Questions to Ask a Mortgage Lender
Questions to ask a mortgage lender or broker before you commit: rate against APR, itemized fees, mortgage insurance, rate locks, escrow, and who actually handles your file. Written for buyers comparing more than one quote.
The questions
Open any question for the note
Are you a broker or a direct lender?
Why ask it
Changes who sets the price and who you chase when the file stalls. Brokers shop several lenders and are paid by one of them, and knowing which you are dealing with explains a lot of the later answers.
What rate can I get today, and what is the APR on it?
Why ask it
The rate and the APR differ by roughly what the fees cost you. A gap of much more than a quarter point is telling you where the money is.
Is that quote based on my actual credit pull or an estimate?
Why ask it
Quotes built on an assumed score move once the file is real. Ask which score model they use and which pricing band you land in.
Can you send me the itemized fees in writing?
Why ask it
Ask for the Loan Estimate rather than a verbal summary. Origination, underwriting, processing, and discount points are separate lines, and some of them are negotiable while others are fixed third-party costs.
Which loan programs do I qualify for, and what does each one cost me?
Why ask it
Conventional, FHA, VA, and USDA loans carry different insurance and fee structures. A lender who quotes only one may only be approved for one.
What down payment would change my rate, and by how much?
Why ask it
Pricing moves in tiers rather than smoothly. Finding the next threshold sometimes saves more than any amount of haggling over the rate.
If I need mortgage insurance, what does it cost and when does it end?
Why ask it
FHA insurance can run for the life of the loan while conventional coverage usually stops at a set equity point. Ask which applies to you and get the date or the number, not the principle.
What debt-to-income ratio are you working to, and where do I sit against it?
Why ask it
Tells you how much headroom you have before a new car payment breaks the file. Useful to know before you buy anything else mid-process.
How long can you lock the rate, and what does an extension cost?
Why ask it
Locks expire and closings slip. Get the extension fee in writing now, because you will be asking about it at the worst possible moment otherwise.
What could change this rate between now and closing?
Why ask it
A low appraisal, a credit change, a condo with a troubled association: each can reprice a loan. You want that list at the start rather than a week before closing.
What documents do you need from me, and by when?
Why ask it
Ask for the complete list on day one. Most delays trace back to a gift letter, a business return, or a bank statement page requested late.
How do you handle self-employed or variable income?
Why ask it
Two years averaged, add-backs for depreciation, and how they treat a strong recent year. Lenders differ far more here than they do on rate.
Who underwrites this, and are they in-house?
Why ask it
In-house underwriting usually means quicker answers on an unusual file. Outsourced underwriting is why questions come back in batches days apart.
What is your average time from application to closing right now?
Why ask it
Ask for a current figure rather than a brochure one. It decides what closing date you can safely put in an offer.
Will you sell this loan, and do you know who would service it?
Why ask it
Most loans are sold. It matters because the company taking your payments, and handling any future hardship request, may not be the one across the desk.
How will the escrow account work, and what happens when the tax bill rises?
Why ask it
Escrow shortages arrive as a payment increase about a year in. Ask how they set the opening cushion and how a reassessment gets handled.
Is there a prepayment penalty, and how do extra payments get applied?
Why ask it
Some servicers hold extra money as a future payment unless told to apply it to principal. Ask what instruction to give and whether it can be set once and left.
What happens if the appraisal comes in below the purchase price?
Why ask it
You want the process before you need it: dispute, second appraisal, renegotiation, or more cash down. This is the most common late failure point in a purchase.
Which down payment assistance or first-time buyer programs are you approved for?
Why ask it
Plenty of lenders are not set up for state and county programs. Asking now avoids discovering it after your file is halfway through.
Who will I be dealing with after today, and how do I reach them?
Why ask it
Loan officers hand files to processors. Get the name and ask what response time to expect when something needs an answer the same day.
Comparing lenders properly
Practical guidance for the conversation itself
Before you call
Know your own numbers
Pull your credit report, add up monthly debt payments, and work out what cash you have after closing costs. A lender can only quote against real figures, and you can only judge a quote if you already know them.
Shop inside a short window
Several mortgage inquiries in a short period are generally treated as one event by credit scoring models. Doing all your quotes in the same fortnight also keeps them comparable, since pricing moves week to week.
Ask for the same scenario from everyone
Same purchase price, same down payment, same lock length, same day. Otherwise you are comparing quotes built on different assumptions and the cheapest one is just the most optimistic.
Reading two Loan Estimates side by side
- 1Compare APR before rate, then look at what created the difference.
- 2Separate lender fees from third-party costs. Only the first group is worth negotiating.
- 3Check whether points are baked into the rate you were quoted.
- 4Look at the monthly payment line and confirm whether taxes, insurance, and mortgage insurance are included.
- 5Check the lock period on each. A thirty day lock is cheaper than a sixty day lock for a reason.
- 6Add up total cost over the years you realistically expect to hold the loan, not over thirty.
Warning signs
- A quote that only ever arrives verbally, or a Loan Estimate that keeps being delayed.
- Pressure to lock today because the market is about to move.
- A rate well below every other quote with no explanation of what pays for it.
- Vagueness about who services the loan or who underwrites it.
- Fees that appear or grow between the Loan Estimate and the Closing Disclosure without a stated reason.