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Bottom Line Up Front

  • Wait to start shopping until your lender preapproves you for a specific loan amount, which will be based on your income, assets, credit score and debts.
  • A mortgage qualification calculator can also help you determine how much home you can afford.
  • At Navy Federal Credit Union, you can lock your loan rate for up to 60 days at no additional cost.

Time to Read

5 minutes

July 13, 2022

Whether it’s your first home or your next home, house hunting is exciting. But before you start looking at properties, pause for a moment and dedicate some time to thinking about your future financial and housing needs.

According to data from the National Association of Realtors®, homeowners stay in their homes an average of 8 years before moving. Since you and your mortgage will probably be together for some time, you’ll benefit from fully understanding how it works. Your home-buying team should be there to help you.

Here are 10 questions to ask your lender before purchasing a new home:

1. What can I comfortably afford?

Your lender will preapprove you for a specific loan amount based on an analysis of your creditworthiness, income, assets and debts. When discussing what’s comfortable for you, be sure to consider all the home’s expenses, including taxes, homeowners insurance, any homeowners association dues, utility costs and maintenance. A good rule of thumb: Keep your total housing payment, including taxes and insurance, below 28% of your gross monthly income (your pre-tax paycheck amount). Using a mortgage qualification calculator can also help you determine how much you can afford.

2. Which loans do I qualify for?

Your lender will talk with you about your options, each with its own pros and cons. With a conventional fixed-rate mortgage, for example, your monthly payment will stay the same over the life of the loan. An adjustable-rate mortgage (ARM) has a variable rate that may adjust up or down after the initial fixed-rate period expires—like with a 5/5 ARM, where your monthly payment can change after 5 years. Some home loans, like VA loans, may not require a down payment. Ask your lender about the mortgages they offer and the requirements of each.

3. How much will you need for your down payment?

Your lender can help you determine if you qualify for loans, such as VA loans, that offer options for a low- or no-down payment. A higher down payment, however, will usually lower your monthly payments and help you secure a lower interest rate. Use a down payment calculator to compare different down payment scenarios.

4. What’s PMI? Do I have to pay it?

Private mortgage insurance, or PMI, is sometimes required when the down payment is less than 20% of the home’s sale price. Exceptions include VA loans and some other special mortgage options, like all those offered by Navy Federal Credit Union. Learn more about PMI and how it can be eliminated when equity reaches a certain percentage of the appraised value.

5. What interest rate do I qualify for? How can I lower it?

The interest rate has a direct impact on your monthly payment—the higher the interest rate, the higher your payment. To compare lenders, ask which annual percentage rate (APR) you qualify for, which includes the lender’s fees. If you’re early in your home-buying journey, you can also ask your lender for tips to help you lower your interest rate as well as actions to avoid that may raise your interest rate. For example, many mortgage lenders will advise against opening a new line of credit before you settle so as not to lower your credit score temporarily.

6. What will my monthly payment be?

When you’re shopping for a home, your lender can run the numbers to estimate your monthly payment for different properties based on the purchase price, the down payment amount and your interest rate. You can also use a monthly mortgage payment calculator to estimate your monthly payment and see how much interest you’ll pay over the life of the loan.

7. What are the closing costs?

Some up-front costs may be due at closing, such as these fees:

  • origination fees and discount points
  • appraisal
  • document preparation
  • title insurance
  • home inspection

A closing cost calculator can give you a ballpark estimate of closing costs, which typically run between 2% and 5% of the loan amount. Review your loan estimate for an itemized list of estimated closing costs.  

8. Is my interest rate guaranteed? When does that happen?

Interest rates can fluctuate between the time you submit your loan application and when you go to closing. To prevent your rate from changing, you can lock it in for a specified period of time, typically 30 days. At Navy Federal Credit Union, you can lock in a rate for up to 60 days at no additional cost.1

9. Will the monthly payment include taxes and homeowners insurance?

For some loans, you can either pay property taxes and insurance payments on your own or have them included in your monthly mortgage payment. The latter option, called escrow, means the amount you owe for the year is divided into 12 parts and added to your payment each month. Your financial institution then makes these payments out of the escrow account when they’re due out.

10. How long will the closing process take?

It’s important to make sure there’s enough time to get your financing in order when making an offer and setting a closing date. It may take anywhere from 30 to 60 days to complete all the steps involved in securing financing and closing on the loan. Talk with your loan officer early in the process to better understand how long you’ll have between making an offer and closing.

Have More Questions?

Start your home-buying journey with Navy Federal. We’ll be there every step of the way to help you purchase and finance your next home with confidence.

Next Steps Next Steps

  1. Obtain a preapproval if you’re ready to buy so you can see how much you can afford.
  2. Use our mortgage calculators to estimate some of the costs associated with buying a home
  3. After you’ve determined how much you can afford, work on your home must-haves (location, size, features and more) and contact a trusted realtor to help with your home search.



Special Freedom Lock is available for new applications on purchase and refinance loans at no additional fee for a 60-day lock. You must request the Special Freedom Lock option during the initial lock request. You may request a lower rate no more than two (2) times, with a maximum cumulative interest rate reduction of 0.50%. You must monitor rates to decide when to exercise the option to lower the rate. All requests for a lower rate must occur at least seven (7) calendar days before closing.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.