Profile picture for madchild2001

When searching for lenders...

I've noticed that when it comes to attempting to obtain a loan to buy a home, many advise that we seek out different lenders and get pre-qualified so that we can find the best rates. Wouldn't this affect my credit negatively for each of my visits to the lenders as each one will perform a hard inquiry?  Also, is pre-qualification the same as pre-approval?
  • January 08 2014 - US
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Answers (4)

Profile picture for madchild2001
One of my biggest concern was the outsourcing of companies to pull my credit scores so they don't register as one pull---and is what prompted my question.  If I don't find my home within the 90 day active phase of the pre-approval, would a lender take into consideration that the previous pulls were for the purpose of buying a home and not count it against me?  

I'm wondering now if using a website like lendingtree wouldn't be beneficial to get quotes and then speak to the lenders I have chosen.  I fell like the short online questions they ask are a bit restrictive and I feel iffy about giving out personal info to a company that will share it with others, though I understand this is how it works (more or less). I'm also a bit old school and would prefer to talk to someone in person.

Is there any difference to using small lending companies vs. my bank?  I only ask because I only know major banks as lenders and not small companies. 

Also, is prequalification the same as pre-approval? If it's not,  I don't want the lender to tell me later, you were only pre-qualified before, but we need to check your credit again to pre-approve you.  
  • January 09 2014
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You are correct in the fact that pulling credit lowers your scores, but this type of situation is a little bit different. After the first time your credit is pulled, you are able to pull your credit again in the following three weeks without further lowering your credit scores. So as long as you have the lenders pull your credit within this three week period then you should be fine. It will be as if you only had your credit pulled one time. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing with your situation. There are lenders like myself that would be glad to speak with you to help you get the loan that you need. There would only be a few more details needed to sort out your situation. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • January 09 2014
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Profile picture for gator70
Don't listen to this --   "Your credit score will not be hurt if each of them (three) pulls a credit report. "

Hard pulls on your credit hurt your FICO. There is a special window of time whereas the credit reporting agencies view credit pulls for a mortgage as only one hard pull. This was engineered to prevent the FICO damage.

However this goes wrong very often.

When I did a credit pull with Wells Fargo they outsourced the credit inquiry and the credit reporting agencies did not recognize this firm as a mortgage inquiry. Many banks outsource this activity.

When you get a pre approval from more than one lender they all hard pull your credit file. This is often 30-60 days before you are in full Real Estate shopping mode. The special window on credit pulls closes fast.

After you find your target property and make an offer, if successful the lender will pull credit again during the underwriter's investigation. If this happens to be with a new lender then your credit has one more hard pull and your FICO is damaged.

If your offer falls out, you lose time and you start again., possible with one more credit pull that falls outside of the special window of time.

Your pre approval letter gets old after 90 days and the seller want it to be a recently dated one. You might be faced with another credit pull outside of this special window of time. 

  • January 09 2014
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When it comes to shopping for a home loan you do want to visit more than one lender.  It would be in your best interest to get three quotes.  Your credit score will not be hurt if each of them (three) pulls a credit report.  However, that company will show up as an inquiry.  

Almost every mortgage loan is sold at one point or another on the secondary market.  That means that almost every loan is going to be serviced by a large bank.  That being the case, every lender is going to have competitive rates.  Tell the lender giving you the quote that you want to know what the par rate is for the day.  All three quotes should be with .25% of each other.  

The next thing you want to pay attention to is how the total settlement charges add up.  Are there a lot of nickel and dime type charges.  Can they explain line by line what each is.  This is what separates most lenders from one another.  They should provide you with a GFE (Good Faith Estimate).  If they don't provide you with a GFE you should not consider that lender.  
  • January 09 2014
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