Can I get pre-approved by multiple lenders?

Short Answer:

Yes, there is no limit to the number of pre-approvals you can have when buying a house. However, making sure that all lenders run hard credit pulls at the same time, will reduce the effect of multiple credit inquires on your credit score.

Long Answer:

When you're in the market for a new home, getting pre-approved for a mortgage is a crucial step. It not only gives you a clear idea of how much you can afford but also makes you a more attractive buyer to sellers. One common question, I get during this process is whether you can get pre-approved by multiple lenders. The short answer is yes, and there are several reasons why this might be beneficial.

Why Get Pre-Approved by Multiple Lenders?

1. Compare Programs and Rates: Different lenders may offer different programs that you qualify for, interest rates, and fees. By getting pre-approved by multiple lenders, you can compare these offers to find the best deal. Even a small difference in interest rates can save you thousands of dollars over the life of your loan.

2. Better Understanding of Your Options: Each lender has its own set of criteria for approving loans. By getting pre-approved by multiple lenders, you can get a better understanding of your options and what different lenders are looking for in a borrower.

3. Increased Confidence: Knowing that multiple lenders are willing to pre-approve you can boost your confidence as a buyer. It reassures you that you have multiple financing options available, which can be particularly comforting in a competitive housing market.

Will Multiple Pre-Approvals Hurt My Credit Score?

One concern many potential homebuyers have is whether getting pre-approved by multiple lenders will negatively impact their credit score. The good news is that credit scoring models typically treat multiple inquiries for the same type of loan within a short period as a single inquiry. This means that if you shop around for a mortgage within a 14-21day window (depending on the credit scoring model), it will have little to no impact on your credit score. In addition, many mortgage lenders can pre-approve clients with soft-credit pulls now. Soft credit pulls have no affect on your score.

How to Manage Multiple Pre-Approvals?

1. Time Your Applications: To minimize the impact on your credit score, try to have lenders run hard credit reports within a short time frame. This way, the credit bureaus will recognize that you are rate shopping and will count the multiple inquiries as one, against your score.

2. Keep Track of Offers: Create a spreadsheet or document to keep track of the different offers you receive. Note the interest rates, loan terms, fees, and any other relevant details. This will make it easier to compare and choose the best offer.

3. Communicate with Realtor: Be transparent with your realtor about your intention to shop around after ratification of contract. Some sellers consider which mortgage lender/company you are using for finacing, when they make their decision on one offer vs another.

Conclusion

Getting pre-approved by multiple lenders is not only possible but also a smart strategy for finding the best mortgage. It allows you to compare mortgage programs and provides a better understanding of your options. Just be sure to time your applications/hard credit pulls.

Find more answers to mortgage & real estate questions at www.jdanswersquestions.com

These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.