What to do now
Make a list of potential lenders
Recommendations on lenders might come from friends, relatives, or real estate agents. While this gives you a start, you should also seek out different lenders on your own. There are many ways to find potential lenders. You can contact your local bank or credit union and other lenders that serve your area, as well as checking online. A housing counselor can also be a good resource to help you figure out how to identify lenders.
You can work with either a lender or a mortgage broker to get a mortgage
You can meet with lenders and mortgage brokers at this stage to get a feel for both options. Review the differences between a lender and a mortgage broker. For simplicity, we use the term “lender” or “loan officer” to refer to both lenders and mortgage brokers.
Contact at least three lenders on your list
Don’t stop with just one lender! By exploring your options with multiple lenders, you get more information about your options and get a sense for which loan officers you might feel most comfortable working with. Call each lender to set up an appointment to meet with a loan officer.
At the appointment:
- Share the basic facts about your situation and the kind(s) of loan you are considering.
- Ask the loan officer whether your plan makes sense to them, or whether they might recommend something a little different. If they recommend something different, ask why.
- Ask the loan officer to show you the interest rate, APR, estimated fees, and monthly payments for a couple different loan options.
- Ask the loan officer to look at your documents and help you understand whether there are reasons you might not qualify for the loan options you have discussed.
Keep your options open
Don't decide on a lender at this stage. Although you are not getting a loan now, explore your options with different lenders before you find a house because once a seller accepts your purchase offer on a home, you may have as little as a couple days to line up financing.
What to know
You’ll get the most value out of these conversations if you bring documentation with you
Lenders have very specific guidelines about how they count and document your income, assets, and the source of your down payment funds. An experienced loan officer can help you spot potential issues and suggest ways to address them. If your application might be complicated – for example, if you are self-employed – it’s best to find out sooner rather than later. Seek out lenders who are willing to go over the details with you.
You can decide whether to allow a lender to check your credit
A loan officer may ask for permission to check your credit. Knowing your credit score allows the loan officer to give you accurate pricing information about different loan options. An experienced loan officer can also help you check your credit report for errors. However, a lender’s credit check can show up in a future credit report and can result in a slight dip in your credit score. Within a 45-day window, you can have multiple lenders check your credit without additional impact on your score. Find more about what to consider when deciding when to allow a lender to check your credit.
After the lender checks your credit, you might start getting other offers of loans or credit, called “trigger leads” or “unsolicited offers of credit.” The offers are generally allowed under the Fair Credit Reporting Act. Credit reporting companies include your name on lists that creditors and insurers use to send you offers for credit or insurance, even if you did not sign up for these offers. You have the right to opt out of receiving the offers. Talk to your loan officer about how they plan to check your credit and whether you should expect trigger leads. The credit reporting companies operate a web site where you can opt out or find out more .
Even if a real estate agent or homebuilder has a preferred lender, still look for a better deal
Homebuilders and real estate agents are often familiar with certain mortgage lenders, but you can and should shop around to make sure you’re getting the best deal.
How to avoid pitfalls
Work only with loan officers who make you feel comfortable asking questions
A loan officer’s answers to your questions – as with all mortgage and real estate professionals – should make sense and help you understand your choices.
- If a loan officer makes you uncomfortable, can’t answer your questions, or is too pushy, look for another lender that is a better fit.
- As you move through this process, always make sure to check that the documents you receive match what the loan officer tells you. If they don’t, ask questions. If the loan officer is unable to answer your questions, consider working with a different lender.
- You can check to see if a loan officer is authorized in your state. Most are listed in this loan originator database .
Credit discrimination is illegal
Under the Equal Credit Opportunity Act, it’s illegal for lenders to base credit decisions on certain factors such as race, religion, marital status, national origin, receipt of any sort of public assistance, sex, or age (as long as you are old enough to enter into a contract). Learn more about illegal credit discrimination.
FAQs
Don't stop with just one lender! By exploring your options with multiple lenders, you get more information about your options and get a sense for which loan officers you might feel most comfortable working with. Call each lender to set up an appointment to meet with a loan officer.
