Questions to Ask a Mortgage Lender
Questions to ask a mortgage lender, broker or loan officer before you commit: rate against APR, itemized fees, mortgage insurance, rate locks, escrow, and who actually handles your file. Written for buyers who are getting pre-approved for a mortgage or about to apply, and who want more than one quote for the same home loan.
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The questions
Each question, and why to ask it
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.
What do I pay when I apply, and which of those charges are gone if the loan does not close?
Why ask it
Credit report, application and appraisal charges are often collected early, and refund rules differ from one lender to the next. The answer is also the price of switching lenders halfway through.
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.
If you are a mortgage broker, which lenders can you place my loan with, and how are you paid?
Why ask it
A broker's panel can be a handful of lenders or several dozen, and the fee may come from you, from the lender, or sit inside the rate. What a broker has to disclose depends on the country and state, so ask how it works where you are buying.
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.
Are you licensed as a mortgage loan officer in the state where I am buying, and where can I check that?
Why ask it
In the United States, loan officers are listed in a national registry (NMLS) with a public lookup of their licenses and any regulatory actions. Other countries keep their own registers, so ask which body they answer to and look them up yourself.
What will my full monthly payment be with taxes, insurance, and any dues included?
Why ask it
Quoted payments often cover principal and interest only. Taxes, hazard insurance, mortgage insurance, and association dues can add several hundred dollars, and an escrow figure built on the seller's old tax bill will understate the first year badly.
How much cash will I actually need at closing, all in?
Why ask it
Buyers budget the down payment and get blindsided by prepaid property tax, the first insurance premium, escrow funding, and per-diem interest. A lender who can total it to the dollar has read your file rather than a template.
Which of these fees are yours, and which are set by third parties?
Why ask it
Origination, processing, and underwriting fees belong to the lender and are where the margin sits. Appraisal, title, and recording charges are third-party and roughly fixed, so a suspiciously low third-party column usually means a lowballed estimate you will still pay.
Are you charging discount points, and are any of your own fees negotiable?
Why ask it
Points buy the rate down permanently, so the figure to compare is cost per eighth of a percent. Watch for the offer with an attractive rate and an origination fee that quietly equals the discount.
Is there a rate or fee discount for keeping my accounts at your bank, and what do I have to maintain to hold on to it?
Why ask it
Banks and credit unions sometimes trim the rate or a fee for customers who keep deposits with them or pay by automatic transfer. Get the condition and the size of the discount in writing, and ask what happens if you move the account in year three.
Which credit score are you using, and how close am I to a better pricing tier?
Why ask it
Lenders price off the middle of three bureau scores, and pricing steps in tiers rather than sliding. If you sit a few points under a break point, the answer worth having is how many points and which account would move you.
Can you run this same loan at fifteen, twenty, and thirty years so I can compare the total interest?
Why ask it
Seeing the three side by side moves the decision from monthly payment to lifetime cost, which is usually a different answer. Reluctance to run it marks an order taker rather than an adviser.
If I take an adjustable rate, when does it first adjust, what is it tied to, and what are the caps?
Why ask it
The introductory rate is the least important part. If they cannot state the first adjustment date and the periodic and lifetime caps from memory, they are probably not explaining the downside to anyone.
What is the difference between the pre-qualification and the pre-approval you offer?
Why ask it
The two words get used loosely and involve very different amounts of verification. Listing agents know the difference, so the answer decides whether your offer reads as real money or as a wish.
Will getting pre-approved put a hard inquiry on my credit, and can it wait until I am ready to make offers?
Why ask it
A pre-qualification is often a soft check, while a full pre-approval usually shows on your report as a hard inquiry. Ask which one they run and when, so it lands in the same few weeks as your other quotes.
How long is the pre-approval letter good for, and what do you need from me to renew it?
Why ask it
Every letter carries an expiry date, and the length is the lender's choice. A house hunt that outlasts it means newer pay stubs and statements, and possibly another credit pull.
Has an underwriter looked at my documents for this pre-approval, or only the automated system?
Why ask it
A letter issued after a person has read the tax returns and bank statements is far less likely to come apart later than one printed from software findings. Listing agents sometimes phone the lender to ask exactly this.
Can you reissue the letter at the price of each offer instead of my maximum?
Why ask it
A letter showing your ceiling tells the seller how much room is left to negotiate. Find out who can turn a new one around on a Sunday afternoon, because offers rarely wait for office hours.
What happens to my approval if I change jobs, take on a car payment, or lose overtime before closing?
Why ask it
Employment and debts get re-verified shortly before closing, which is how people lose loans by financing furniture. Their answer is effectively a list of things not to do for the next two months.
Can you close by my contract date, and will you put that in writing for the seller?
Why ask it
A lender willing to write a letter to the listing agent is staking their reputation on your file. Hesitation at this point tells you how confident they really are, and can also strengthen your offer in a competitive market.
Is this loan assumable by a future buyer?
Why ask it
Some government-backed loans can be taken over by a qualified buyer while most conventional ones cannot. If rates rise after you close, an assumable loan becomes a selling point worth real money.
If rates drop after I close, what would refinancing with you actually cost?
Why ask it
Some lenders credit or waive their own fees for returning borrowers. A specific policy is worth writing down; a warm assurance that they will look after you later is worth nothing at the closing table.
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.
Bank, mortgage broker or loan officer
A bank or credit union lends from its own programs, a mortgage broker places your application with one of several lenders, and a loan officer is the person at either who takes it. The list works for all three, but the first answer tells you where to press: a broker on how they are paid, a bank on how narrow its range of programs is.
Getting pre-approved for a mortgage
Ask what the lender verifies before writing the letter, how long it lasts and whether the credit check is a hard one. A pre-approval is not yet a commitment to lend: the property still has to appraise, and income and debts are checked again before closing. Terms differ by lender and by country, so ask how it works where you are buying.
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.