Obtain Cost Information

It is a wise idea for you to consult with numerous lenders and brokers to get more information about mortgages. You should have a general idea about how much money you can afford for the down payments as well as you need to find out about any other costs associated with the process of acquiring a loan. Having knowledge of how much the monthly payment and the interest rates will be is clearly not enough information for you to make a decision about a mortgage loan. When talking to your lenders and brokers, you need to ask about the same loan amount and what the loan terms would be and what type of loan is being offered and this will make it much easier for you to compare and contrast the different terms. The information provided below is essential for you to ask of every lender and broker that you are considering taking a loan out from:

Rates

Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment.
If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down.
Ask about the loan's annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.

Points

Points are fees paid to the lender or broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.
Check your local newspaper for information about rates and points currently being offered.
Ask for points to be quoted to you as a dollar amount--rather than just as the number of points--so that you will actually know how much you will have to pay.

Fees

A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but they usually involve higher rates.
Ask what each fee includes. Several items may be lumped into one fee.
Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet in this brochure.

Down Payments and Private Mortgage Insurance

There are certain lenders that obligate the borrower to pay a down payment that is the equivalent to 20 percent of the home's purchase price. On the other hand, nowadays more and more lenders are offering lower down payments that are less 20 percent and sometimes it can even be as low as 5 percent when taking out a conventional loan. In the event that the down payment is less than 20 percent of the home's purchase price, the lenders are very likely to ask that the homebuyer needs to purchase private mortgage insurance, which is also known as PMI in order to protect the lender in the event that the homebuyer does not pay the down payment. The down payment requirements might be much lower if government assisted programs such as the Federal Housing Administration, Veterans Administration or the Rural Development Services are offered.

Ask about the lender's requirements for a down payment, including what you need to do to verify that funds for your down payment are available.
Ask your lender about special programs it may offer.

If PMI is required for your loan:

Ask what the total cost of the insurance will be.
Ask how much your monthly payment will be when including the PMI premium.
Ask how long you will be required to carry PMI.