How does a mortgage work? What kind of home can I buy? These are common questions that homebuyers and homeowners constantly have running through their heads. If you are in the market for a home, your loan officer should be able to answer some critical questions. Here are five important questions to ask your lender.

What’s the Difference Between Being Prequalified and Preapproved for a Mortgage?

A pre-qualification estimates how much a buyer can afford to spend on a home. A pre-approval is an agreement between a buyer and lender for a specified period that states that the buyer is eligible to finance up to a specific amount for the purchase of a home. This happens after a lender has verified a borrower’s credit score and other financial documents. With this information, different loan options can be discussed, and the buyer will know exactly how much they have to spend.

How Do I Qualify for a Mortgage?

Several financial things need to be in place before you consider applying for a mortgage. Your loan officer can analyze your current situation and provide the steps that need to be taken, if any, to qualify for the best loan. Your credit score, assets like savings, and income are all crucial factors that lenders consider.

What Does a Monthly Mortgage Payment Include?

Understanding the monthly obligation that your mortgage payment includes is crucial.  Your monthly mortgage is comprised of several things.  Principal, the amount that goes towards your balance; interest, the amount that you pay for borrowing the money; homeowners insurance and property taxes are collected monthly and placed in an escrow account to be paid by your lender; and depending on your loan, PMI (private mortgage insurance) can make up another part of your payment.

What are Closing Costs?

Closing costs cover everything needed to finalize your mortgage.  These costs include your down payment, title costs, services, and other expenses.  Your earnest money deposit will be credited to this total, and you’ll receive a breakdown in your closing disclosure that details each item.  Typically, closing costs range from 3% to 6% of the total purchase price.  

Will You Sell My Loan After I Close?

Once your loan is processed and closed, many lenders will sell the right to service your mortgage (MSR – Mortgage Servicing Right) to a servicing company, ending your relationship with your loan officer and original lender.  Standard Mortgage Corporation (NMLS#: 44912) typically does not sell its loans.  Once you originate and close your loan with Standard, they will usually service it for the life of your mortgage.  This commitment to customers provides the highest level of service for your most significant investment.  

For over 90 years, Standard Mortgage has helped homebuyers across Louisiana and the Southeast find the best mortgage solutions for their needs.