Do multiple mortgage inquiries count as one? ›
Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. This is because other lenders realize that you are only going to buy one home. You can shop around and get multiple preapprovals and official Loan Estimates.
How do I get approved for multiple loans? ›
Lenders will determine your eligibility for an additional loan based on several factors, including: Your DTI ratio. Your debt-to-income ratio helps lenders determine whether you can afford to make your monthly payments. They'll use this metric to decide whether you qualify and to determine your interest rate.
Is it okay to talk to multiple mortgage brokers? ›
Can you have two mortgage brokers? Using multiple mortgage brokers can be possible, although it might not be a good idea, particularly if they're both submitting applications on your behalf.
Can I get a pre-approval from multiple lenders? ›
You can have multiple pre-approvals at the same time, in fact it's often a smart move. There is technically no limit on the number of pre-approvals you can get which makes shopping around with different lenders a no-brainer.
Should I pre-qualify with multiple lenders? ›
Each mortgage lender will give you a unique offer with its own interest rates, loan amounts, origination fees, and other upfront closing costs. Getting multiple preapprovals will help you compare those rates and terms to find the best, most affordable home loan.
What is the secret way to remove hard inquiries? ›
The easiest way is to file a dispute directly with the creditor. If the creditor cooperates, the inquiry may be removed after sending a single dispute letter.
Can you go through underwriting with two lenders? ›
Key Takeaways
Applying to multiple lenders allows borrowers to pit one lender against another to get a better rate or deal. Applying to multiple lenders lets you compare rates and fees, but it can impact your credit report and score due to multiple credit inquiries.
How many hard inquiries is too much? ›
Since hard inquiries affect your credit score and what is found may even affect approval, you might be wondering: How many inquiries is too many? The answer differs from lender to lender, but most consider six total inquiries on a report at one time to be too many to gain approval for an additional credit card or loan.
Is it hard to get multiple loans? ›
Key takeaways
It's possible to take out a second personal loan, but you'll likely be subject to borrowing caps imposed by the lender. The lender may also require you to make a set number of timely, consecutive payments before approving you for a second personal loan.
It's calculated by dividing your monthly debts by your gross monthly income. Generally, it's a good idea to keep your DTI ratio below 43%, though 35% or less is considered “good.”
Do multiple loan applications hurt your credit? ›
However, applying for two different types of loans, for example, a student loan and a car loan within a two-week period can count as two separate hard inquiries. Applying for more loans after the timeframe of 14 to 45 days can negatively impact your credit score.
What not to say to a mortgage broker? ›
10 Things Not To Say To Your Mortgage Broker | Loan Approval
- 1) Anything untruthful.
- 2) What's the most I can borrow?
- 3) I forgot to pay that bill again.
- 4) Check out my new credit cards.
- 5) Which credit card ISN'T maxed out?
- 6) Changing jobs annually is my specialty.
a Bank. A mortgage broker can offer a wider array of options and streamline the mortgage process, but working directly with a bank gives you more control and costs less. Kate Wood joined NerdWallet in 2019 as a writer on the homes and mortgages team.
Is it better to use a broker or not? ›
Working with a mortgage broker can potentially save you time, effort, and money. A mortgage broker may have better and more access to lenders than you have. However, a broker's interests may not be aligned with your own. You may get a better deal on a loan by dealing directly with lenders.
How many lenders should you meet with? ›
It's recommended to apply to at least three different lenders. This gives you a better understanding of what's available in the market and helps you find the best rate and terms. Can applying to multiple lenders hurt my credit score?
Can I have two lenders at the same time? ›
You can apply to multiple mortgage lenders and it won't negatively impact your credit score so long as all the credit inquiries happen within the same 45-day window.
Can I get quotes from multiple lenders? ›
Once you've chosen a home, it's time to request Loan Estimates from multiple lenders. Getting multiple Loan Estimates can help you save money and get a mortgage that best meets your needs. Homebuyers can potentially save $600 to $1,200 per year by getting mortgage offers from multiple lenders.
Is it better to stay with the same mortgage lender? ›
You could save money (at least initially)
By sticking with the same lender, you may not need to pay a valuation fee and you may not need a solicitor, so you'll save on those costs. You might also avoid paying a redemption fee.
