Jacques Poujade Shares: 5 Questions To Ask Your Mortgage Broker When Buying A Home?

Jacques Poujade is a financial industry executive, with more than three decades of experience. During his career, he has worked in prominent roles in Canada, the UK, and the US. Therefore, he has the practical knowledge to help budget conscious entrepreneurs, from a range of backgrounds, obtain real estate financing to buy their ideal home. These days, he leverages that expertise at the non-bank mortgage provider, LendPlus. Here he shares five questions he commonly gets asked and that you, too, should ask your mortgage broker when buying a home.

1.
What Documents do you Need to Process my Loan?

You should ask this question upfront, so
you will have plenty of time to get your documents together. Proof of Income
enables lenders to check that your earnings are sufficient to cover mortgage
payments and living costs (i.e. utility bills and furnishing costs). Lenders
will gauge your risk profile by researching your credit history too.

Frequently, lenders ask for documents like
bank statements to ensure that mortgage applicants have the funds to cover
several monthly mortgage payments. This is just in case anything unexpected
occurs – like having an accident that prevents you from working, or
unexpectedly losing your job. Lenders may wish to see your tax return as well
to check that the information you gave to the IRS corresponds with the income
report you submitted to them.

2.
Am I Eligible for an FHA Loan?

FHA loans are specialized loans provided by
the FHA (Federal Housing Administration), which enable people with zero credit
or bad credit to acquire mortgages. Usually, these loans are given to first
time house buyers. The FHA permits these buyers to buy a house for a mere 3.5
percent down payment, in some cases. This makes home ownership possible for
many more people. A minimum credit score of 580 is required for approval.

3.
How Much Money Should I set Aside for Closing Costs?

Generally speaking, sellers pay closing
costs, although sometimes, they might negotiate with buyers to split the cost.
These costs include recording fees, commissions, title insurance, and mortgage
fees. Buyers who have mortgage insurance with an annual payment option pay
their lender the initial twelve month’s premium upon closing. Buyers who opt
for monthly mortgage insurance payments only must pay their lender for one
month upon closing.

Long story short, when determining how much
you can put down on a house, you should include ancillary fees like closing
costs and/or mortgage insurance.

4.
Can I Pay Off My Mortgage Early?

Yes, absolutely. If you wish to release
capital for other purposes, or lower the total interest charged for your
mortgage, paying your mortgage off ahead of time could help. You make interest
payments on your remaining balance every month your mortgage exists. If you pay
off your balance early, you will avoid years of additional interest on the
loan.

Also, fully paying your mortgage off
increases your monthly cash flow. This eases the financial burden on your home
and provides you with extra resources to save or invest. Over the long term,
this approach could give you bigger returns.

5.
Can I Benefit from Mortgage Insurance or PMI?

Yes, mortgage insurance gives lenders a financial guarantee that protects them, if borrowers default on their loans. If you want to purchase a house, signing up to loan conditions that feature mortgage insurance boosts your buying power to a large extent.

By purchasing mortgage insurance, you have
the chance to buy a house with a five to ten percent down payment, rather than
the twenty percent that is frequently needed if the lender isn’t protected by
mortgage insurance. This is an ideal option for would be borrowers, who cannot
make big down payments.

Connect with Jacques If you would like to receive further advice relating to finance and real estate, you can follow Jacques Poujade on Twitter and Facebook for his latest thoughts. He also covers these subjects in considerable detail on his personal website, JacquesPoujade.com

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