Buying a house is a significant milestone with a seemingly complex process, but working with a mortgage lender makes it easier. They keep up with the current market rates and determine how much you qualify for on a loan. However, for those who have never made such a purchase, knowing what to ask may prove difficult. Here’s a closer look at some important questions that can increase your understanding and chances of a successful purchase. 

What Should Buyers Discuss With Mortgage Lenders?

1. What Type of Home Loans Are Available? 

Each home loan offers a different set of features, and knowing the options helps determine which is best for you. 

For example, a fixed-rate loan locks in the interest rate so it won't fluctuate, while variable-rate loans experience a gradual increase after a certain timeframe. 

Then there are first-time homebuyer (FHA) loans designed to increase accessibility and provide assistance with down payments and closing costs. If you're a veteran, loans are available through the United States Department of Veterans Affairs (VA) that offer competitive rates and come with a government guarantee.

2. How Much Is My Down Payment? 

Down payment requirements vary based on loan type. Those that come through the United States Department of Agriculture (USDA) and the VA don't usually require a down payment to make home purchases possible for lower-income families. 

Other loans require a minimum amount. Usually, mortgage lenders require at least 20% of the entire home cost to complete the sale. If they run the numbers and find your credit score to be in good standing, then there's a chance that you could qualify for a much smaller amount. 

If you're taking out a conventional loan and not putting 20% down, then the mortgage company might require you to secure private mortgage insurance (PMI). While this will increase the monthly payments, it offers a level of protection until you build up enough equity. 

3. What's the Difference Between Prequalification & Preapproval?

Prequalification typically happens at the start of the home buying process and gives you an estimate on the amount you can borrow based on a credit check and details on personal finances. Preapproval is the process of completing an application for a mortgage and receiving an offer letter verifying that you qualify for a certain amount. While this doesn't require an immediate commitment, a preapproval is only valid for 90 days.

If you’re considering a home purchase, reach out to Shelly Winston of Caliber Home Loans. Located in Ooltewah, TN, this local mortgage lender is highly skilled and works closely with her clients to ensure they fully understand the available options. She offers various real estate services, including FHA and VA loan programs, and maintains a wealth of resources. Visit the website for details on the home buying process, or call (423) 902-8237 to schedule a consultation.