First-Time Home Buyer: Questions to Ask Your Lender

Quick Summary: Navigating the mortgage process as a first-time home buyer can be overwhelming. Knowing the right questions to ask your mortgage lender can make a big difference in securing a loan that fits your needs. This blog covers five essential questions to ask your lender, helping you make informed decisions and take a confident step toward homeownership.

Buying your first home is an exciting milestone, but with so many options and terms to consider, it’s easy to feel overwhelmed. Here are five crucial first-time home buyer questions to ask your mortgage lender.

1. What Types of Mortgages Do You Offer?

Not all mortgages are created equal. From fixed-rate mortgages to adjustable-rate mortgages (ARMs) and government-backed loans like FHA or VA, the options are numerous. Asking your lender about the types of mortgages they offer will help you understand which loan is best suited for your situation. For instance, a fixed-rate mortgage offers consistent payments over time, which can be ideal for budgeting, while an Adjustable Rate Mortgage (ARM) may start with a lower rate that can be adjusted later. It’s important to discuss the pros and cons of each option with your lender.

2. What is the Interest Rate vs the APR?

Interest rates significantly affect your monthly payments and the total cost of your mortgage over time. However, the Annual Percentage Rate (APR) includes not just the interest rate but also any fees or other costs associated with the loan. By asking about both the interest rate and the APR, you get a clearer picture of what the mortgage will truly cost you. Additionally, inquire whether the rate is fixed or variable, as this will impact your payments over the life of the loan.

3. How Much Do I Need for a Down Payment?

The down payment is one of the largest upfront costs of buying a home. Traditionally, lenders require a 20% down payment, but many first-time homebuyer programs allow for much lower down payments. Some loans may only require 3% down but this often comes with the condition of paying Private Mortgage Insurance (PMI). Discuss with your lender the options available to you. The impact of a higher or lower down payment on your mortgage terms and whether you qualify for any special programs that reduce the required down payment.

Check out CCCU’s different first time home buyer programs.

4. What Are the Closing Costs?

Closing costs are fees associated with processing your loan and completing the home purchase. They typically range from 2% to 5% of the loan amount and include things like appraisal fees, title insurance and attorney fees. It's essential to ask your lender for a breakdown of these costs early in the process. Knowing these costs upfront will help you budget more effectively and avoid any last-minute surprises.

Listen to The Perfect Bite’s episode 36 about homeownership expenses to learn more about them.

5. Can I Lock in My Interest Rate?

Interest rates can fluctuate based on market conditions, so it's important to ask your lender if you can lock in your interest rate. A rate lock ensures that your rate won’t increase before closing even if market rates go up. Ask your lender how long the rate lock lasts and if there’s a cost associated with extending it if needed.

Conclusion

Asking these first time home buyer questions will help you navigate the mortgage process with greater confidence and clarity. By understanding your options and the costs involved, you’ll be better equipped to choose a mortgage that fits your financial situation and long-term goals.

At CCCU, our mortgage team is dedicated to guiding first-time homebuyers in Las Vegas through every step of the home buying process. For more questions about our mortgage loans or FHA loans, visit www.CCCULV.org or call us at 702-228-2228.

Are you in the early stages of your homebuying journey? Find out more about the mortgage loan process with CCCU!