What Questions Should You Ask a Mortgage Lender Before Applying?

Questions About Loan Programs and Qualification

Understanding mortgage lender requirements before applying can help you determine which financing options are realistic.

1. What loan programs do I qualify for?

Ask the lender to explain why particular loan programs may fit your finances rather than simply naming everything available. For example, a conventional mortgage may work for some borrowers, while someone with nontraditional income may need a different qualification method.

2. What credit requirements apply?

Ask what credit score requirements apply to the specific loan you are discussing and whether other parts of your credit history could affect qualification or pricing.

3. What down payment will I need?

Down payment requirements can depend on the loan program, property, occupancy, and borrower profile. Ask for the requirement that applies to your proposed transaction rather than assuming one percentage applies to every mortgage.

4. Do you work with self-employed borrowers?

Self-employed and irregular-income borrowers may need additional documentation. Ask how the lender will evaluate your income and what loan options you may qualify for. 

5. Do you offer alternative mortgage programs?

Borrowers who do not fit traditional qualification guidelines can ask about Non-QM loans and other alternatives. These may include a bank statement loan that uses an alternative method of documenting income or a DSCR loan for qualifying investment properties.

Questions About Rate, Payment, and Fees

Some of the most important mortgage loan questions involve costs, but comparing rates alone can be misleading.

6. What rate can I qualify for, and does it require points?

Discount points are upfront fees paid for a lower interest rate. A similar loan may be available without points but at a different rate, so compare the tradeoff rather than automatically choosing the lowest rate. 

7. What will my estimated total monthly payment be?

Ask for more than principal and interest. Your estimated total payment may also include property taxes, homeowners insurance, and mortgage insurance when applicable.

8. How much cash will I need to close?

Ask for the estimated cash to close, not simply the down payment. The Loan Estimate provides an estimated cash-to-close figure that accounts for the different amounts due and credits involved in the transaction.

9. What lender fees will I pay?

Ask the lender to identify its origination charges and explain what each covers. Common mortgage lender fees can include origination, underwriting, processing, application, verification, and rate-lock charges. When choosing a mortgage lender, compare total origination charges for similar loans. 

Questions About Documents and Underwriting

The documents a lender requires can vary based on your income, finances, and loan program. 

10. What documents will you need from me?

Documentation requirements can vary based on how you earn income and the loan you are seeking. You do not have to provide verification documents to receive a Loan Estimate, although providing accurate information can make the estimate more useful.

11. What could cause my application to be denied?

Ask which requirements could affect approval for the specific loan you are considering, including credit, income, assets, debt, and property requirements. If you have already been denied a mortgage, understanding the reason can help you discuss other options with a lender. 

12. Do you see any potential problems with my application?

This is one of the most useful questions to ask a lender before applying. Ask the lender to identify potential red flags involving your income documentation, credit history, available funds, property type, or other details that could limit your options or require additional documentation.

Questions About Closing and Rate Locks

Before closing, ask about the timeline, possible delays, and how your rate lock works. 

13. How long will closing take?

Ask for a realistic estimate based on the loan and your situation, especially if you have a contractual closing deadline.

14. What could delay my mortgage?

Documentation problems, application changes, or verification issues can cause delays. For example, a low appraisal or difficulty documenting income may require the lender to revise the Loan Estimate.

15. When can I lock my rate?

A rate lock keeps the interest rate from changing before closing as long as you close within the specified period and relevant application information does not change. Policies vary by lender.

Ask how long the lock lasts, whether it costs anything, what an extension costs, and what happens if closing is delayed.

16. Are there prepayment penalties?

Most residential mortgages do not have prepayment penalties, but borrowers should still ask. When permitted, a penalty can affect the cost of refinancing, selling the home, or paying off the loan early. 

17. Can I refinance later?

Ask whether anything about the loan could make refinancing later more difficult or expensive. If refinancing may be an option down the road, current mortgage rate conditions can provide useful context, but future rates are unpredictable. 

Questions for Investors and Nontraditional Borrowers

The right questions to ask about a home loan can be different for investors and borrowers with less conventional finances.

18. Does the lender regularly handle my type of financing?

Investors should ask about investment property financing and the lender’s experience with their property type and loan structure. If you plan to hold the property through a business entity, understanding how to buy an investment property with an LLC can help you prepare. 

Financing also varies by strategy. Fix-and-flip investors, for example, may consider hard money loans while borrowers seeking alternative income documentation can review what a stated income loan is before discussing their options with a lender. 

Questions About Who Handles Your Mortgage

It also helps to know who will manage your loan before and after closing. 

19. Who will manage my loan before closing?

Ask who will handle questions, request documents, and provide updates during processing and underwriting. You should also know whom to contact if an issue could delay your closing. 

20. Who will service the mortgage after closing?

Loan servicing covers your payments and account after closing. Your Loan Estimate will indicate whether the lender currently plans to service the loan or transfer servicing to another company. This may not make one loan better than another, but it can help you know what to expect. 

How to Choose a Mortgage Lender for Your Situation

Choosing a mortgage lender is about more than finding the lowest advertised rate. Compare the complete loan structure, qualification requirements, closing costs, documentation, timeline, rate-lock terms, and the lender’s experience with borrowers like you.

For borrowers with unusual income, investment properties, or circumstances that do not fit traditional mortgage guidelines, Phast Funding offers conventional and alternative financing options.

The best questions to ask before getting a mortgage are the ones that reveal exactly what you are being offered and what will be expected of you. Ask for specific answers, compare the numbers in writing, and make sure the loan you apply for matches your finances, property, and plans.

Have questions about your mortgage options? Contact Phast Funding to discuss your income, property, financing goals, and available loan options.