What are the right questions to ask banks/mortgage brokers? Mortgage Type, Fees & Costs, Interest & Payment Credit & Approval etc.

I am shopping around for a mortgage. What are the right questions should I ask? Notes: I will be talking to both banks and mortgage brokers.

Answer:-

When shopping for a mortgage, asking the right questions helps you compare lenders, understand loan terms, and avoid surprises.

Generally, ask each lender,

1. What is the interest rate? What is the term?
2. What fees do I have to pay?
3. How can I save on interest charges? Can I make extra payments when I have money available? What options do I have?
4. If I sell my house or property before the scheduled maturity date, will I have to pay a penalty? If so, how much will the penalty be?
5. What options do I have if I want to pay my mortgage off early?
6. If I sell my house or property, can I transfer the remaining amount of my mortgage and the terms to a new property without paying a penalty (portable mortgage)?

Here are some questions that you should ask yourself before you get a mortgage.

1. How much can I afford to borrow? FCAC has an interactive Mortgage Qualifier Tool that can help you figure out how much you qualify to borrow. Remember that this is a maximum, and consider leaving a cushion in your budget so you are not stretched to the limit.
2. How much will I have for a down payment?
3. How much of an increase in my mortgage payments will I be able to afford if interest rates go up?
4. Have I shopped around to find the best combination of interest rate and features for my needs?

Find out more at Financial Consumer Agency of Canada

More on the subject matter:-

Here are key questions to ask banks and mortgage brokers:

General Mortgage Questions

1. What types of mortgages do you offer?
   (Fixed-rate, adjustable-rate (ARM), FHA, VA, USDA, jumbo, etc.)

2. Which loan option do you recommend for my situation, and why?

3. What’s the current interest rate for this loan? Is it fixed or variable?

4. What’s the APR (Annual Percentage Rate)? (Includes interest + fees)

5. What’s the minimum down payment required?

6. Do you offer down payment assistance programs?

Fees & Closing Costs

7. What are the estimated closing costs? (Typically 2-5% of loan amount)

8. Do you charge an origination fee? (Often 0.5%-1% of loan)

9. Are there application, underwriting, or processing fees?

10. Can you provide a Loan Estimate (LE) form? (Required by law within 3 days of application)

11. Are there prepayment penalties if I pay off the loan early?

Credit & Approval Process

12. What credit score do I need to qualify?

13. How much can I borrow based on my income/debt?

14. How long does the approval process take?

15. What documents do I need to provide? (Pay stubs, tax returns, bank statements, etc.)

16. Do you do a hard or soft credit pull for pre-approval?

Interest Rates & Locking

17. Can I lock in the interest rate? For how long? (30-60 days typical)

18. Is there a fee to lock the rate?

19. What happens if rates drop after I lock? Can I renegotiate?

Down Payment & PMI

20. Will I need Private Mortgage Insurance (PMI)? If so, how much? (Usually if down payment < 20%)

21. How can I avoid PMI? (Higher down payment, lender-paid PMI, piggyback loan)

22. Can I use gift funds for the down payment?

Repayment & Flexibility

23. What’s the loan term? (15, 20, 30 years?)

24. Are there biweekly payment options? (Helps pay off loan faster)

25. Can I make extra payments without penalty?

Mortgage Broker-Specific Questions

26. Which lenders do you work with? (Brokers have access to multiple lenders)

27. Do you charge a broker fee? (Some are paid by lenders, others charge you)

28. How do you compare loan offers for me?

Final Considerations

29. How long until closing after approval? (Typically 30-45 days)

30. What could delay or derail my approval? (Job changes, new debt, appraisal issues)

Red Flags to Watch For

• Vague answers about fees

• Pressure to sign quickly

• Unwillingness to provide a Loan Estimate

• Promises of “guaranteed approval” without checking your finances

Asking these questions will help you find the best mortgage deal and avoid costly mistakes. Always compare offers from at least 3 lenders!