Financing in 95124>Question Details

Ella, Home Buyer in San Jose, CA

Is it wise to get 2-3 quotes from lenders or will it affect my FICO?

Asked by Ella, San Jose, CA Sat Sep 29, 2007

I'm ready to get pre-approved for a home loan( ist home) .I have excellent credit .Is it necessary to shop for the best int rate from 2-3 banks or will it lower my FICO score that so many lenders are looking into my info?

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Hi, Ella:

Lots of conflicting answers so far - here's the accurate one: Until a few years ago, each time a creditor ran a client's credit report, the score declined by a few points. Fortunately the three credit bureaus changed this to now allow up to four credit inquiries in a 30 day period per type of inquiry (i.e. mortgage inquiries, installment loan inquiries, etc.). The credit scores will drop slightly based on the first inquiry, but will not change for inquiries 2 through 4 if you continue to shop. Any lender who tells you that each inquiry will continue to lower your score is probably trying to keep you from the competition. Just keep the shopping to a maximum of four inquiries in a 30 day period and you should be fine.
5 votes Thank Flag Link Sun Sep 30, 2007
Thanks everyone for all the inputs, i decided to get only 2 quotes...the first referred to me by a good co-worker and the other from a national bank with known good ist time home buyer program.
3 votes Thank Flag Link Fri Oct 5, 2007
Your score is impacted by having excessive inquiries. The credit bureaus state that if you have multiple mortgage inquiries within a 14-30 day period, that they will only be counted as one. (Each burea is different). However, I've seen credit scores impacted with no other specific changes and the reason given was too many inquiries. It's best to work with a mortgage broker that you trust to help you not only with the rate, but the best overall program and loan guideance. As you can see, many homebuyers purchased on rate (1%) over the past few years and have gotten into trouble. The best rate, is not always the best option when you know all the facts. Hire a true professional and protect yourself.

Please view my profile for legal disclaimer.
3 votes Thank Flag Link Mon Oct 1, 2007
Yep - I've actually been the fourth mortgage broker to run a client's credit after having been told what his prior scores were, and the scores were the same on the fourth inquiry. Please also remember that you get to start over on the count 30 days after the first inquiry.
3 votes Thank Flag Link Sun Sep 30, 2007
Just one more point. If you know your score you should be able to shop rates without every lender pulling it again.

Also, make sure when you are shopping that you are comparing apples to apples. Some lenders, even our local banks, will quote no points then charge a one point origination fee. (Which is just a point with a different name). In fact , you should get a good faith estimate before you commit to any lender.

Finally, make sure you are locked in at application for a period long enough to cover your closing date. Actually it is best to be locked in several days past your closing date on a purchase because there are so many things that can delay a closing.
2 votes Thank Flag Link Mon Oct 8, 2007
On behalf of all Trulians and RE Pros, thank you for coming back to the thread with your updates and feedback. So often, we wonder if our answers were read, or served any useful purpose. Thanks for responding!
2 votes Thank Flag Link Fri Oct 5, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Valid points, Steve. Still, what I stated before is accurate: The first inquiry will lower your score slightly. After that, the score won't be lowered by the next three inquiries if they are from the same type of creditor (i.e.: mortgage inquiry, auto loan inquiry) within a 30 day period. There are lots of other things that can cause your credit score to decrease that have nothing to do with credit inquiries such as increasing the balance on your credit cards, too many or too few credit accounts, collections, etc..., but based on the original question, the score won't decrease (after the first inquiry) until there are more than four "same category" inquiries within a 30 day period. In other words, the bureaus are not penalizing you solely for shopping for a new mortgage loan. All other issues you discuss are very valid. There are many "used car salesmen" in the mortgage business. Work with someone you can trust or with a lender recommended by a friend. I can't believe the horror stories I've heard from clients of mine who had been the victims of bait & switch tactics from unscrupulous loan reps.
2 votes Thank Flag Link Mon Oct 1, 2007
I agree with Kelly. I have check with a number credit repair specialist and they all confirmed what Kelly is saying.
2 votes Thank Flag Link Sun Sep 30, 2007
Hi Kelly. Welcome to Trulia Voices. Thank you for giving us the specifics. I knew it was 30 days or a months but did not know how many inquiries were permitted. That's really good information you gave us.
Web Reference: http://www.go2kw.com
2 votes Thank Flag Link Sun Sep 30, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
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Amir,

