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Oleg Potemkin (RA), Partner  Hawaii Realty International, LLC  Honolulu Oahu Hawaii
  Tel: (808) 398-9987   Fax: (808) 356-1737   Email: oleg@hawaii-realty.com

Some of the biggest misconceptions held by buyers relate to the belief that all lenders, and all mortgages, are pretty much the same. Also, buyers tend to think that the mortgage process doesn’t start until AFTER you find the house you want, and negotiate a successful offer. These misunderstandings are not surprising when you realize that the vast majority only experiences the mortgage process once or twice in their lives.

Unfortunately, in this situation, Ignorance is certainly NOT bliss! If you fail to ask the appropriate questions of your potential lender, you may do serious damage to both your negotiating position and your pocketbook.

Questions You should Ask EVERY Lender BEFORE you shop for a house.

1. Will you pre-approve me? This is very important. Negotiating is much easier for the buyer when the seller KNOWS, ahead of time, that you will get your mortgage.
   

2. How quickly can my loan go through? Again, if the seller knows you can close quickly, this may sway the negotiations in your favor.
   

3. Do you carry Adjustable Rate Mortgages? The lower the rate (Adjustable Rate Mortgages have initial rates lower than fixed mortgages) the more you can qualify for. While you may not opt for this mortgage in the end, knowing it is available is like putting an extra ‘line of credit’ into your pocket.
   

4. Do you have Convertible Loans, or loans with a conversion option? If you do find the need to use the Adjustable Rate Mortgage, can you change it to a fixed rate in the future? At what cost?
   

5. Do you carry fixed-rate mortgages with 30-yr. terms? With 15 yr. terms? This is “vanilla” in the mortgage world. However, comparison shopping of items like interest rates, application fees, points, and other lender closing costs can yield you substantial savings.
   

6. Are you an FHA DIRECT lender? If this is an option (and many first-time buyers go FHA), then this is a good question to ask. Sometimes the processing time can really be shortened with a direct lender. Again, this is a good negotiating tool, since it may get you to the closing sooner.
   

7. Are you a VA DIRECT lender? For those who qualify, a VA loan can be a wonderful option. Again, dealing with someone who is a Direct Lender for this type of loan can really streamline the approval process, and help you with the seller.
   

8. Do your mortgages carry a pre-payment penalty? Pre-payment penalties, which had all but disappeared from the industry, have recently reared their ugly heads again! ASK! And make certain you fully understand the circumstances under which you may trigger that penalty.
   

9. Are you a portfolio lender? Some lenders keep the loans they make “in-house”, and some sell the loans to other institutions. While it does not impact you (or the terms and conditions of your loan) if it is sold, there is a good reason for asking this question. Portfolio lenders often have more leeway during the approval process, and can tolerate past credit problems that others may not want.
   

10. Are your fees negotiable? Let the lender know you are comparison-shopping. Politely asked, this question will appear to be just one more factor in your decision-making process. If the lender really wants your business, you may be surprised by the answer! In any case, if you don’t ask, you can be certain that no one is going to just offer to drop his or her fees.

Taking a few minutes to ask these questions of a number of lenders can pay off big time. These benefits may come in the form of a more favorable negotiating position for you with the seller, and/or as a direct saving in relation to your loan. In either case, doing your groundwork with lenders is a smart and important way to begin your home buying process.

Your Hawaii Real Estate Specialist
Oleg Potemkin (RA), Partner  Hawaii Realty International, LLC
1888 Kalakaua Avenue, Suite C-312, Honolulu, Hawaii 96815 USA
   Tel: (808) 398-9987   Fax: (808) 356-1737   Email: oleg@hawaii-realty.com

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