It's OK to shop around!
I encounter many buyers that are nervous about talking to a lender. Many get defensive at the suggestion that they get pre-approved. Dig a little deeper into the objection, and I usually discover that the buyers are more concerned about protecting their credit score than the actual approval.
I asked one of my lenders for some input on how I can help my clients understand the process and take the fear out of loan approval. Jason Mallett with American Mortgage provided some great resources for us.
What happens to your credit score when you make an inquiry?
The initial inquiry into your credit from a loan application will take a few points off your credit score. This initial dip is inevitable if you need to take out a loan for your new home. Any subsequent inquiries, within a brief time window, into your credit by any other lender will not be reflected in your score.
This holds true in the area of mortgage loans, auto loans, and student loans. It is not the same as applying for a credit card or a line of credit at a department store. Applying for a mortgage is not the same as applying for 10 credit cards. The credit agencies recognize the difference and adjust the scores accordingly.
Buffers and Deduplication...
Credit agencies recognize the differences between credit lines and understand when a consumer is shopping around for the best mortgage product. They have designed a process that allows multiple inquiries without penalty.
Lenders perform one last credit check on any loan they are about to close. As long as that check is done within 30 days of the previous inquiry, FICO ignores it.
Deduplication is the elimination of duplicate data. When a consumer shops for a mortgage loan, the initial inquiry takes a small hit to the credit score. As long as the additional inquiries are of the same nature, and within 45 days of the initial inquiry, they are considered duplicates and will not have any adverse effects on the credit score.
I found a great article on this...click to read more.
Where to shop?
Now that you understand it doesn't adversely affect you to shop within that 45-day window - SHOP!!! I have a great place for you to start your shopping - my lender-resource page. It provides you with my favorite lenders. I can't imagine any better solution than what you will find with the lenders on my list.
After you have shopped - then shop!
Now that you have confidence that you have the best loan product for your needs, the fun begins! Take a look at one of my most popular home searches or create your own search custom-made for your budget.
When you are ready to take that next step, give me a call.