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Dealing with a mortgage loan broker is not something that most people do on a regular basis, since getting a mortgage is typically a once or twice in a lifetime event. However, it is very important to know what you're doing when the time comes, and knowing what to ask is half the battle. So, here are a few essential questions that you should ask your mortgage loan broker.
What is the Interest Rate?
The most basic thing you need to know about the potential loan you are getting is what the interest rate is. The interest rate determines how big your payment is and how much money you will pay over the course of your loan. Without this knowledge you cannot properly evaluate what they are offering. Be sure to ask about discount points, too, and how they can affect your rate and your overall loan.
Is There a Prepayment Penalty?
Finding out about a potential prepayment penalty is also important. If you sell the house or refinance, the last thing you want is to pay another fee to the mortgage company. Prepayment penalties can be very expensive. Typically, the fee is equal to six month’s interest.
What Are the Terms?
The repayment terms of the loan are critical. Be sure you know when your loan becomes due. For example, be on the lookout for balloon terms, because your loan balance will be due in 10 to 15 years. If you do not have sufficient money at the time to pay the loan off or refinance, the lender can foreclose on your home. You need to understand the terms of the mortgage and know what to expect in both the short and long-term.
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