*If they are within the same 30 day period.
This is due to the Fair Credit Reporting Act which was enacted to help protect consumers credit scores from erroneous facts being reported against peoples credit.
One can shop for a mortgage worry free as long as the inquiries happen within a 30 day period. This means you can visit multiple lenders and brokers to make sure you are getting the best rate possible and not have to worry that your credit will be going up and down as a result.
If you are looking for a Mortgage in Utah and are told by a mortgage lender not to have others pull your credit because it will lower your score, run. This is an old trick that some people use to discourage shopping and competitive rates and fee’s. You want the best deal possible and the credit laws enable you to find it!
Some important things to remember when you know you will be applying for a mortgage:
- Put off applying for any new credit until after the loan is closed not merely approved.
- Credit Cards, Auto Loans, Signature Loans, Satellite TV/Cable, Cell Phone Service
- Make sure all of your credit card balances are below 30% of the available credit limit.
- Maxed out cards are a score killer, pay all balances down to below 30% (10% is optimal). Carrying a small balance, no more than 10% of the available balance can actually help improve scores more than carrying a zero balance.
- Credit reporting can take 30-60 days on recently changed status’s. If you intend to pay down balances to help improve scores make sure to do it well ahead of time as it wont help at all if you do it a week before your credit is pulled for the application.
- If there are some credit issues that need to be resolved, have all of the documentation available that shows if debts were paid or reported in error ect.
- Gather up all the basic required documentation for a loan ahead of time to help speed up underwriting. You will need the following to begin the process (but you may need more once Underwriting starts looking at the file):
- 2 years tax returns
- 2 months pay stubs or profit and loss statements for self employed
- 2 months bank statements (personal and business for self employed)
- Most recent statement from Retirement accounts such as IRA, RothIRA, 401K
- Paper trail documenting the source of your down payment (Bank Statements, Letter of Explanation etc.)
- Personal Identification (Valid Drivers License, Social Security Card, Passport, W-2)
- If you are not 100% sure that you are a ‘perfect borrower’, look into what you qualify before you go house hunting. Nothing is more disappointing than finding out you don’t qualify for that beautiful home or ‘killer deal’ that you just found.
Remember that to get the lowest rate possible you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including a loan origination/discount/broker fee which can be negotiated with your lender representative. You may elect to pay less in fees but you will have to accept a higher interest rate. This is a good strategy for consumers not planning on keeping their home for more than 3 years. Discuss all available scenarios with your loan advisor
