14 Questions to Ask Your Mortgage Lender in Texas

When you're buying a home in Texas—whether in Austin, Dallas, Houston, or a hidden gem in the Hill Country—you’re not just house hunting. It’s one of the biggest (if not the biggest) financial decisions of your life. So, naturally, you may have a lot of questions on how the homebuying and financing process works.

Here’s some of the most common questions we get as a mortgage broker. If you have any other questions, please reach out by clicking here. We’re happy to help!

1. What Will My Total Monthly Payment Be?

Depending on what you agree with your lender, your monthly mortgage payment may be more than just principal and interest. In Texas, it typically includes escrows for property taxes, homeowners insurance and possibly HOA dues, PLUS mortgage insurance (depending on your loan program and down payment. These added costs can significantly change what you pay each month and impact your overall budget.

Be sure to ask for a breakdown of all components of your projected monthly payment BEFORE home shopping. Don’t just take a base quote at face value—ask what happens if your taxes or insurance go up. Use our mortgage calculator to get a sense of what your monthly number may look like.

2. Which Loan Program Is Right for Me?

There are more home loan options available today than ever before, and the right one for you depends on your situation. Do you want a fixed rate loan or an ARM? Are you self-employed? Do you receive RSUs or commission? Are you trying to buy a new home before selling your current one? These details matter.

Traditional lenders typically steer you towards their limited programs that they can easily process, but a mortgage broker, like LendFriend. can match your financial profile to a wider range of lenders and products. To know which program is right for you, make sure you’re working with someone who has access to all programs.

3. What Are Your Credit Score Requirements?

Many lenders will say you can qualify for a mortgage with a credit score as low as 620 (or even 580 for FHA loans), but that’s just the minimum threshold – not what you should be shooting for. Just because you can qualify doesn’t mean you should lock in a loan with a subpar rate.

A "qualifying" credit score gets you through the door, but a “competitive” score (usually 700 and above) earns you lower interest rates, reduced mortgage insurance, and overall better terms. Don’t throw money away by having a bad score. If you have a score below 660, you really want to improve it as fast as possible, which can take as a month. Before applying, make sure your credit is in top shape. Learn how in our guide to improving your credit score or reach out and we can analyze your issues and give you the fastest path to increase your score.

4. Are There Prepayment Penalties?

Most standard mortgage loans today are Qualified Mortgages (QMs), which means they cannot include a prepayment penalty. But if you’re applying for a non-QM loan—common for self-employed buyers or investors—prepayment penalties might still exist.

Even if you think your loan does not include a prepayment penalty, make sure to ask if your loan includes a penalty for paying off early, refinancing, or selling. Some lenders might sneak in a soft penalty (only for refinancing), while others may have hard penalties (applied no matter what).

5. What Will Closing Costs Be—and Can I Negotiate Them?

Closing costs – the cash you’re using to purchase the home (other than the down payment) typically range from 2% to 3% of your home’s purchase price in Texas, but they can go higher depending on your lender and the services they use. These costs include appraisal fees, origination charges, title insurance, prepaid taxes and HOI and more.

Ask for a Loan Estimate early on, and make sure you understand each item. Remember, this is just an estimate as, any of these fees can be negotiated or shopped around. An appraisal can cost around $600-1000 (though the average we see is $700) and credit reporting fees can be $150. Your lender doesn’t control these costs and some lenders might put in arbitrarily low numbers to make you think the cash to close is much lower than it is (sneaky).

Many borrowers try to lower their cash to close by waiving the escrow requirement. That’s fin but it’s important to keep in mind—if you choose to waive your escrow account, your lender may increase your interest rate slightly to compensate, especially for lower credit score borrowers.

6. Do I Need an Escrow Account?

In most cases, yes—especially if you’re putting down less than 20%. Escrow accounts are just a forced savings account to ensure your property taxes and homeowner’s insurance are paid on time. But if you're putting 20% down or more, you might be able to waive escrow.

That said, waiving escrow may comes at a cost: a higher rate. Many lenders charge about 0.125% more if you choose to handle these payments yourself. Ask your lender to show you both options side-by-side so you can determine if waiving escrows has a cost associated with it.

7. What’s My Interest Rate and APR?

Your interest rate determines your monthly payment, but it doesn’t reflect the full cost of the loan. That’s where APR comes in—it accounts for the base rate plus any lender fees or upfront costs you’ll pay.

Sometimes a slightly higher rate might be cheaper overall if the fees are lower. In this interest rate environment, we see a lot of lenders try to entice you with a slightly lower rate, but neglect to inform the borrower of the $5,000+ in fees being charged to access that slightly lower rate. Your mortgage broker can help compare loans from different lenders using both rate and APR so you know which one is truly more affordable. And if you are trying to buy down your rate ALWAYS ask for a breakeven analysis (how long it takes to recoup the cost of the lower rate with the money you save each month on the lower rate).

8. Do you offer mortgage points?

Mortgage points, sometimes called discount points, are an optional fee that you can pay at closing to reduce your interest rate and save on the overall cost of the loan. The cost can vary based on how much you’d like to reduce your interest rate. Reducing your rate by 0.125% can cost around 1% of your total loan amount (i.e., on a $400,000 loan that’s $4,000 paid upfront at closing.

