Brai is the founder of SW4 Insights, a public policy advisory firm based in Washington D.C. He has over a decade of experience as a journalist and consultant covering finance and economic policy, with a particular focus on distilling complex topics t.
Brai Odion-Esene ContributorBrai is the founder of SW4 Insights, a public policy advisory firm based in Washington D.C. He has over a decade of experience as a journalist and consultant covering finance and economic policy, with a particular focus on distilling complex topics t.
Written By Brai Odion-Esene ContributorBrai is the founder of SW4 Insights, a public policy advisory firm based in Washington D.C. He has over a decade of experience as a journalist and consultant covering finance and economic policy, with a particular focus on distilling complex topics t.
Brai Odion-Esene ContributorBrai is the founder of SW4 Insights, a public policy advisory firm based in Washington D.C. He has over a decade of experience as a journalist and consultant covering finance and economic policy, with a particular focus on distilling complex topics t.
Contributor Rachel Witkowski Correspondent/EditorRachel Witkowski is an award-winning journalist whose 20-year career spans a wide range of topics in finance, government regulation and congressional reporting. Ms. Witkowski has spent the last decade in Washington, D.C., reporting for publications i.
Rachel Witkowski Correspondent/EditorRachel Witkowski is an award-winning journalist whose 20-year career spans a wide range of topics in finance, government regulation and congressional reporting. Ms. Witkowski has spent the last decade in Washington, D.C., reporting for publications i.
Written By Rachel Witkowski Correspondent/EditorRachel Witkowski is an award-winning journalist whose 20-year career spans a wide range of topics in finance, government regulation and congressional reporting. Ms. Witkowski has spent the last decade in Washington, D.C., reporting for publications i.
Rachel Witkowski Correspondent/EditorRachel Witkowski is an award-winning journalist whose 20-year career spans a wide range of topics in finance, government regulation and congressional reporting. Ms. Witkowski has spent the last decade in Washington, D.C., reporting for publications i.
Correspondent/EditorUpdated: Feb 1, 2022, 1:07pm
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Buying a house is a very involved process. There’s a lot of groundwork you should cover before applying for a mortgage. After you’ve narrowed down your home preferences and budget, research loan options to determine which mortgage lender is right for you.
There is no perfect number for how many lenders you should apply to, but the key is to look at multiple offers and compare them, and within a short time frame so it does not hurt your credit score.
Applying to more than one mortgage lender means you are able to compare interest rates and fees to find the best deal. It puts you in a stronger position to negotiate and secure a better loan package if you have multiple offers in hand.
Different companies also offer different kinds of loans. This is especially true if it is an online mortgage company versus a traditional bank or credit union. So you will want to cast a wide net and explore options in greater detail. Ask questions and take the time to understand what kind of loan might be the best choice for you. A housing counselor, mortgage broker and sometimes a lender will offer general suggestions to help broaden your search.
Depending on the lender and their business model, there are different approaches to how they structure interest rates and what closing costs are paid upfront or can be included in the loan balance. Several online lenders offer low or zero closing costs, but you will have to pay a higher interest rate in exchange. More traditional financial institutions will sometimes charge higher closing costs but give you a lower interest rate.
Tap your social network about how they chose their mortgage lender, whether it’s family, friends or coworkers. If you’re working with a real estate agent, they might also recommend lenders that they have worked with, and those that might not be the best fit.
Be sure to ask everyone you consult why they chose a particular lender. For example, it could be because of a good experience with a specific loan officer. Make sure their reasons match up with your criteria so you don’t waste your time with lenders that are not right for you.
Speaking with multiple lenders allows you to get a better sense of your options, and determine which loan officers you would be most comfortable working with. It’s likely you will spend weeks working with the lender and sending documents, so you want to make sure it’s someone you feel communicates clearly and quickly.
But how many mortgage lenders should you apply to? The Consumer Finance Protection Bureau (CFPB) recommends that you contact “at least three lenders” on your shortlist.
There is no formula that tells you the exact number of mortgage applications to submit. Considering the time commitment required, some people are content with applying to two lenders and choosing which comes up with the better offer. Others prefer to shop extensively and will apply to as many as six or seven lenders before they decide.
If you take the path of least resistance and only apply to two lenders, keep in mind that you could miss out on a better deal. On the flipside, you are putting your credit score at risk if you submit too many applications exceeding 45 days.
Another reason to be wary of engaging with too many lenders is that the national credit agencies sell your information to other mortgage companies that you have not applied to. This is known as a trigger lead.
Once other lenders know you are actively shopping for a mortgage, you might get inundated with phone calls, emails and direct mailings from would-be competitors with offers that might be too good to be true.
In order to pick the best mortgage, you should request a loan estimate from multiple lenders. This way you can compare and contrast to see which has the best deal. Also, requesting a loan estimate is straightforward and no paperwork is required.
The only information you have to provide is your:
Be sure you are comparing the same kind of loan from each lender, with similar features, so you can easily make the comparisons.
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