Does it hurt my credit score to mortgage shop?
Each mortgage application you submit will result in a hard credit inquiry. That's because each lender will need to do a credit check to see if you're a good loan candidate. A single hard inquiry should only lower your credit score by a few points, whereas many hard inquiries could cause more damage. However, if you apply for multiple mortgages within the same 14 days, and each mortgage lender pulls your credit report during that time, it will count as a single hard inquiry -- protecting your score.
It's best to get pre-approved for a mortgage loan before you start looking at homes. That way, you'll have a sense of how much you can afford to spend. You're also more likely to be taken seriously by sellers. That's especially important in a competitive housing market. In fact, it's a good idea to get pre-approved by more than one mortgage lender, and that way, you can compare loan terms.
That said, mortgage pre-approval doesn't guarantee a loan. Once you're ready to make an offer on a home, you should shop around quickly and apply for a mortgage. You don't want to apply for a mortgage before you're ready to buy a home, because the interest rate you lock in will only be guaranteed for a certain amount of time. You can generally lock in a rate for 30, 45, or 60 days, but sometimes longer. But you should get pre-approval offers from different lenders so that once you're ready for an actual mortgage, you'll know where to focus your efforts.
To recap, here's how to shop for mortgage rates:
- Get your finances in order
- Determine how much of a mortgage you can afford
- Contact different lenders
- Compare your offers to find the best one
Whether you're a first-time home buyer or you're an experienced refinancer, it pays to do some mortgage shopping before accepting an offer. Follow these steps to increase your chances of coming away with the best mortgage option for you.
Still have questions?
Here are some other questions we've answered: