Applying at credit union and local bank for first time homebuyer

[alwayshopeful]

Ok so I've been stressing out for months now trying to clean up our credit.  Myfico scores are EQ-718 , TU-708 and husband is EQ-666  TU-680, I pay $119/mo on student loans (have never been late), we paid off all of our debt and that is the only debt remaining.  I was going to apply online with our bank aswell as a credit union this morning.  I wanted to apply at both because our local bank doesn't offer fha just convention (minimum score needed is 650)  but the credit union offers both.  Will it hurt my score by applying at both places on the same day?  What happens if were preapproved at both places? 

[JM-AM]

Nothing happens but a few INQ's. In all actuality there probably wouldnt be much difference between your Bank and the CU on the same type of loan unless the requirements are different. Such as minimum score for qualification.

Since your husband score is just peaking over minimum requirement your rate will be higher.

Its a good idea to compare the differences but other things play a part. Such as employment history, down payment as examples.

Personally if you find the right Broker overall it would be a better financial savings. Yes some LO's would disagree but the truth is always in the numbers.

With that being said I am not saying do not shop and compare between all your options. Just wanted to inform you that you may be overlooking where you would gain the most savings overall.

[MovingForward_2012]

It may hurt a tiny bit because of the inquiry for the first application but the second inquiry should not ding your score at all since they are lumped together as one inquiry for scoring purposes. You will see the individual inquiries on your credit report but you should only be dinged once for both. When the inquiries for the same type of loan are spread out over a spam of several months, each inquiry hurts your score but when they are close together due to rate shopping, you should not get dinged twice and there is a possibility your score will not drop at all, especially if you already have a few inquiries on your reports. I have found out the fico score changes due to inquiries is a type of voodoo magic...it is not a 1:1 ratio. I have incurred multiple inquiries on my credit report since July, and some dropped my score and some didn't. It appears though that the initial inquiry for a credit card dropped my score, but a second inquiry for a different credit card a month later didn't hurt my score. At the most, I have lost 9 pts for a single inquiry and given that your scores are pretty high, I think you would lose around that many points for a mortgage inquiry but the second mortgage inquiry shouldn't cost you any points.

If what I just said is confusing, it is because it is. There is no known science available to the general public on how inquiries affect your score. Fico says inquiries account for 10% of your score but the weighting, etc., is fico proprietary. Fico does group people into different scoring buckets such that the same inquiry may cost someone with a lower score more points than it would cost someone with a higher score. Point of all of this, is you have a great score and it is not uncommon for someone with a score such as yourself to rate shop. In fact, it is recommended because say you don't like a particular lender's rate but you like their customer service...you can bring a GFE from another lender to them to see if they can match it so you get the best of both worlds: a great rate coupled with great customer service.

If you are preapproved at both places, you will need to compare preapproval amounts and rates, then determine which lender you would like to go with. I recommend speaking with a Broker as well as they work with multiple lenders and they can help find the loan that is best for you. Plus Brokers are very knowledgeable about the business and are very capable of answering all your questions to make sure your home buying experience is pleasant. While big banks and some credit unions will treat you more like a number than a person.