Is it worth shopping around for a lender?

4 Replies

Hi I'm looking to buy my first house in the Baltimore area and I'm planning on getting a conventional loan. Is it worth shopping around for different lenders? Will I get significantly different rates? Also do you typically only get pre-approved by one lender or can you get pre-approved by multiple.

@Caleb Wang

Pre-approval is generally a process that involves your credit getting pulled. I'd only do that once before you go house shopping.

But yes, once you find a place, go shopping. Bring your credit report with you, you'll get a copy during your pre-approval, and have the banker give you a number. If you can't get a number, head on down the road to the next place.

I recommend calling up some mortgage brokers, rather than going to a specific lender (like Wells Fargo or Chase). Brokers have access to lots of different lenders, so they can shop for the best rate for you. It won't take any more time for you than it would if you went to a big-name lender, but you'll get the benefit of shopping around.

If you want, you can call multiple brokers if you're still trying to learn more about how the process works, what costs you should expect, etc. That way you can see who does a good job explaining the process, and compare closing costs among a few brokers.

@Kimberly T. do you have additional fees when you go through a mortgage broker?

@Aaron Montague Thanks for the suggestion about pre-approval. That makes a lot of sense.

@Caleb Wang My understanding is the fees are comparable. That has been my experience. The idea, as I've been told, with using a broker is that the broker gets a chunk of the closing cost fees (like a sales commission), and the lender that the broker uses for your loan is fine with the reduced closing costs that they get because the broker is doing the leg work. As far as what comes out of your pocket as the buyer, it should be about the same amount as going directly with a lender.

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