I’m just starting the process to shop around to get a mortgage. I understand I should at least talk to a few lenders, but does that mean I should try to get pre-approved with them in order to get the conditions I could get? If every time I do that it’s a hard pull on our (mine and my wife’s) credit report, I imagine that after 2-3 we would definitely take a hit and our scores could go down. Is this a problem?
Generally speaking there's a window where multiple mortgage inquiries within the same time period do not impact your score. Whether that window is 2 weeks or 30 days it depends either on what's really true (I honestly don't know) or what the algorithms deploy, so I apologize. Of course I am referring to the algorithms for all 3 bureaus--EFX, TU and EXP--but my point is really that as long as you are practicing the type of behaviours that are representative of consumers with good qualifying scores, then you are going to be in the neighborhood of those with good credit scores.
With that being said, my philosophy regarding whom to select and how many to research leads me to advise you to gather a few referrals from friends, family, Agents and enemies in order to reach out and contact them. Let them know you are shopping around, but be honest with them as well as yourself so that you can find a match with someone you feel both comfortable and confident that you are working with because IF/WHEN the "going gets tough" you want to have your fate in the hands of someone you know you can trust.
Don't focus on initial note rates without comparing APRs and understand that you will get what you will pay for......If you want to save money and be frugal, do so when shopping for clothes or shoes--not necessarily with your mortgage loan as you won't be able to return it if it doesn't fit you down the road.
Me & my husband's credit was hard-pulled 4 times with 4 different lenders within a 29-day period. My credit score only went down 2 points, although the number of inquiries were ugly. Now that I'm in the process of a mortgage loan, u/w just asked for a letter of explanation for all the inquiries -- and i simply wrote a letter indicating that I was shopping around for a competitive mortgage quote, and that settles it.
@nguyenlm0629 where do you send the letter and did they consolidate it to one after?
Keep in mind, you don't have to let all these lenders pull your score. After 1 lender pull, you'll know all 3 scores and your debt ratio will be verifiable. If a lender wont give you estimated (rate/points) based on your verbal info and scores then they have something to hide. You can get a good idea right off the bat with how awful some lenders offers are so it's unnecessary for the inquiry.
I would agree and disagree with this, but allow me to explain with a bit more detail so the Consumers can understand the complexity of the loan pricing process because unfortunately---as you likely know, most consumers think all mortgage rates are equal across the board....
As a Loan Officer that originates and sells loans directly to the Govt. Sponsored Entities that include Freddie Mac, Fannie Mae and Ginnie Mae there are many adjustments to the "price" (rate) of the loan that the consumer is requesting. (Now, if any of you loan officers out there are manually overriding the online pricing engines in order to offer your applicants/clients better pricing~~please let me know :-) )
In order to ensure that I am providing you the most current and competitive market rate, I want to have your credit report in my file so that I make no mistakes about providing any discounts for loan level pricing, credit scores, etc. and so that I can be ready to lock if you committ to the terms. Sure I can provide you with an estimate through my website in real time, but if you are seriously shopping (you gave me your permission to issue credit) I am going to give you a serious and precise estimate as well. Of course this comes back to my original post where I mentioned to talk to several LOs to "gain that feel or sense of confidence" in the one you want to work with so that you actually can avoid multiple inquiries.
I hope that helps a little...
When a buyer asks "My middle score is 682, what's your rate and points for an FHA loan?"
There will be no pricing hits and as a loan officer of 17 years, they can receive a precise rate quote.
It appears your company has overlying factors that that increases the buyers interest rate for things other than credit score. We do not do that. If you know the LTV and score a proper rate can be quoted. I'm very surprised anyone can say otherwise.
Think about it from a consumer standpoint... with your theory a consumer would have to go to bank A, get their credit pulled, get an offer of 4.7%, with 1 point.. Then go to lender B, get their credit pulled again - get an offer of 5.5 with 1 point. And so on. They might go to 3 lender'B's in a row before they find the 4.25 FHA rate with no points that I have available today. When they simply could have called lender B and found out immediately that they are priced way too high and not worth of a credit pull. I refer to this as the common sense approach. Once they like the rate quote, then have the lender pull credit and send off the preapproval.
Yes and no.
I'm in NC with a correspondent lender where there are both positive (cost/cash credit to the consumer) and negative (cost/cash hits) pricing adjustments for loan levels, credit score etc, for just about every scenario.
The cost discrepancy may only be .25% (hypothetically) of the loan amount and could be the difference of receiving a lender credit of $500 on a $200k loan, or it could be the difference in receiving the loan at par value or to pay a discount fee of that amount. However, when comparing to the brick and mortar banks in my market I will win more than I will lose when it comes to loan program costs and rates but again, these little nuances are the primary reason I recommend that folks shop around and compare lenders but to not focus primarily on the rate you are being offered without including the service as well as your own satisfaction in knowing you have chosen the right expert to help you navigate the process.
In my experience as a consumer talking directly to lenders, the rate sheet is the rate sheet for that given day (or time, these things can change).
Ultimately you can easily talk to a bunch of lenders without taking a pull, but you cannot get the official rate quote without a pull... that said I don't personally think it's necessary, I can look at a rate sheet and know precisely what is going to be quoted.
To clear up a bit of things FICO wise: mortgage inquiries are indeed scored as one if they are done with a certain time period (Experian FICO 2, which is part of the mortgage trifecta, is 14 days) and they also individually have a grace period of 30 days on all FICO models used today, which means even the first mortgage inquiry won't impact your credit for 30 days.
Most people should be able to sort their lender within 14 days for optimal scoring and really anyone should be able to figure it out in 30, like seriously if you're planning on getting a mortgage get your ducks in a row and pick one.
Admittedly some outliers, like I walked away from an ocean front condo 30+ days in and then went and did something else entirely but that was certainly partly because I didn't have my poop in a group in terms of what I really needed.