I am the lady for whom the California bait-and-switch law was written about thirty years ago. I happened when the manager of a chain furniture store patted me on the head and said, "You don't understand busness, little girl." I called the AG, so he could explain business to me. Our legislature, which never does much, actually cleaned up the law here. The manager's company paid $4M for a course in bait and switch.

You're welcome.

I am amazed at how often I run into this fraud. Even when I tell them who I am, they persist. So does the AG.
1 vote Thank Flag Link Sun Sep 30, 2007
Hi Ella, I agree with everybody who said that you can have several inquiries within a specific time frame (I think it's a month) without it affecting your credit score. I asked a very knowledgeable loan agent about that not too long ago as I was concerned that multiple inquiries could affect the credit score.
These days you want to be pre-approved by two lenders just in case one falls out at the last minute. Just make sure that you tell the second loan agent that you getting the loan approval as a backup. They'll understand that in the current market. Good luck.
Web Reference: http://www.go2kw.com
1 vote Thank Flag Link Sat Sep 29, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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Often the best way to avoid a bad loan is to get a second opinion. I recommend interviewing a bank mortgage loan rep., as well as an independent mortgage broker, and ask each one for a copy of the Good Faith Estimate for every loan they talk to you about. One lender might propose more than one loan package, and you need to be able to see and compare by looking at the estimates in writing.

Then I suggest providing the Good Faith Estimates to each lender you're considering working with, and asking for their comments. One lender can usually spot the strengths and weaknesses of another lender's proposed loans better than the rest of us!

Personally, I am a Realtor, not a lender, but I respect my clients loan needs enough that I try to attend their initial loan appointments. Being there together helps because the borrowers can ask me related real estate questions - and it helps me, too, because I have a better idea what they can afford and how to structure their offer to match their loan. We can also talk about which lenders they like, and why, to help them find the most trustworthy lender to meet their mortgage requirements, and get them into the home they really want.

Find More RE Financial Counsel and Resources at:
http://movinca.com/index.php/page/financialcounsel
Web Reference: http://www.movinca.com
1 vote Thank Flag Link Sat Sep 29, 2007
Ella, I think that Dot's advice is good- have them all base it off of the reports that you give them, then you can have them run it when you find the lender you are most comfortable with. My advice- not that you really asked this- is to use care when choosing the lender. Often I see people who are told that one lender will save them 1/2 % or so- however, they HAVEN'T mentioned the many junk fees they are adding on. You need to be VERY careful to compare apples to apples. Have them all put every fee in writing- so that you can see the bottom line figures. I have even seen lenders give you everything in writing, then at the very last minute tell you that something has changed and they can't do what they originally said. They knew the whole time that they couldn't beat the price of a competing lender- but lock you in to them. It is important that you have someone you truly can trust- get recommedations from people who have used them!

Good luck on buying your first home! I hope you find it to be a great experience for you, and the beginning of building lots of wealth!
1 vote Thank Flag Link Sat Sep 29, 2007
As Amir said, you get a window of opportunity to shop around without hurting your score. Make sure you have all your paperwork in hand with a completed application and meet with a mortgage broker, a local bank and a national bank to compare rates and terms within the same day or two. Also remember that rates can change several times a day. If you have a recent copy of your report with the score, take that to the banks/brokers and ask them to rely on it for now. Then when you find a home or are ready to lock in a rate, that is when you want them to hit your credit report. That way if a problem arrives 25 days later, you can contact another lender without it hurting your score.

It sounds as if you are on top of things. Congratulations!!!
Ruth
1 vote Thank Flag Link Sat Sep 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
I pre-approved 417k with rate lock 5.125 from BOA for the house of (123 street 95124) ; but some one bid over me;and I miss a chance to buy that house; May I still use that approval to qualify for another house?

