5 Questions to Ask Your Lender Before Buying a Home

When buying real estate at the Lake of the Ozarks, one of the most important things to consider is your mortgage options. While it may seem easier to just go with the first mortgage lender you come across, you may be doing yourself a disservice by not educating yourself before making a final decision. To help you make the right choice for your mortgage needs, here are 5 questions every homebuyer should ask their lender:

1. What type of loan is best for me?
Loans are not all one-size-fits all, and there are several options out there to meet just about any buyer's particular needs. By doing your research, you'll more easily be able to determine which option is best for you. And it's important to choose a home loan that best suits your financial circumstances, because it can save you major money and make sure those payments will likely remain within your financial reach. So, don't be hesitant to discuss your options with your lender before making a final decision.

2. What is the interest rate and Annual Percentage Rate?
First of all, you need to understand that the APR is not the same as the interest rate you pay on your monthly mortgage payment. The annual percentage rate (APR) is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan's term. While it's important to know the APR and what's all included in this fee, it's not the most important factor. You should be more concerned with the interest rate being charged and any "hidden" lender fees that may be charged.

3. What is the loan estimate?
The Loan Estimate tells you important details about the loan you have requested. The form provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the form indicates if the loan has special features that you will want to be aware of, like penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.

4. Is there a prepayment penalty?
A prepayment penalty is a clause in a mortgage contract stating that a penalty will be assessed if the mortgage is prepaid within a certain time period. The penalty is based on a percentage of the remaining mortgage balance or a certain number of months' worth of interest. If you have plans to pay ahead and pay your loan off before the term of your loan, this could be a very important and costly clause if you're not aware of it.

5. What are all the costs? 
Often times, buyers don't realize that there's more to closing costs than just the sale price of the home. Once they get to the closing table, they may be baffled by the closing cost expected of them. Lenders are required to give you a loan estimate, accurately containing all of the costs of your loan. All the costs of a loan include not only fees that go into the lender's pocket but also related third-party vendor fees such as the appraisal, credit report, lender's title policy, inspection reports, escrow, recording fees and taxes.

Buying a Lake of the Ozarks Home
Now when you choose a lender or broker, you can start by asking them the right questions. Once you've determined what your budget is, it's time to find your dream home. We have many different types of homes available on the market right now, from luxury lake homes, comfortable family homes in town, and quaint vacation homes when you need a second home. Visit our website to learn more about what we have available, how we can help you find your home and even a few recommended mortgage lenders in the area!

2011 REALTOR Salesperson of the Year
Missouri Association of Realtors

752 Bagnell Dam Blvd., Suite A
Lake Ozark, MO 65049

Office | 573.365.1555
Fax | 573.365.1766


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