What Questions to Ask a Mortgage Lender
Questions for a first conversation with a mortgage lender, covering rate quotes, the Loan Estimate, mortgage insurance, underwriting, and closing timelines. Written for buyers comparing two or more lenders before they commit.
The questions
Open any question for the note
Are you a bank, a credit union, or a broker, and who actually funds the loan?
Why ask it
Brokers shop several wholesale lenders and often do better with unusual income; a bank can only sell its own products. If the person cannot say plainly who underwrites and who funds, you are talking to a salesperson with no access to the decision.
Which loan programs do I qualify for, and which one would you put me in?
Why ask it
A useful answer names two or three programs and the tradeoff of each. A lender who recommends one product before asking about your down payment, your credit, or how long you plan to stay is fitting you to their inventory.
What rate can you offer me today, and what assumptions is that number based on?
Why ask it
Rates move during the day, so a number without a date, a lock period, and the assumed credit score, down payment, and property type is not a quote. Lenders who resist stating the assumptions are quoting a rate you will not get.
How long can I lock that rate, what does the lock cost, and who pays if closing runs late?
Why ask it
Locks usually run 30 to 60 days and extensions cost real money, often a fraction of a point per week. The answer you want is who absorbs that cost when the delay came from the lender's side, not yours.
Can you send me a written Loan Estimate so I can compare it line by line?
Why ask it
The Loan Estimate is a standard three-page federal form, which makes it the only clean way to compare lenders. Reluctance to produce one is a sign the verbal number will not survive contact with underwriting.
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.
What is the smallest down payment I can make, and what would putting down more change?
Why ask it
Low down payment programs exist, but the amount you put down moves both the rate tier and the mortgage insurance premium. Ask for the payment at two or three down payment levels instead of one, since the curve is rarely smooth.
Will I have to pay mortgage insurance, and what exactly makes it go away?
Why ask it
Conventional mortgage insurance ends near 20 percent equity and can sometimes be removed early with an appraisal. On most FHA loans it lasts the life of the loan, which many buyers discover only when they try to refinance.
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.
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 will you calculate my income if it includes bonus, commission, or self-employment?
Why ask it
Variable pay is usually averaged over two years, so a strong recent year gets averaged down. If you are self-employed, find out whether they work from net or gross and which tax years they will count, because that single choice can decide the file.
What debt-to-income ratio am I at right now, and how much room is left?
Why ask it
Most programs cap total debt payments somewhere between 43 and 50 percent of gross income. Knowing your current number tells you whether financing a car or opening a store card before closing would sink the approval.
What documents do you need, and what tends to stall files like mine in underwriting?
Why ask it
The document list itself is routine. The valuable half of the answer is the failure list: large unexplained deposits, gift funds without a paper trail, employment gaps, side debts that never made it onto the application.
After I apply, who handles my file day to day, and how quickly do you return calls?
Why ask it
Most loan officers hand the file to a processor once it is sold. Ask for a name and a response-time commitment, because the person who saves your closing date is usually not the person who sold you the loan.
How long does it take you to get from application to closing, on recent files?
Why ask it
Thirty to forty-five days is common. Push past the best case to their actual recent average and the share of closings that slipped, since a lender who has never measured this cannot manage it either.
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 there a prepayment penalty, and can I pay extra toward principal from the first month?
Why ask it
Penalties are rare on standard mortgages but do appear on some non-qualified products. Confirm that extra money is applied to principal immediately rather than held in a suspense account or treated as a prepaid installment.
Do you keep and service this loan, or will it be sold to another company?
Why ask it
Servicing decides who takes your payment, manages the escrow account, and answers when something goes wrong. A lender who sells servicing at once cannot promise you anything about the next twenty-nine years of the relationship.
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.
Shopping lenders without losing the thread
Practical guidance for the conversation itself
Before the first call
Pull your own credit first
Check all three bureaus yourself so you know your middle score before a lender tells you. Errors take weeks to correct, and finding one after you are under contract is how buyers lose earnest money.
Decide how long you expect to keep the house
The answer changes which product makes sense. Paying points to buy the rate down only pays off if you hold the loan past the breakeven point, which is usually four to seven years.
Gather two years of income documents
Tax returns, W-2s, recent pay stubs, and two months of full bank statements. Having them ready is what separates a two-week pre-approval from a two-day one.
How to compare offers honestly
Collect quotes inside the same short window
Rates move daily, so a quote from Monday and one from Thursday are not comparable. Ask each lender for a Loan Estimate on the same day and give them the same numbers to work from.
Read page two, not page one
Page one carries the rate and payment. Page two itemizes what the loan costs to get, which is where identical rates turn into offers that differ by thousands of dollars.
Credit inquiries cluster
Mortgage inquiries made within a short shopping window are generally scored as one event, so applying to several lenders does not compound the damage to your score the way people fear.
Answers that should worry you
- A rate quoted without the assumptions behind it, or one that changes when you ask for it in writing.
- Pressure to lock immediately on a file the lender has not yet reviewed.
- Fee estimates that arrive only verbally, or a Loan Estimate that keeps being delayed.
- A payment quote that omits taxes, insurance, and association dues to look competitive.
- Vagueness about who will handle the file after application, or about who to call when a deadline slips.
- Encouragement to leave a debt or a side job off the application because it will not be checked.
Between pre-approval and closing
- Do not open new credit, finance furniture, or change jobs without telling your lender first. Underwriters re-pull credit and re-verify employment shortly before closing.
- Keep the paper trail intact. Move money between accounts as little as possible, and document any deposit that is not payroll.
- Answer document requests the same day. Files stall far more often on waiting for a borrower than on underwriting itself.
- Read the Closing Disclosure against your Loan Estimate line by line. You are entitled to it three business days before closing, which is enough time to challenge a fee that grew.