Don't settle for a mortgage that's not right for you.
If you are going to purchase a property of your own, it's extremely likely you'll be using a mortgage in order to do it. Mortgage loans are common among home buyers because few people can pay cash outright for a home, and doing so often doesn't make sense due to the low interest rates and favorable terms that mortgages offer.
You don't want to jump into getting a loan and end up with the wrong one, though, since chances are your balance will be high and your repayment time will be long. To avoid a loan that's expensive, or that becomes a pain to deal with, it's a good idea to comparison shop and get several different quotes from lenders before moving forward with actually applying to borrow.
But just how many mortgage quotes should you get? Here's what you need to know to help you decide.
The minimum number of mortgage quotes to get before applying for a home loan
In order to be a smart shopper when it comes to getting your mortgage, it's a good idea to get a minimum of three quotes from different financial institutions.
Getting no fewer than three quotes can enable you to see if there's much variation in the rates and terms you are being offered. It can also give you a decent selection of different loan options to choose from.
While three quotes is a minimum, many people would do better to compare loan offers among more lenders. This is especially true if there's reason to suspect it may be more difficult for you to get an affordable mortgage. Each lender has their own qualifying requirements and their own process for setting rates, so borrowers with low credit scores, small down payments, or lots of other debt may find some mortgage providers to be more understanding than others.
Comparing quotes among a broader number of lenders is also a good approach if you aren't sure what type of mortgage to get. For example, if you're deciding between a conventional or FHA mortgage, you'd likely want to get three quotes from lenders specializing in each loan type to truly gauge what your borrowing costs would be with each option.
How to get multiple mortgage quotes to find the best deal
When you're getting quotes from different lenders, you should try to mix up the types of financial institutions you consider. For example, you may want to get quotes from large and small banks, credit unions, and online lenders. This will allow you to better determine if a specific type of loan provider is best for your unique situation.
You should also ideally look for lenders that give you a quote without putting a hard inquiry on your credit record. While multiple mortgage quotes tend to be grouped together as one for purposes of determining your credit score, it's still nice not to have to worry about many inquiries being listed and potentially affecting your score.
The good news is, a huge number of mortgage lenders have made it quite easy to get quotes online without your credit being impacted, which makes it much easier to ensure you're getting at least three quotes. You can usually compare rates and terms online in a matter of a few minutes to make absolutely certain you're getting the best home loan for your needs.
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FAQs
When applying for a mortgage, it's best to compare at least three lenders, according to the Consumer Financial Protection Bureau (CFPB). This can help you uncover the ideal combination of loan type, interest rate and fees that meets your needs.
How many mortgage loan quotes should I get? ›
Key takeaways: Understanding how to shop for a mortgage
You should get quotes from at least 3-5 lenders. Compare interest rates and lender fees. Look out for discount points. You have to get preapproved to know your “real” rate.
Will getting multiple mortgage quotes hurt credit? ›
Does shopping around for a mortgage hurt my credit? No. 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.
Should I get multiple loan estimates? ›
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.
Should I get multiple mortgage pre-approvals? ›
While many home buyers will only need one mortgage preapproval letter, there really is no limit to the number of times you can get preapproved. In fact, you can — and should — get preapproved with multiple lenders. Many experts recommend getting at least three preapproval letters from three different lenders.
Does getting pre-approved hurt your credit? ›
No—they may involve a soft inquiry, which won't affect your credit score. If you are pre-approved for a specific card you will receive an offer. The offer itself doesn't generate a hard inquiry, so don't worry—just because you have the offer doesn't mean you've hurt your score.
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.
Which FICO score do mortgage lenders use? ›
The most commonly used FICO Score in the mortgage-lending industry is the FICO Score 5. According to FICO, the majority of lenders pull credit histories from all three major credit reporting agencies as they evaluate mortgage applications. Mortgage lenders may also use FICO Score 2 or FICO Score 4 in their decisions.
How many hard inquiries are too many? ›
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.
Does getting a mortgage quote hurt credit? ›
A hard inquiry could lower your credit score by a few points. On the other hand, soft credit inquiries won't affect your score. You might wonder what would happen to your credit score if you shopped beyond the 14-day time frame. After 14 days, new mortgage quotes will add a soft inquiry to your credit report.
Under the TRID rule, credit unions generally must provide the Loan Estimate to consumers no later than seven business days before consummation. Members must receive the Closing Disclosure no later than three business days before consummation.
What triggers a new loan estimate? ›
Common reasons you may receive a revised Loan Estimate include: The home was appraised at less than the sales price. Your lender could not document your overtime, bonus, or other irregular income. You decided to get a different kind of loan or change your down payment amount.
How long are pre-approvals good for? ›
Most lenders will provide a mortgage preapproval letter that expires within 60 to 90 days. Not only can interest rates change during the preapproval window, but so can your financial situation. Either can affect your maximum borrowing potential, which is why lenders don't want to take on the risk beyond 90 days.
Can you be denied a loan after pre-approval? ›
However, even though prospective homebuyers get pre-approved for a mortgage before shopping for homes, there's no 100% guarantee they'll successfully get financing. Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved.
How long should you wait before applying for another loan? ›
How long should I wait before applying for another loan? Again, this can depend on your bank or lender's policies. Some lenders require you to wait 3 – 12 months (or make 3 – 12 monthly payments) before you can apply for another loan.
Can I buy a house higher than my pre-approval? ›
Usually, the preapproval shows the maximum purchase price/loan amount the lender will preapprove you for, and comes with an expiration date. If you try to make an offer on a home for an amount higher than you're preapproved for, sellers are likely to ignore the offer because you won't get approved for the loan.
How long is a mortgage rate quote good for? ›
Most lenders offer rate locks for 30, 45 or 60 days, according to the Consumer Financial Protection Bureau. However, you may find some lender with shorter term locks (as low as 15 days for purchase loans) or as long as 90 or 120 days if you're willing to pay an upfront fee.
How many mortgage lenders should you contact? ›
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.
How long is a lender quote good for? ›
Most lenders will provide a mortgage preapproval letter that expires within 60 to 90 days.
How many lines of credit should you have to buy a house? ›
Having a good credit score is incredibly important — but so is the way you built it. A rough rule of thumb: You will need 3 open tradelines to qualify for a conventional loan.