If you expect mortgage rates to fall sharply, it may not make sense to spend the money upfront. Instead, you may want to save that money for a refinance down the road. Be sure to ask your lender when it makes sense to buy mortgage points, how much each point will lower your interest rate, and what the maximum number of points you can buy is. The money you pay to reduce your rate with a mortgage broker is ONLY to access the lower rate and does not compensate the mortgage broker in any way, so they can provide a neutral, unbiased opinion.

9. Can I Lock My Rate—and for How Long?

A rate lock protects you from market fluctuations once you’re under contract. Most lenders offer 30–60 day locks, but you must have an executed contract in order to lock your rate. Many lenders allow extensions if needed, but at a cost to you the borrower (typically 0.025% of the loan amount per day). Be sure to ask whether your rate lock includes a float-down option in case rates drop before closing.

Not all lenders provide a rate float down option—but LendFriend does and it’s been used to save clients as little as $500 on closing fees and as much as 0.25% of their loan amount because interest rates fluctuated so much between the time the buyer locked the loan and the time the buyer purchased the home.

10. Can I Buy Without My Spouse in Texas?

Texas (like several other states) is a community property state. You can leave your spouse off the loan, which is helpful if one spouse has a lot of debts that brings the DTI above the necessary threshold. However, even if the spouse is not on the loan, that spouse will still own the house 50/50 and they’ll likely need to sign documents – like the deed - at closing.

Some loan programs (like FHA) require your spouse’s credit to be pulled, even if they aren’t on the loan. Your mortgage professional should walk you through how community property laws may impact your approval.

11. What Types of Mortgages Do You Offer?

As a mortgage broker, we have can to an extensive lineup of loan programs. Borrowers can choose from fixed-rate, adjustable-rate, VA, FHA, jumbo, DSCR, bank statement loans, bridge loans, and more.

Having access to these options means your mortgage is built around your needs—not just what’s easy for your lender to process.

12. What Income Counts Toward My Loan Qualification?

Income isn’t just a W-2. Do you receive tips, commission, bonuses, freelance income, alimony, or RSUs? Depending on how it’s documented, all of this may count toward your mortgage qualification.

For self-employed borrowers, income can be documented with tax returns, 1099s, or even bank statements. If a lender tells you your income doesn’t qualify, don’t stop there—ask a broker what your other options are.

12. Do You Offer Preapproval or Prequalification?

In today’s market, a prequalification is the standard documentation to submit along with your offer. A prequalification can be done with just a soft pull, your W2 (or other income documentation) and bank statements and are much less time consuming and intensive as a preapproval.

Preapprovals require a hard credit pull and documentation plus underwriting reveiw. The downside of a preapproval is that it can affect your credit score and potentially your pricing later – plus if you’re in a rush, you want a fast prequalification, not a slow preapproval. Unless you’re under contract or close to it, stick with a soft-pull prequal from a broker.

13. How Much Do I Need for a Down Payment?

You don’t need 20%. Conventional loans start as low as 3% down. FHA is 3.5%, and VA and USDA offer 0% down for qualified buyers.

Plus, there are down payment assistance (DPA) programs throughout Texas that can help first-time or lower-income buyers with grants or second-lien loans. Learn more about down payment options in our dedicated guide.

Why Mortgage Brokers (Still) Beat Big Banks in Texas

Mortgage brokers continue to outperform traditional banks and retail lenders—and in today’s Texas market, the advantages are hard to ignore.

Unlike banks that are limited to their own loan products and internal guidelines, brokers have access to dozens of lenders. This allows them to match borrowers with programs that better align with their income, goals, and timeline. Whether you’re using RSUs to qualify, want to waive escrow, or need a competitive rate without inflated fees, brokers offer options most banks can’t.

Pricing is another key differentiator. Brokers often secure lower rates and fees for the same loan product offered by a retail lender. That’s because banks tend to add higher profit margins, while many brokers work on lender-paid compensation—meaning the borrower doesn’t pay for their services directly.

When it comes to speed and flexibility, brokers also have the edge. Need to close quickly? Using 1099 income or a non-traditional source? Brokers typically have more tools at their disposal to help buyers qualify and close without unnecessary delays. Soft credit pulls are standard at the prequalification stage, so clients can begin the process without affecting their credit score.

Most importantly, brokers act in the borrower’s best interest. They are not tied to one institution, which allows for a more objective, borrower-first approach. In a competitive market like Austin or Dallas, that can be the deciding factor in securing the right home at the right time

Final Thoughts

Mortgages are complicated. But asking the right questions—and having the right partner—can make the process smoother, smarter, and more affordable

At LendFriend Mortgage, we believe that educating the homebuyer is the key to a successful homebuying process—and we’re here to help you explore every possible path to get there. Let’s talk about your goals and figure out the best way to get you home—wherever that home may be. Give us a call   512.881.5099 or get in touch with me by completing this quick form, and I'll be in touch as soon as possible.