Questions to Ask Your FHA Loan Officer
Some people know enough as new borrowers to ask some of the right questions, but others might not know there are some questions whose answers are not quite as meaningful without other information.
Closing Costs vs. Interest Rates
If you shop around for an FHA lender for your condo loan, mobile home loan, or new construction loan, asking about interest rates is a no-brainer. You want to know how much your loan will cost you. But when comparing lenders, don’t stop there. Ask the lender for both rates AND closing cost estimates so you can see how these costs look side-by-side.
Some lenders will keep interest rates the same and hike closing costs in times when rates are moving higher. Other lenders may keep closing costs lower but hike the rate. You’ll want to know the facts and figures for both.
Ask Your Lender About APRs
Don’t stop the conversation about interest rates--quiz your lender about the Annual Percentage Rate or APR on the loan. APRs take into account the fees associated with the loan and not just the going rate. APRs are important.
Ask About Mortgage Insurance
Some wonder if FHA loans require mortgage insurance. The short answer is yes, for either 11 years or the full lifetime of the loan.
We’re not advising you, in this case, to ask about canceling mortgage insurance or avoiding it as FHA mortgages do require a mortgage insurance premium (though not PRIVATE mortgage insurance).
Instead, what you should consider asking the lender in this area? How much it may cost to finance the Up Front Mortgage Insurance Premium and how much it might raise your monthly payment.
Some choose to finance the premium to save money out of pocket on the loan--if that is your priority, be sure to ask early. If the amount of your monthly payment is still affordable with the financed insurance option, it may be a good thing to think about.
Your participating lender may have an incentive program for certain types of borrowers. Your FHA loan options could include certain perks for first-time buyers that repeat borrowers don’t get (depending on the lender, the FHA does not favor first-time borrowers) or vice versa. You may get a loyalty perk for being an existing customer, or you may be offered an incentive as a new customer.
What Is an FHA Loan?
Using an FHA Loan Calculator
Meeting FHA Loan Guidelines Improves Your Chances
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