the sources and options that are available to you. Ask the lending agencies about the pros and cons of each option available to you and get an estimate of what would be profitable and more convenient for you, depending on your job profile and budget.
Try to avail as much information as possible in this regard and do not make decisions in haste. Explore the options of interest-only loans, amortization loans, fixed-rate loans, and adjustable-rate loans. It is advisable to follow the advice given by the brokers to make a healthy decision. They are gelled in the market, and they know which option could suit you according to your financial condition.
2. What is the interest rate?
A good agency will guide you based on the Comparison rate rather than the interest rate. You will want to have a low-interest rate on your loans, but a mortgage broker will analyze it for the long term and present you with a comparison rate.
Also, rates could be fixed or variable. Brokers will help you make better decisions based on your financial situation.
3. Is there any down payment required? If yes, how much?
Down payments are usually required. The amount of down payment differs by lending institutions, the loan amount, tenure, etc. However, a broker will help you bring it down to as low as 3%. Quite often, a payment of 20% is incurred.
4. What is the process of loan approval, and how long can it take?
There are various levels at which a loan is sanctioned. In case of clear documentation without any visible faults in the profile, a loan can be approved in as less as 15 days.
A broker will guide you with the documentation process and will also try to smoothen up the procedure. Be sure to ask additional questions in this case to get a clear idea of what you are getting into.
5. Are there any additional costs involved?
A loan estimate is presented by all agencies to the clients, which gives detailed information on all the extra costs and taxes involved. This estimate can give you an overall idea of the costs that are involved in the entire process. Request your mortgage broker to provide you with an estimate of the time to proceed.
6. Will you be provided with an on-time closing?
On-time closing could be an issue involved and a matter of concern. Ask them whether they'll take the responsibility of closing your transactions on time and, if not, what is liable to happen to the additional costs incurred in this period. It is important to get a schedule according to which you will process your loans. A clear-cut idea about the entire process must be gained before borrowing.
The Bottom Line:
Remember, you are not limited to asking these questions only. It is important to have a fair idea about the process and the more you ask, the more knowledge you will gain. The lending and borrowing market is complicated and at any time you can be in the trap of some unauthenticated lenders. Such cases happen in this market as usual like in other markets. So, it is better to clarify all your doubts by questioning the broker to avoid issues in the latter phase.
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