How Many Mortgage Lenders Should You Apply To? It is not uncommon to hear that you should shop around when applying for a mortgage. But what is often not advised is just how many different mortgage options you should look at or how exactly you should carry out your mortgage shopping process.
Why Should You Get Mulitple Mortgage Offers?
Though most lenders stick to the standard basic qualification requirements on traditional loans, they will all have something different to offer when it comes to the fine details. In some cases, shopping around could save you thousands of dollars over the life of the loan, be it in the form of fewer fees or a slightly lower interest rate.
It is a good idea to seek what different lenders will offer you when you apply for a mortgage loan. Each lender will have their own specific lender fees, allowances on negotiable items like lender-specific fees, and could even charge to lock in a certain interest rate.
How to Shop for Mortgage Lenders
If you plan to shop for a mortgage on your own it is a good idea to apply for a mortgage with about 3 to 4 different lenders to see what each will offer you. You can get the ball rolling on this in three different ways. Seek a prequalification letter, apply for preapproval, or do both.
Lender Prequalification
This is a fairly quick and easy process to do because it is free and based only on the information you give to a lender. They do not need to check with a third party to verify anything yet. A lender will take your preliminary info and quickly give a response on a ballpark figure of what you could potentially qualify for on a loan with them if all of this info holds true after confirmation from a third party.
Remember this is not a preapproval and as such, there is no set-in-stone guarantee that you will be offered a certain amount of money for a loan.
Lender Preapproval
This is a more thorough process in which your credit report is pulled to verify financial responsibility and track record. Pay stubs and account statements will also be verified to ensure you have a stable income. With more information required and verified through a third party, a lender will provide more details into what a loan with them could look like.
Most often the loan offer will include an interest rate and estimated fees as well as a full list of all the costs due at closing and your monthly required payment. This process can take anywhere from one to three days.
Seeking Both a Letter and Preapproval
You could make getting a prequalification letter your first step and if you like what you see take the next step of seeking preapproval. If you apply for a mortgage and receive a preapproval you are not obligated to follow through on a mortgage with that lender. You could even go through the next steps of seeking full approval and if at any time the lender is requiring too much you can opt to go with another offer.
What is the Best Strategy for Mortgage Shopping?
The best way that anyone can shop for a mortgage is to work with an experienced mortgage broker because they do all the shopping for you. It is just like talking with any mortgage lender, except the mortgage broker is going to work on your best behalf and shop around for you to get you the best offers.
They already know what most lenders in the area are offering and which options might be the best for you to personally apply for. They take your information and do all of the prequalification work for you and then return to you with all of the offer information.
No need to fill out multiple forms, or talk with different officers trying to sell you on something and give you different information about your financial status. The mortgage broker shops on your behalf and then helps walk you through each of the top offers to give you expert advice and answer your questions so that you can decide on what mortgage would be best for you.
For more information on finding the best mortgage lender in Mission Viejo and California, please contact me at any time.
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For help finding the right type of mortgage in California please contact me at any time.
