Buying Your First Home? 10 Questions to Ask a Mortgage Lender

It’s a great time to be a first-time homebuyer. As a longtime local mortgage lender, Town and Country Banc Mortgage Services is here to help you buy your first house in Central Illinois or the Metro East. Here are 10 questions to bring with you to your first appointment with one of our friendly and experienced lenders.

1. How much house can I afford?

The best way to answer this question is to get pre-qualified for a mortgage loan. The pre-qualification process involves providing your basic financial information to your lender. They will look at factors such as your credit history and credit score, employment history, and the ratio of your monthly debt payments to your income.

Most loan programs have specific guidelines that the mortgage lender can explain to you. Some loan programs have minimum FICO requirements of 620, while other loan programs have minimum requirements of 640 or 660. Your mortgage lender can clarify your options when they review your financial information. Various loan programs also have maximum Debt-to-Income guidelines (generally between 41% and 45%), which the lender can analyze for you.

2. What is the best type of home loan for me?

We can help you evaluate the range of available mortgage loans and make recommendations. For example, military veterans and first-time homebuyers may be eligible for special loan and/or down payment assistance programs. Here is an overview of the different types of home loans Town and Country Banc offers:

Standard Down Payment Mortgage Programs

• 30 Year Fixed-Rate Mortgage: The most popular type of home loan
• 20 Year Fixed-Rate Mortgage: Offers a potentially lower interest rate in return for a shorter loan term
• 15 Year Fixed-Rate Mortgage: Could get an even lower rate and pay off your loan in half the time.
• Jumbo Loans: For home loans that exceed the current conforming loan limit (in most cases, this amount is $510,400)

Low Down Payment Home Loans

• Home Buyer Access Program: Provides up to 100% financing for highly-qualified home buyers on either a 15-year fixed rate loan or 7-year adjustable rate mortgage
• Federal Housing Authority (FHA) Loans: A federally-insured home loan with down payments as low as 3.5%
• HomeReady® Program: Benefits credit-worthy low-to-moderate income borrowers with as little as 3% down
• Assist Bond Program: Provides a grant for down payment and closing cost assistance
• Illinois Housing Development Authority Program: Allows eligible home buyers to purchase a home with as little as “the greater of $1,000 or 1% of purchase price.” Certain limits apply.
• Loans for Veterans: Helps our valued veterans, military personnel and their surviving spouses obtain a mortgage and own a home with relaxed credit standards and no down payment options.
• Loans for rural properties (USDA Rural Development Loan): Requires no down payment for the purchase of a home in a designated small town or rural area.

To learn more about other mortgage loans that are unique to your home buying needs, visit our Find the Perfect Home Loan page.

3. How much of a down payment do I need?

This depends on the type of mortgage loan you choose. As you can see from the list above, there are plenty of lower down payment options if you can’t afford to put 20 percent down. However, if you do make a lower down payment, you may have to pay Private Mortgage Insurance for the life of your loan or until you reach 20 percent equity in the house.

4. What’s my interest rate?

Your rate depends on a variety of factors, including the current market index rate, your personal credit score and income, and the type of loan and loan terms you choose.

5. What are discount points and origination fees?

Some lenders give buyers the option of purchasing points to reduce their interest rate. Origination fees are charged by lenders at closing for processing a new loan application.

6. Why do I need to pay for a home inspection?

Once you make an offer on a house and the seller accepts, you are “under contract.” The next step is to get a home inspection, which the buyer pays for out of pocket when it happens. While an inspection isn’t mandatory, it’s a best practice to make sure there are no expensive surprises waiting for you. The inspector looks at the house inside and out and provides a detailed report of potential issues. Your real estate agent may be able to re-negotiate a lower price or ask the seller to fix something before closing if a big problem appears. A home inspection is separate from the real estate appraisal that the mortgage lender will order to validate the property’s market value.

7. What are my estimated closing costs?

Your lender will provide a Loan Estimate and Closing Disclosure to show you what your closing costs include. Generally, they amount to 3-4% of the total purchase price. As mentioned above, we offer programs to help first-time buyers cover closing costs. Just ask one of our lenders if you’re interested.

8. When will my closing day be?

The average time to close is about a month, but your specific date will depend on a variety of factors. As your lender, we’ll keep you updated with an estimated and final date throughout the process. The best way to keep the process on track and avoid delays is to respond to requests for documentation and other questions as quickly as possible.

9. Can I pay off my mortgage early?

Yes, you can make extra payments on your mortgage and pay it off early without penalty. Under Illinois state law, mortgage loans cannot have a prepayment penalty unless the borrower is also offered a loan without such a penalty.

10. How can I reach you with additional questions?

Applying for a mortgage can be a stressful process. At Town and Country Banc Mortgage Services, we pride ourselves on delivering a smooth and pleasant experience for our mortgage customers. We do this through professional knowledge and personalized service. When your lender is a member of the Town and Country mortgage team, you will find that they get to know you and respond swiftly to your questions and concerns. When evaluating any potential mortgage lender, make sure you’ll have a single point of contact and know how to reach them.

Town and Country is your local Mortgage Lender in Central Illinois and the Metro East

Our dependable, local mortgage professionals put years of experience to work for you. We can help you find a custom mortgage loan to meet your needs. Town and Country Banc Mortgage Services is consistently rated the top housing lender in our market. We close most home purchase mortgages in 30 days or less. Apply online or contact us today!