When screening mortgage lenders it helps to ask the right questions. Asking mortgage lenders the right questions can help you avoid making costly mistakes with the new mortgage. Here are the questions you need answered.

Shopping for a new mortgage can be an intimidating process. Your goal when refinancing should be to save money over your previous mortgage; however, mistakes can rob you of potential savings and cause you to overpay for your new mortgage. You need to do your homework and ask the right questions when shopping for your new loan.

What is the lock period for the loan?

You will need the mortgage lender to guarantee the interest rate you have agreed on. If the mortgage lender agrees to a lock it will last for a specified period of time. You must close on the mortgage before the lock expires or the lender may raise your interest rate. Make sure the lender gives you a realistic amount of time to close.

Ask for a Good Faith Estimate.

When applying for a mortgage is important to have all of the fees and closing costs up front. The Annual Percentage Rate is not enough to make a valid comparison from one lender to the next; you must make your comparisons based on the good faith estimate.

Does the lender include a prepayment penalty in the contract?

Do not accept a mortgage with a prepayment penalty. In todays market there is no reason to have one. If the lender insists on including this penalty, a penalty you will have to pay if you sell or refinance the loan, find a new lender.

To learn more about finding the right mortgage and avoiding costly mortgage mistakes, register for a free mortgage guidebook.