Becoming informed as a first-time homebuyer is the key to making sure that you are getting a competitive loan. And what is the key to becoming better informed? Asking lots of questions. Below are some recommended questions to ask the Alabama mortgage company you have chosen to work with.

  1. What can I afford? You may think you have a pretty good idea how much home you can afford, but as a first-time homebuyer, it is easy to miscalculate. That is why you should talk to your mortgage company directly about your income and the price range you are shopping in. During the pre-approval process, you can find out exactly how much home you can afford considering the mortgage premiums and interest as well as other costs of homeownership.
  2. Can you connect me with competitive mortgages with my current credit score and DTI ratio? Not all Alabama mortgage brokers and direct lenders work with customers in all financial situations. Big-box lenders may turn away customers with lower credit scores and higher debt-to-income (DTI) ratios. But when you’re shopping for your first home, chances are that describes you at least to some degree. So, ask right away whether a mortgage company expects to be able to connect you with an affordable home loan given your financial metrics. If you find a company which specializes in government-insured loans such as FHA, VA and USDA, those are all products aimed in part at customers who may be in a similar situation as you.
  3. Can you tell me about local and state programs to help with my down payment? FHA, VA and USDA mortgages all have features which can help you to afford a new home with a minimal down payment (or, in the case of a VA mortgage, no down payment). But you might still need more help with your down payment. There are some state programs for first-time homebuyer down payment assistance in Alabama as well as tax credits which can further help you afford a home. Find out whether your mortgage company can provide you with more information on these programs.
  4. Can you offer a mortgage rate lock? While you are waiting for closing, mortgage rates may fluctuate. You do not want to be caught off guard and discover that your mortgage rate at closing is higher than the mortgage rate you were originally quoted. One way to get around this is by requesting a mortgage rate lock. This is something else you can inquire about during the consultation.
  5. Can you pre-approve me? Getting pre-approved for a mortgage does two very important things for you as a first-time homebuyer. Firstly, it provides you with a more solid estimate of how much home you can afford. Secondly, it tells sellers that you are serious and helps them know that you can afford the offers you make. Your bargaining power increases as a result.
  6. What closing costs can I expect? Closing costs catch many first-time homebuyers off-guard. They can range quite a bit depending on the situation. So, you should always ask your mortgage company what the projected closing costs for a specific loan would be.
  7. Do I need to purchase insurance? As a first-time homebuyer, you may be required to purchase homeowners insurance, mortgage insurance, or both. For example, with an FHA mortgage, private mortgage insurance (PMI) is always required. Make sure that you are aware of these costs before you proceed to sign on a loan.
  8. Why should I work with you? One last valuable question to ask any mortgage company before you decide to do business with them is why you should choose them in the first place. The answer they give you will be informative as regards their values and the kind of service you can expect from them.

Let Us Connect You with Your First Home Loan

American Pacific Mortgage is a local Shoals mortgage company with over two decades of experience serving first-time homebuyers. We specialize in government-insured loans and can help you move affordably into your first home regardless of your credit score. To get pre-approved now, please call (205) 495-0313. We can’t wait to work with you!