Gather Information

Last updated: February 4, 2016

Know What to Ask Each Lender

Be sure to gather all important cost information.

Rates

  • Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
  • Ask whether the rate is fixed or adjustable.
    • If the rate quoted is for an adjustable-rate mortgage 
      • Know how the rate and loan payment will vary. 
      • Know if your loan payment will be reduced when rates go down, and if there is a rate cap. 
  • Ask about the loan’s annual percentage rate (APR). 
    • The APR takes into account the interest rate and points, broker fees, and certain other credit charges you may be required to pay. 
    • The APR expresses these factors as a yearly rate.

Points

Points are fees paid to the lender or broker for the loan and are often linked to the interest rate. Usually the more points you pay, the lower the rate.

  • Check your local newspaper for information about rates and points currently being offered.

  • Ask for points to be quoted to you as a dollar amount — rather than just as the number of points — so that you will know how much you will actually have to pay.

Fees

A home loan often involves many fees such as: 

  • loan origination or underwriting fees 
  • broker fees
  • settlement fees (or closing costs) 

Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. “No cost” loans are sometimes available, but they usually involve higher rates.

  • Ask what each fee includes. Several items may be lumped into one fee.

  • Ask for an explanation of any fee you do not understand. 

  • Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet.

Down Payments

  • Ask for the lender's requirements 
  • Know what will be required to verify your funds.
  • Ask about special programs.

Private Mortgage Insurance (PMI)

  • Ask what the total cost will be
  • Ask how much your monthly payment will be with the PMI included

This article is published on KansasMoney.gov. Find more information by contacting these state agencies: