The Answers to Your Top 5 Mortgage Questions

Comerica Bank

Suburban house with lawn and tree

When making a home purchase, consumers can enter the process with a wide range of questions.

When making a home purchase, consumers can enter the process with a wide range of questions. These can be practical, such as "How much house can I afford?" or personal, like "What are my deal breakers in terms of style and location?" While those preference-related questions depend on your lifestyle, we're here to help you on the practical parts, especially when it comes to your mortgage.

We dug into the weeds of what mortgage questions consumers typically have and narrowed it down to the top five.

1. What questions should I ask my bank when applying for a mortgage?

Generally speaking, you want to get broad information that helps you better understand the process so you can make more informed choices down the line, especially if you're a first-time homebuyer. Questions to ask include:

  • Do I qualify for any specialty programs, like FHA, or first-time homebuyer programs?
  • How do different types of payment options work, and how will they impact my monthly payments?
  • What kind of fees and secondary costs can I expect as I go through this process?
  • What documents should be prepared prior to a formal application?

These are just a few examples of the types of questions you should ask your mortgage banker. The key is to create a strong sense of transparency and openness so you know what to expect from your mortgage and your mortgage banker.

2. How do I choose a mortgage lender?

Don't just consider the interest rate on the loan and leave it at that. You must also assess how the makeup of the loan will impact total costs over the course of the contract. If one lender gives you a great interest rate to start out, but with an adjustment five years later that leads to high costs, you may be better off with an initially higher interest rate in a fixed contract.

Beyond getting the best value, you must also consider trust as a priority. You don't ever want to be surprised by your mortgage. Instead, it's often best to seek a lender that will help you assess what will work best for your situation. Ideally, you'll have a strong relationship with your lender and not just see them as a source of financing.

3. What questions should I ask a mortgage banker about rates?

Instead of the big-picture questions that come up with a mortgage banker, this is the time to get really specific on issues such as:

  • If the rate being offered is locked in, what is the lock-in period?
  • Could the rate change over the duration of the purchasing process?
  • What factors are impacting your rates and if you can take action to improve those circumstances?

By getting into these specific issues relating to the interest rate, you not only can pin down the kind of deal or offer, but you can also get a clear idea of how the banker operates.

4. What is private mortgage insurance?

Private mortgage insurance is designed to safeguard the lender in the event you cannot pay back a loan. Typically, lenders will mandate that you take on the insurance cost if you are unable to make a down payment of 20 percent (or more) of the purchasing price.

Costs can vary substantially for the insurance, but you can generally expect them to add up to more than $1,000 per year and be built into the monthly payment for your mortgage. It's possible to forgo the insurance after enough equity has been accrued on the property.

5. What's the difference between a variable and fixed rate?

In the simplest terms, an adjustable-rate mortgage will have a shifting interest rate over the course of the loan. A fixed rate, as the name implies, remains the same over the life of the loan.

Weigh your options carefully and make sure you understand when a variable-rate loan will change, and how to ensure you're prepared for the future.

Any more questions?

Do you still have questions about how a mortgage works? We'd be happy to talk with you. At Comerica Bank, we take a customer-oriented approach to lending in which we're happy to advise and help you find the right loan for the house of your dreams.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice.

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.

Related Content