Committing to a mortgage is one of the most important decisions one makes in life. Therefore, asking the right questions to your mortgage brokers in Cork can lead to better clarity and understanding. Especially if you’re a first time mortgage purchaser, asking relevant questions will save you from headaches later. If you don’t find the answers satisfactory, you can continue shopping and talk to a different broker who understands your concerns and gives clear answers. Transparency is an important factor to consider while loan shopping and asking the following questions will help you make up your mind.
Question #1 Which type of loan works best for you?
When we talk about mortgages, only two types of loans come to mind- fixed and variable. But loans are much more than fixed and variable. You should ask your lender about the pros and cons of interest-only loans, adjustable-rate loans, and fixed rate loans. Also which one works best for you given your current financial situation and future projections.
Exploring different types of loans gives you more options to choose from. Many lenders offer additional schemes on loans which may be beneficial or misleading. Talk to your mortgage broker regarding the same.
Question #2 How much Down Payment you’re required to pay?
Different types of borrowing require different down payments. First time home buyers need to put down a minimum of 10% deposit. If you’re moving houses, the minimum deposit goes up to 20%. As an investor, you’ll be paying at least 30% deposit. Talk to your mortgage broker about the different deposit options and how you can bring down your monthly payments. Finding the minimum deposit for mortgage insurance eligibility is another important factor to consider while making a choice. Technically speaking, a larger deposit brings down your monthly payments and vice versa.
Question #3 What is meant by Annual Percentage Rate (APR)?
While interest rate is the rate at which interest is charged, Annual Percentage Rate is the total cost of mortgage. It is calculated through a complex equation that includes interest rate, lender fee, and other mortgage costs and divides it by loan term. It is usually higher than the interest rate and reflects the total mortgage cost. APRs are calculated differently for different types of loans. For example, APR of adjustable-rate mortgages does not equate to the maximum interest rate. Avoid comparing APRs of different types of mortgages because their interest rate fluctuations and total costs can vary.
Question #4 How much is the mortgage closing time?
Mortgage closing is the time when paperwork is complete and funds are released. After mortgage closing, the borrower becomes liable to payback the loan amount. Mortgage closing date is the same as the property purchase closing date. Hence it’s important to have a concrete estimate of the mortgage closing date. The time taken to close the loan wholly depends on the lender. Average loan processing time is around 43 days. Ask if there are any obstacles that may push forward the estimated time. Lenders should be able to provide an accurate or near accurate closing date for the entire process to be smooth and streamlined.
Question #5 What are the total costs involved in getting a mortgage?
Transparency is important while purchasing a mortgage. Knowing how much you’ll be required to pay apart from deposit, broker fee, and monthly repayments. Charges to consider are lender fee, escrow service charges, appraisal fee, charges for credit reports, title fee, cost of pest inspection, and applicable taxes. All these charges may add up to be a lot and you may find yourself overwhelmed by the surprise. Talk to your mortgage brokers in Cork about the additional charges you’ll be required to pay and compare them with other mortgage providers. It should be worked out before applying for the loan.
Knowing what questions to ask your mortgage brokers is an important step towards making the right mortgage decision. Good additional points to ask could be in rate lock-in period, the prepayment penalties, and are on-time closings guaranteed or not. Queries regarding discount points are also not uncommon. Inquire about the government funded schemes for first time home buyers and their eligibility criteria. Keeping these questions in mind and asking them at the time of loan purchase is crucial for taking the right decision.
