First-Time Home Buyer: 3 Questions to Ask a Mortgage Broker

As a first time home buyer there is a good chance that you may be confused about the process. While getting a mortgage can be a very exhilarating experience, it can be a little overwhelming as well. When you start talking to mortgage brokers about the process, there are going to be many questions that cross your mind. Here are a few of the most important questions that you need to ask the broker. 

1. Do you have any first time home buyer programs?

As a first time home buyer, you will have many more options in front of you compared to other buyers. There are many programs out there that are designed for first time home buyers. Many of them will allow you to come up with a smaller down payment than you normally could with a traditional mortgage. In addition to a smaller down payment, you may be able to secure a lower interest rate as well. First time home buyer programs traditionally allow those with questionable credit to get approved easier also.

In addition to favorable loan terms, there are many first time home buyer programs that will actually give you money for down payment assistance. This amounts to free money that does not need to be repaid. Therefore, asking about first time home buyer programs could save you a lot of money overall.

2. Is this an introductory rate?

With the mortgage industry always coming up with new products, you want to make sure that you understand what you are agreeing to. Many home buyers have unwittingly signed up for mortgages that they did not understand. You might see a low 3% interest rate being displayed on the paperwork. However, what you might not realize is that this rate is only good for the first six months of the loan. Then the loan jumps up to 9% interest. Be aware of any unusual clauses with the loan and make sure that you fully understand them before you sign on the dotted line. 

3. What are the closing costs?

Many times, mortgage lenders will not disclose all of their closing costs on the front end. They may try to get you to agree to the loan before you fully understand how much you will be paying. Do not allow them to do this to you. By law, they are mandated to give you a good faith estimate of all of the costs associated with the loan within three days of you submitting the loan application. This means that you are entitled to know what the loan will cost you before you do anything. Otherwise, you could end up getting in over your head quickly. 

Closing costs can amount to several thousand dollars in most cases. Many closing costs are actually negotiable as well. Therefore, you should be sure to shop around and find the best deal on closing costs before you agree to a loan.