It is not just first-time homebuyers in Arizona that need to make informed decisions when applying for home loans; any homebuyer can benefit from knowing what is new in the mortgage lending world. Asking some important questions before applying for a home loan can increase an aspiring homeowner’s likelihood of getting approved for an affordable loan with no surprises later. Consider the following helpful questions to ask a mortgage lender before applying for a home loan.

How Much Can I Afford to Borrow?

Asking a lender how much you can afford to borrow can help you select the most home for your money. You may also be able to increase the amount you can borrow by paying off some bills before applying for a home loan. Your lender can look at your income, debts, and credit history and give you a good idea of how much you will be eligible to borrow so you can look at homes in your price range.

What Loans are Available for Me?

Many people think the only option they have for a home mortgage is a conventional bank loan. As a first-time homebuyer in Arizona, you may be surprised at the loan products available to meet your needs. Ask your lender if you qualify for an FHA, USDA, or VA loan. With one of these loans, you may be eligible for a low down payment or no down payment. You may also qualify with a lower credit score than may be required for a conventional loan.

What Will Be My Interest Rate?

Ask the lender if the loan has a fixed rate for the life of the loan. With a fixed rate your payments will stay the same until you pay off the loan. If you choose an adjustable-rate mortgage (ARM), you can get a lower interest rate resulting in lower payments for the first few years. ARM payments typically remain at a fixed rate for a specified time, usually between three and ten years. If the rate for the loan changes when the interest rates increase, your payments may be higher than you expected.

Asking about your interest rate and APR or annual percentage rate will help you compare what lenders offer. The interest rate is the annual amount you pay to borrow money to purchase your home. APR covers all fees involved in buying your home and can include closing costs, discount points, and origination fees. Lenders should be able to explain the fees included in the annual percentage rate.

Can I Qualify for Assistance with Closing Costs or Down Payments?

There are down payment assistance programs available for Arizona individuals and families with limited resources. Down payment assistance programs may be in the form of grants or second-mortgage loans. You will not need to pay back a grant. If you pay the second mortgage loan as agreed, a percentage of the loan may be forgiven each year. After a required number of years, the second mortgage lender forgives the loan completely. Your lender can tell you if you are eligible for assistance with closing costs. In some cases, homeowners who are motivated to sell may assist with closing costs.

How Long Will It Take to Close the Mortgage?

Knowing when the mortgage will close can help you plan your move and other events. While you wait for loan approval and closing, lenders typically recommend that you refrain from incurring new debt. If you think you might need to purchase furniture and other household goods on credit, knowing when the loan will close can help you plan for those purchases without putting your home loan application in jeopardy.