Applying for a mrotgage with multiple brokers. Good idea or bad?

Question

I'm in the process of looking for a primary residence and have heard differing opinions on whether or not you should apply for a mortgage with multiple brokers. Some say it's not good for your credit to have additional inquiries while on the other hand, you're really cheating yourself by not shopping around. What are your thoughts??

Dirk Smithson · Answer

Joel has some good info, but junk fee's are a thing of the past, Mortgage companies cant charge unnecessary fees. they will face steep fines if they do ,(state licensed can't for sure) Its so strict that if the borrower pays more for a credit report than what the company charges they consider that a junk fee. It was common practice to charge 25.00 for a credit report even if the report only cost the LO 13.50. That has come to a hault.

As far as getting multiple quotes, It shouldn't lower your score if they are pullled within a 30 day window, but like joel say's not 100% sure on this so get advice from a credit company.

I'm told everyone has the same rates and fees, but I don't believe that, however Mortgage  brokers have to charge every customer the same pricing on a month to month basis, for example If xyz brokerage is working with wellsfargo. they tell the rep tht they want to earn .875 on the backend of everyloan. thats what every borrower gets charged. In the past if Jon Q Loanofficer wanted to charge customer" A" .875 on monday and tuesday charge customer" B " 1.75 because he felt like it he could.

Dodd Frank Act made this new law, and for me it has worked in my favor. I used to get hammered by customers telling me they can get it cheaper and if I dont lower my fees theyll go elsewher. Now I tell them heres the rate, and fees and it's what I have to charge by law. not a penny more not a penny less. I cant change the fee to give my cousin or neighbor a better deal than what I give they person who walks through the door.

Also If It were me I would ask them if they were state or federally licensed. Im told The federal don't have to follow the same rules like the state so your going to have a LO who is on thier best behavior if they are state licensed. Big Banks like wells are federal I believe.

Joel Owens · Answer

You also want to "lock the rate" and try to get one "free float down" if you can.

The rate locks in the low rate of today. If the market has a blip with news that spooks everyone  in a negative way basis points could jump by 25 or a 1/4 of a percent. If however the opposite happens and rates lower by 20 basis points for example you want to "float down" and lock that lower rate. Also compare the total lender charges for junk fees and amount required down. It's not just the interest rate but other terms and fees of the loan and how long it takes to close.

Joel Owens · Answer

Hi Nick,

The 3 credit bureaus understand that for things like a car and a house mortgage consumers will "shop the rate".

This means multiple credit pulls. Generally if you do this they will count all inquires within a say 1 to 2 week span as ONE INQUIRY. Now this is the way it worked for primary house loans last time I looked but do not take it as 100% as the algorithm credit scoring models constantly change.

Now if you keep getting credit pulled over a longer span of time say months then you stack up multiple inquiries not counted as one and the score goes down because the model thinks you keep applying for credit and nothing is approved.

Remember a call on the phone doesn't mean squat so you are wasting your time. Until they see tax returns and your credit a rate quote is worthless. You have to underwrite the borrower first to get a minimal approval and then deeper into the process they will be asking for much more to close the loan.

Curt Davis · Answer

You can shop around for the best rates simply by calling them to find this out.  You dont need to apply every time.