This could indirectly cost you dearly.
- If you need a mortgage, it’s a good idea to shop around for rate offers.
- It’s also a good idea to do your rate shopping in a short period of time.
These days, mortgages are getting more and more expensive. So if you’re considering financing the purchase of a home, it’s important to research the best mortgage rate. This could mean making several phone calls to different mortgage lenders and discussing your financial situation.
But if you plan to shop for fares, it’s important to do so in a short period of time. If you prolong the process, it could actually hurt your credit score.
The problem of taking your time
When shopping for a mortgage, it’s important to get as much information as possible. After all, you’re probably borrowing a lot of money and want to make sure you’re getting as competitive an interest rate as possible on your home loan.
But if you plan to make fare purchases, it’s best to do so within 14 days if possible. This will reduce the chances of you ending up with multiple difficult inquiries on your credit report.
Every time you ask to borrow money, a lender does a thorough investigation of your credit report to make sure you are a reputable borrower. A single serious request is usually not a big deal, as it will usually only result in a five to 10 point drop in your credit score. It’s when you have multiple inquiries on your credit report that you might start having problems with damage to your credit score.
Now, the good thing about finding a mortgage is that if you do it quickly, you won’t have a whole bunch of different tough inquiries on your credit report. On the contrary, all these requests will count as one.
Why is that? If you’re shopping around for a mortgage and seven different mortgage lenders pull out your credit report in a short time, it’s pretty clear that you’re only looking to borrow a single amount of money. And so, these various surveys for the same purpose will all be combined into one. But if you spread these requests beyond 14 days, this may not happen. Instead, these various requests could be counted individually.
Note that a single serious request can lead to a drop of five to ten points in your credit score. Well, four or five hard requests could result in a drop of 25 to 45 points. It’s more meaningful. This could take you from excellent or excellent credit to still quite good, but not eligible for the best rates offered by a given lender. And so you’d better shop quickly to avoid this spell.
Rates may change
Another reason why it pays to shop quickly for a mortgage? Mortgage rates can fluctuate from day to day and, in some cases, rise sharply within weeks. And so, if you want a real apples-to-apples comparison, it’s best to gather quotes from different lenders in a short period of time. This way, you’ll know what rates you’re considering and you’ll be in a better position to choose the right lender for your borrowing needs.
The Best Mortgage Lender in Ascent in 2022
Mortgage rates are rising – and fast. But they are still relatively low by historical standards. So if you want to take advantage of rates before they get too high, you’ll want to find a lender who can help you get the best rate possible.
This is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, without a credit check, and lock in your rate at any time. Another plus? They do not charge origination or lender fees (which can reach 2% of the loan amount for some lenders).
Read our free review