October 26th, 2019 11:45 AM by Jackie A. Graves, President
Mortgages are almost always the biggest and costliest loans
people will take out in their lives, so getting the best deal is one of your
most important financial moves. Along those lines, many borrowers want to know
if applying for multiple mortgages at the same time makes sense in this quest.
Of course, the top way to get the best deal is by making sure
your credit score is in good condition; this will affect your interest rate,
which is a major part of how much a loan costs. The other part is lender fees.
Loan fees vary by lenders, so borrowers should shop around to get the lowest
fees — not just the lowest interest rate.
The big problem with multiple mortgage applications is the fees
that come with each one. If your goal in applying for multiple mortgages is to
save money, then it may not make sense to spend a wad on application fees,
usually hundreds of non-refundable dollars per application.
lenders won’t charge a fee for prequalification,
so borrowers can get estimates without a hit to their wallet.
some lenders do charge a fee for mortgage preapprovals, as they
require income verification, credit checks and other administrative duties that
are more intensive than prequalifying. And they will typically want a deposit
of around 1 percent of the loan value to lock in a rate.
lenders will remove a preapproval fee as a courtesy (and a way to entice you to
become a customer), so it doesn’t hurt to ask.
lenders won’t tell you an application fee is negotiable, it does tend to be one
of the few costs associated with obtaining a mortgage that can be flexible, or
waived,” says Lauren Anastasio, wealth advisor at SoFi in Philadelphia.
lender pulls your credit score to approve you for a loan, that’s counted as a
hard inquiry, which can count against your credit. However, credit score models
take into account multiple inquiries that are used for the purpose of rate
shopping. In this instance, credit reporting agencies, such as Experian, will
group all of those inquiries together and just count them as one.
be a record of multiple credit inquiries if you do apply with multiple lenders,
but there should be little to no impact on your credit score from those
inquiries and it shouldn’t discourage you from speaking with multiple lenders
until you find the right fit,” Anastasio says.
will pay a variety of fees for taking out a mortgage. Some of these are lender
fees, but some are just the cost of homeownership, such as taxes and insurance.
It’s important to understand these fees so that you know exactly how much the
mortgage application fee might be called something else. For instance, some
lenders may say they don’t charge an application fee, but they’ll charge an
origination or processing fee, Anastasio points out. They might also waive the
application fee, but have a higher underwriting fee.
to shop and compare interest rates and fees. They both will be different from
lender to lender,” says Adam Spigelman, vice president at Planet Home Lending
in Cherry Hill, New Jersey. “Your goals and needs influence which combination
of costs and rates will be your best bet. For example, if you are not staying
in the house long term, it might make more sense to take a slightly higher
interest rate to get lower fees than to take the lowest possible rate and pay
examining your loan costs, be aware of “junk fees.” These are added costs
lenders might tack on to your bill. You might find two line items that pay for
the same thing, such as “origination” and “broker” fees. If you spot this on
the loan breakdown, be sure to ask about it. Also, having multiple loan costs
to compare can give you some leverage when you’re negotiating with a lender.
borrowers who are refinancing, Spigelman recommends asking for a “no-risk
appraisal” which can cut down on how much you pay for the loan.
“no-risk” appraisal is where the lender pays the upfront cost for your
appraisal. If it turns out you don’t have enough home equity to refinance, the
lender doesn’t ask you to repay the cost of the appraisal,” Spigelman says.
want the cheapest mortgage possible with the best terms, but completing
multiple applications is probably not the way to accomplish this. Shop for
rates and APRs and compare these. APR is the all-in cost of the loan and
includes fees and other costs, so it’s the best apples-to-apples comparison.
And don’t be afraid to negotiate with the lender on fees, especially on items
where they have some wiggle room.
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