This is a follow up my previous question regard of 95124; I prefer house in 95124 only and under 500k; I lost from last bid on short sale; and another lost from reo sale; someone bid price over the opening house price..

thanks again.

hien
0 votes Thank Flag Link Sun Jan 25, 2009
It is wise and your score shouldn't be affected. I wrote an article on my website about this very thing.

http://getprequalified.com/article/104743/first_time_home_bu…
Web Reference: http://GetPrequalified.com
0 votes Thank Flag Link Sat Nov 10, 2007
Your score lowers anywhere from 3-8 points per "pull". I learned this one the hard way becuase sometimes the lenders will pull you multiple times for different products.
0 votes Thank Flag Link Mon Oct 8, 2007
I agree with Steve. Get a referral from someone you trust and use one lender who is trustworthy, knowledgeable and can get the job done. Beware of the interest rate bait and switch tactics.
0 votes Thank Flag Link Mon Oct 1, 2007
Shop for rates but be sure you are comparing apples to apples (getting the same quote across the board).

Do not let the lenders continue to run credit reports on you as it will reduce your FICO score as they look at the amount if inquiries within a 90 day period.

When you are shopping for lenders it is helpful to work by referrals from family, friends or even your Realtor. You want someone who will deliver and not just thow the numbers you want to hear to get your business.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Sat Sep 29, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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We are not talking about second opinions here!

We are talking about your FICO score.

That was your question.

Don't give authorization to anyone else to run your credit. You are done! Put a fork in you. DON"T do it again!

Move forward with what you have. Your score is what it is. Work with it. DON"T run your report again.

You are only going to make things worse.
0 votes Thank Flag Link Sat Sep 29, 2007
Ella, yes it will lower your score; however banks understand that you are shopping for a mortgage. If you had car dealers, credit card companies and dept store inquires then that would be bad. It shows you as unstable and a high risk for the lender.

If I was you, I would call my realtor and friends and ask them for a lender referral. Call that lender and let him pre-qualify you and give you a good faith estimate. He should tell you your FICO scores at that point. Let him or her know that you are shopping at least 2 other companies. Call the other companies and give them all the details . This will allow you to shop with only one hit against you!

Hope this helps.
0 votes Thank Flag Link Sat Sep 29, 2007
Contrary to popular opinion..... (drum roll please...)

Inquiries DO lower your FICO score. If a credit report is run through the SAME credit reporting agency, your score will not be effected. Unfortunately, different lenders use different credit reporting agencies and it WILL result in an inquiry every time another agency is used.

If you are shopping loans, have your credit report transferred to the new lender wanting to run your credit or make sure they run the credit through the same agency as the company that ran your credit last.

DO NOT believe someont that tells you different.
0 votes Thank Flag Link Sat Sep 29, 2007
I disagree...I have seen scores come down with each check even on the same day. It is good to find out your score yourself by going to one of the 3 major bureaus (buy all three-in-one). When you check your score yourself it does not count against you.

Shop around with several lenders but do not let them check your credit. Have them base their quotes off of the scores that you give them. In other words, ask them "Based on my credit scores of 657, 701 and 743, what interest rate will you offer me?"
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Sat Sep 29, 2007
Ella,
From what I know you can get several quotes within a specific period of time and it won't hurt your scores. Check with a local lender to get specifics.
0 votes Thank Flag Link Sat Sep 29, 2007
I have been told that if the credit checks are within a month your FICA will not get affected. I would personally get a quote from as many lenders as I can.

From 1991 to 1994 I was a mortgage broker myself. Mortgage brokers frequently do the "bait and swith" technique.

http://en.wikipedia.org/wiki/Bait_and_switch

Larger banks and lender loan officers can not do that.
0 votes Thank Flag Link Sat Sep 29, 2007
Yes, get the quotes to compare and contrast. It will not lower your score.
Web Reference: http://www.iansellsnola.com
0 votes Thank Flag Link Sat Sep 29, 2007
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