Posts Tagged ‘loan shopping’

So you are ON FIRE!  You have decided to look into purchasing a home, and you are ready to get the ball rolling… like, yesterday!  Hopefully you have already read Tell me how this “buying a home” thing works?  A Guide, and now you are ready to read on for why NOT to stop, drop, and roll with the first lender!

Zelda__Stop__Drop__and_Roll__by_Gabi_hime

©2005-2013 ~Gabi-hime

All mortgage lenders are not created equally.  You deserve a second, third, or fourth, fifth, and sixth opinion when it comes to a major investment like a home loan.  Just because the bank is larger does not mean you will get the best interest rates, and sometimes there are additional fees that you may not be aware of.  Furthermore, your loan will be sold once it closes and nobody needs your approval to do it.  There are very few mortgage companies who keep their loans in house.  So do you feel like you have banked with USAA since you had a bank account and that you are being loyal to the company?  They will sell your home loan.  You have everything in your whole life with Navy Federal?  They will sell your home loan.  Your best friend’s sister-in-law, Sally Sue, works at Bank of America, and can hook you up?  They will sell your home loan.  This usually happens immediately after the closing and can happen multiple times over the life of your loan.   Here are a few things you need to know when it comes time to mortgage shop:

  • Having your credit run does effect your credit score.  However, what you may not have been told is that you are allowed to shop for mortgage, auto, and student loan rates.  Your credit can be run as many times as needed and lumped under one inquiry for mortgage, auto, or student loans as long as you complete your search within 30 days.   The theory here is that if you apply for multiple sources of revolving debt, you will likely be approved.  Versus if you apply for multiple mortgages, you will only receive one approval.  Therefore the revolving debt impacts your credit more significantly.  Do NOT stop, drop, and roll with the first lender! 
  • You can shop as many mortgage lenders as you would like, but you should do it within a limited time frame.  Ideally, consider mortgage shopping for 14 days, though you are protected with inquiries made within the 30 days before scoring.  Do NOT stop, drop, and roll with the first lender!   
  • Checking your own credit score will not hurt your credit.  It is a fallacy to assume that checking your own credit report should be done sparingly.  To prevent identity theft, or mistakes on your report you should check it at least once a year if not more.  Under the Fair and Accurate Credit Transactions Act (FACTA), you can check your report for free once a year.  However, there may be a small fee to receive your actual score.  That is where a lender can be useful to you.  However, do NOT stop, drop, and roll with the first lender.
  • You have no obligation to go with a mortgage lender that you have spoken with.  It may seem like you have given them access to everything you own, including your first born child, but do not let that dissuade you from shopping for mortgages.  You are not bound to a particular lender because they have run your credit and told you what you qualify for.  Even once you are into the buying process with your Realtor, you can still switch mortgage lenders.  You may even be under contract and preparing to close, but you can still switch!  One more reason you should NOT stop, drop, and roll with the first lender you speak to. 

One more point I feel compelled to add since many of my readers have the ability to use VA home loans:

  • There is no minimum credit requirement that is set by the VA!  The individual lender determines the credit score they are willing to accept.  The VA does not fund your loan, they simply guarantee a portion of it.  There are mortgage lenders out there that are willing to work with a bit riskier of a credit history.  It all depends on the individual circumstances, but this is THE BIGGEST myth I hear on a daily basis.  Once again, the VA does not fund your loan or have a minimum credit requirement.  Read for yourself, right here from the Veteran’s Benefits Administration Home Loan Guaranty Factsheet.  You can speak with your Realtor (preferably yours truly… ME!) who will typically have the scoop on a lender who may be able to help you if you have a trickier credit situation.  But you do NOT have to stop, drop, and roll with the first lender your speak with while giving up on your dream of owning a home.

As I speak of in Tell me how this “buying a home” thing works?  A Guide, you should be able to communicate easily with your Realtor.  The same holds true for your mortgage lender.  You should be able to get in contact with them easily.  They should return your phone calls, emails, and answer your questions.  The benefit to using a local lender is you will likely have their cell phone number and email address and can easily contact them on the weekends and evenings.  They work for you, and let’s face it, many home contracts go through on the weekends and evenings.  Your Realtor works for you, and so should your lender.

So did you learn something today?  How many mortgage myths have you been subject to?  Don’t assume that your Realtor knows it all either since after all, mortgage lending is not our area of expertise.  I see misinformation sent every day to consumers by Realtors who do not understand mortgage lending.  Hopefully I taught you Realtors reading a thing or two as well!  Most importantly, be an informed consumer!  Do not leave an office or end a phone call without understanding what you have been told.  You are not a burden, and you should not be treated as such.  If you get the feeling you are, then take your business elsewhere.  Informed consumers stimulate the housing market, and in turn stimulate our economy.  This FDIC Mortgage Shopping Worksheet may assist you when shopping for the best loan option for your family.  Happy home hunting!

If you are seeking real estate in the Clarksville, Tennessee or Fort Campbell, Kentucky area or know anyone who is, call today or submit your information below.

© Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com, 2013.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and https://buyorsellclarksvilletennesseehomes.wordpress.com with appropriate and specific direction to the original content.