May 16, 2021

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Mortgage News

How To Shop For A Mortgage Without Hurting Your Credit

By comparing mortgage offers, you can find the lowest possible interest rate, which can ultimately save you thousands on interest. However, if you are not careful about how you shop in comparison, you can put your creditworthiness under needlessly, which can make it more difficult to qualify for the best price.

With a little planning, this doesn’t have to be the case. Find out how to do it buy a mortgage without hurting your balance.

1. Browse within a short time

When you are ready to get pretested for a mortgage and want compare offers multiple lenders attempt to do so within a 45 day period. This is because this window shows all credit requests from different lenders as one request in your credit report. While your score may be affected by the single request, it won’t be affected as much as multiple requests on your report.

That being said, it can be a good idea to qualify well in advance of this period so that you have more time to compare prices and fees.

2. Get prequalified

To get prequalified For a mortgage – some lenders call it an interest check – this can be a wise strategy if you are concerned about compromising your creditworthiness in the settlement transaction.

To qualify you for a loan, lenders will review your credit report but will do a “soft” query or soft pull that will pre-examine your report without affecting your score. In contrast, a “hard” credit request – which occurs when you are pre-approved or officially applying for a loan – can adversely affect your score. With prequalification you can shop and compare prices without this risk.

Remember, while prequalification can help minimize the damage to your score, it is not a substitute for getting pre-approved in due course. In today’s highly competitive sellers market, pre-approval is required to prove to sellers that you can get funding if your offer is accepted.

3. Hold back when applying for a new loan

If you are also considering opening a new one Credit card or remove a private loan When purchasing a mortgage, keep the following in mind: Multiple requests for different types of credit can adversely affect your creditworthiness and hamper your efforts to get a competitive mortgage rate.

If possible, wait until you have officially closed your mortgage before applying for additional forms of credit.

4. Check your credit report

Whenever you apply for a loan, it is important to know where your credit status is. Checking your credit report well in advance of making a mortgage comparison purchase can help you take proactive steps Improve it When needed – or to troubleshoot – you are in the best position to get the lowest rate without collecting unnecessary queries on your report.

You can get a free copy of your credit report each year from any of the three major credit reporting agencies AnnualCreditReport.com. Don’t worry – checking your credit report won’t affect your score.

5. Pay off debts

If your credit score could be improved, one of the best ways to increase it is, too Pay off your debt, such as credit card balances. If possible, pay off a credit card balance in full – bonus points to keep the balance as low as possible in the future.

The benefit of paying off your debts is twofold: Less debt will lower yours Debt-Income RatioThis can help you qualify for a larger mortgage or a mortgage with better terms.

Next Steps

Protecting your creditworthiness is important even if you are not buying a mortgage. Once you have been approved for a home loan and gone through the closing process, keep your score by not applying for other types of loans and by continuing to withdraw funds whenever possible.

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