Should You Two-Time Your Mortgage Lender?
Your home is one of the biggest financial investments you will ever have. As a homeowner, you could have a mortgage loan for many years to come, possibly even decades. But while it makes sense for to shop around for the best possible deal, is it okay to apply for a mortgage with two lenders at the same time?Verify your new rate (Jun 20th, 2019)
The Impact Of Multiple Credit Inquiries
In previous years, having multiple mortgage applications meant multiple credit inquiries. Credit inquiries occur when a lender pulls your credit.
For most people, a mortgage credit inquiry is known as a “hard pull” against your credit. Hard inquiries negatively impact your credit score by three to five points.
Multiple inquiries would be potentially harmful to homeowners due to the impact on credit scores. This kept consumers from shopping around to more than one lender.
When you apply for a mortgage over 14 to 45 days today, multiple inquiries only count as one.
This rule went into effect so that consumers could perform due diligence when making major purchases, thus insuring they were getting a good deal.
The Advantages Of Applying With Multiple Lenders
Fact – nearly one out of four home purchase applications are denied.
If 25 percent of mortgage applications are turned down, a little “insurance” could translate to a lot of peace of mind. This is especially true if you have less-than-perfect credit.
Another reason to shop around is that mortgage programs, closing costs, interest rates and service can vary significantly from one lender to the next. Obtaining more than one loan approval allows you to test the waters with lenders on these variables.
It doesn’t hurt to tell lenders that you are shopping around. In fact, you should tell them.
Mortgage competition is alive and well in our current economy. If you are at good credit risk, lenders may be more likely to compete for your business.
Informing lenders that you’re shopping and comparing will typically result in the lender being more inclined to put their best foot forward from the very beginning.Verify your new rate (Jun 20th, 2019)
The Best Way To Apply For A Mortgage (Or More Than One)
When you apply for more a mortgage, working with two or more lenders at once can help you find the best deal.
However, what you don’t want is to end up paying multiple fees for multiple applications.
For example, if you get far enough into the process of a mortgage application, you will need to pay for an appraisal.
While having one appraisal is necessary, paying for multiple appraisals isn’t the best use of your money.
Instead, find one lender with whom you feel confident. Vet them by the things that are most important to you.
For some homeowners, it’s all about the closing costs and the interest rate. For others, closing costs and interest rates may be important, but paying a $100/day penalty to the builder because your lender couldn’t close on time can end up being much costlier than an eighth of a point on the interest rate.
In other words, service and being able to close on time, can prove to be just as important if not more than a slightly higher interest rate.
Know what’s important to you so that you can shop and compare accordingly.
Comparing Multiple Lenders
After you feel comfortable that you’ve found your lender, bank, credit union or broker, pull the trigger on the appraisal and locking the rate.
Having your primary lender in place, you now have more concrete terms, rates, fees and service to which you can now compare with other lenders.
Again, don’t be shy about telling lenders that you’re working with other institutions.
Not only can it be helpful to provide full disclosure to the lenders with whom you’re shopping, it is more than likely to come up regardless.
For example, credit inquiries from other lenders will come up when a lender pulls your credit. Not only will the inquire show up, you will need to explain it.
Also, if you are applying for an FHA mortgage loan, something that happens early on the process is that an FHA case number is assigned.
FHA case numbers go into a nationwide database known as FHA Connection. Most lenders will be less than thrilled to find out via the FHA Connection that you’re “double-apping”.
No one can fault you for wanting to get the best deal. They may, however, get their feelings hurt if they feel as though you’re trying to be sneaky.
Being forthright about your intentions let’s all parties know your objectives, and you’ll be more likely to get a better deal.
What Are Today’s Mortgage Rates?
Consumers typically don’t think twice about shopping around for cars, or even basic household items. Don’t be afraid to apply this same logic when it comes to shopping for a mortgage loan.
Applying for more than one mortgage at once allows you to compare costs, rates, program options and even “test-drive” lenders prior to committing to just one lender.Verify your new rate (Jun 20th, 2019)