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18

April

The Myth of Multiple Mortgage Credit Inquiries

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mortgage credit mythDon’t let the fear of multiple credit inquiries keep you from shopping for a mortgage.

Fact: Your credit score plays a significant role in your life. Scores can determine insurance rates, employment, opening a bank account, and borrowing money like mortgage lending.

If you would like a refresher course on how your credit scores work, check out our blog post on credit scores.

Applying for too much new credit in a short period of time can adversely affect your hard-earned score. So it is natural to be nervous about shopping for a mortgage. But the major credit bureaus see the value of comparison shopping – and that’s why they cut homebuyers some slack.

Types of Credit Inquiries

Credit inquiries are broken down into two main groups: hard inquiries and soft inquiries. “Hard inquiries” may affect a credit score, while “soft inquiries” do not affect a score. It is important to understand the difference when applying for new credit.

Soft inquiries (also known as “soft pulls”) typically occur when a person or company pull your credit as part of a background check. Since soft inquiries are not an application for new credit, they won’t affect your credit scores.

Hard inquiries (also known as “hard pulls”) occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. Your mortgage consultant will need to take a look at your credit report to complete your pre-approval you to purchase a home. Granting a lender permission to pull your scores – constitutes a hard inquiry and can lower your credit.

The good news is the “hit” to your credit is typically just 3-5 points.

Shop Multiple Lenders, Get One “Ding” On Your Credit Report

The important concept is that — unlike applying for multiple credit cards — when someone applies for several mortgages, they won’t get “dinged” for multiple, consumer-initiated inquiries. This is because when they apply for five credit cards, they’ll likely get the option to use them all five. By contrast, with the mortgage applications, they’ll only get approved once.

As such, the credit bureaus have made it a formal policy to permit “rate shopping.” In fact, it’s encouraged.

Borrowers have the right to shop with as many lenders as they like. The secret though is for a client to do their shopping for a mortgage within a limited 14-45-day time frame. If you time the inquiries correctly, the credit bureaus will acknowledge the first credit pull as a “ding” — remember, only 3-5 points — but will ignore each subsequent check.

No matter how many credit checks you do, the mortgage inquiries will always get lumped into a single credit score “hit.”

So, happy shopping! We would love a chance to work with you. To get started, give us a call or apply online today!

Sources: myFICO.com, www.consumerfinance.gov

20

February

First-Time Homebuyers: Where to start

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As a First-Time Homebuyer, it is a good idea to start the pre-approval process before looking at homes. You will know what price range you are pre-approved for, so that you aren’t looking above or below your price range. In today’s market, homes can sell quickly. If you are pre-approved, your pre-approval letter shows sellers that you have the financial backing to make a solid offer.

As a first-time homebuyer, you have many financing options. First, you could go with a traditional conventional 15- or 30- year loan or FHA 15- or 30-year loan. Maybe your new home would qualify for a USDA loan. Are you a veteran? If so, a VA loan may be your best option. Meeting with a loan officer, in Fargo, ND, Maple Grove, MN or Grand Forks, ND, helps you understand the ins and outs of all your financing options. This will give you peace of mind when you are shopping for the right home. You know that you have the best financing option available when you run across the home of your dreams!

Meeting with a loan officer will allow you to understand what you may need to do to close on a home. How much money do you need to save for a down payment? Will you be required to have money set aside for an escrow account for your homeowner insurance and taxes? Is your credit score where it needs to be? After meeting with your mortgage consultant, you will have a clear and realistic understanding of what you need to close on your first home!

The first step in the pre-approval process is starting an application. You can Apply Online Here. 

Are you interested in consulting with a loan officer prior to applying online? Contact Us Today

Our Maple Grove office is having two Homebuyers Social this month! Come and learn about the purchasing process. There will be free drinks and appetizers and time for Q&As. RVSP Today!