Questions to Ask

Getting a new mortgage or refinancing an existing home loan is an important decision that will affect your household budget for years to come. A trained mortgage professional, like the non-commissioned loan officers at Nutter, will help you understand the terms and costs associated with your loan package, but be prepared to ask detailed questions in order to get the best deal possible for you. Find smart questions to ask lenders below.

Q How do you handle transfer of taxes and insurance?
A Some lenders handle these costs out of escrow; others ask for cash up front. Make sure you know what you’re in for; there’s no reason why you should have to supply the cash up front.
Q How long has this company been in business?
A James B. Nutter and Company has been in business in the same home town under the same name for more than half a century. That’s stability you can trust.
Q Will you service my loan for the duration of the term?
A Many lenders and brokers are strictly middlemen, setting up and then selling off mortgage loans. You’re not dealing with someone with whom you will have a long-term relationship. Other lenders, such as James B. Nutter and Company, are in it with you for the long haul.
Q What’s your markup on the fees related to work done by outside contractors?
A Some closing costs and fees are legitimate, such as fees for title policy and appraisal fees, because the lender has to pay someone else to perform that work. That doesn’t necessarily mean the amount is legitimate, however. If an appraiser charges $100 for an appraisal, and the lender charges the borrower $250 for that appraisal, that’s a 150% markup.
Q Can you tell me how each of these fees and closing costs was calculated?
A This is your turn to play “gotcha” with the lender. Many “junk fees” are just dollar amounts arbitrarily tagged onto a loan with no real-world justification whatsoever. These kinds of fees have a wide variety of different names, such as “underwriting fee,” “processing fee,” “table funding fees,” “waive escrow fees,” or “document preparation fee.” Because it’s all smoke, mirrors and make-believe, they can call it whatever they want, and set the price at whatever they think people will fall for. Take the “document preparation fee,” for example. Kinko’s charges less than ten cents a page; if the broker is charging more, ask him why.
Q May I have a copy of a Loan Estimate showing rate, terms and itemized closing costs and fees for this loan?
A This is the most important step you can take. Don’t settle for fast talk; by law, mortgage lenders must give you this information. Be sure you get a copy of your own that you can take with you when you leave. Don’t settle for a promise to have that information at the closing; by the time you sign on the dotted line, it’s too late.

Also, don’t settle for a single line item combining all closing costs and fees into a single lump sum. That’s a favorite ploy of those who try to slip “junk fees” past an unwary borrower. Closing costs and fees are not standard; they can vary by thousands of dollars.