Taking out a mortgage is one of the biggest decisions in a person's life. It has a great impact on the financial situation of that person. As a result, it is quite obvious that mortgage borrowers will ask lenders a lot of questions. Most of the mortgage borrowers are quite suspecting about the mortgage interest rates and have a lot of questions regarding this.
The top 5 most commonly asked questions include the following listed below:
Question 1: What rate will you give me?
The very first question that a prospective borrower will ask a lender will be "What is your rate?". Most of them don’t know a basic fact that there is no one rate for all borrowers. In such a situation, you, the lender, will have to offer a range of rates, depending on various factors like borrower's credit score, property type, loan term, rate-lock duration, points etc. Thus, it will make it clear to the borrower that the lender will require quite a lot of information in order to quote a rate accurately.
Question 2: Will you be able to give me a lower rate than other lenders?
It is quite common that the borrowers will ask the rate question to multiple borrowers. They think this is the best way to shop around. They look around for the lowest possible rate. But things don’t work in that way. Rates keep on fluctuating on a weekly basis. Sometimes, they may even fluctuate on a daily or hourly basis. This can at times make shopping difficult for the borrowers. And it is also true that most experts advise borrowers to shop for a loan. Moreover, it is also true that the federal government requires lenders to use disclosure forms that encourage comparisons.
Question 3: Can I get lowest rates amongst my friends?
This is another question which mortgage lenders have to deal with when they are with a prospective borrower. Borrowers have a tendency to compare their mortgage interest rates with their friends. They don’t take into consideration the logic or reasons why they can’t get what their friends have received. Getting lowest mortgage interest rates amongst friends makes them feel good and they consider themselves smarter than other people.
Question 4: Will I be able to float down the rate?
In order to get the lowest possible rate, the borrowers will ask the lender about floating rates. There are some lenders who offer the borrowers a second chance to lock the rate. This is known as the option of “floating down the rate”. It should be noted here that this option can be quite expensive for the lender and they will look up for other ways to get compensated for it. Moreover, rates may even rise in the future. In such a situation, if the borrower goes for floating rates, then they may have to pay more!
Question 5: Will you be able to let me know more about the loan terms?
Once the borrowers get the rate question answered satisfactorily, they typically jump into asking other details about loan terms. In this case, they ask questions like: "When can we close?", "Is there a prepayment penalty?", "Can you do this loan as a no-cost refinance?", "Is this 30-year fixed-rate loan?" etc.
Unless the borrowers get satisfactory answers to all these queries, they normally don't take out a mortgage.