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How to Shop for a Mortgage Without Hurting Your Credit

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your credit score This is why lenders use it to determine your creditworthiness every time you submit an application to borrow money. credit score fluctuates Over time, as you take on, apply for, and pay off more debt, it can take a little longer to recover from bigger dips.

if you think it will apply for a mortgage Right away, we recommend taking extra steps to ensure your credit score doesn’t drop significantly throughout the home buying process.

Avoid applying for other new lines of credit while buying a mortgage. Opening many new lines of credit at the same time lower your credit score — and when applying for a mortgage, you’ll want it as high as possible That’s because your credit score is what determines the interest rates you’ll be locked into for 15 years or more.

You can also improve your credit score by paying off your existing debt before you even start contacting lenders. there is a good chance that the loan terms will improve.

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double check your credit score

If you are about to start your mortgage search, health range more likely to be approved. There may be some lenders that cater to people with low credit scores, rocket mortgagekeep in mind that this three-digit number not only triggers you to take out a mortgage, but it can also affect the interest you end up paying. raise credit score That means lower interest rates.

rocket mortgage

  • Annual rate (APR)

    Apply for individual rates online

  • Loan type

    Traditional Loans, FHA Loans, VA Loans, Jumbo Loans

  • Clause

    8-29 years, including 15- and 30-year terms

  • need credit

    A credit score of 620 is generally required, but we will consider applicants with a credit score of 580 as long as other eligibility criteria are met

  • Minimum down payment

    3.5% if proceeding with an FHA loan

It’s also important to check if the lender you’re interested in accepts your credit score, as most lenders usually require a score of at least 620. jumbo loancredit score requirements may be higher.

Knowing your current credit score can help you avoid applying for loans with higher credit score requirements. This will only lead to rejection. Of course, you can always postpone the home-buying process and work on improving your credit score first to increase your chances of getting approval from your preferred lender, as well as locking in at a lower interest rate. I can do it.

you also want Keep an eye on your credit report So you can catch errors in your application that might report negative information to the lender.

Get pre-approved for a home loan

pre-qualification mortgage It means that you have received an estimate of how much you might be able to borrow to buy a home. Lenders usually do a soft check on your credit report, but it doesn’t affect your credit score.

Prequalification is a less rigorous analysis than preapproval, but it can still give you a rough estimate of the loan amount, so you can at least know which homes are the best fit for your budget. Not subject to qualification screening, you should prequalify with as many lenders as possible to see the amount you are likely to be offered by each.

Of course, you still need to be strategic about which lenders to ask for prequalification.For example, if you are already planning to make a big down paymentit may be wise to consider something with low or no lender fees, such as: Ally BankThese types of surcharges can add up quickly and must be paid in conjunction with the money you pay upfront for your home purchase, so it’s wise to save as much as you can.

Remember that you will eventually need a mortgage pre-approval. Prequalification is an early step that can be taken early in the home buying process, but it still does not replace preapproval.

Ally Bank

  • Annual Rate (APR)

    Apply for individual rates online.Includes fixed and floating rate mortgages

  • Loan type

    Traditional Loans, Home Lady Loans, Jumbo Loans

  • Clause

  • need credit

  • Minimum down payment

    3% if you proceed with a HomeReady loan

Strong Points

  • Ally HomeReady loans offer a slightly lower down payment of 3%
  • Pre-approved in just 3 minutes
  • Application completed in 15 minutes
  • with online support
  • Existing Ally customers are eligible for discounts applied to closing costs
  • No lender fees

Cons

  • We do not offer FHA Loans, USDA Loans, VA Loans or HELOCs
  • Home loans are not available in Hawaii, Nevada, New Hampshire, or New York.

Submit your application within 45 days

Typically, each time you apply for a new line of credit, the lender Difficult inquiry It may temporarily lower your credit score. Because of this, submitting too many applications for new credit can lower your credit score because you’re considered a high-risk borrower.

However, when it comes to mortgages, lenders expect you to shop, and within 45 days of being asked the first tough question, you can shop as much as you want without further damaging your credit score. I can do it.

This may be useful to use the knowledge gained from already pre-qualifying and being aware of which lenders are most likely to meet your financial needs. , avoid wasting valuable time in a 45-day window to conduct additional research for new lenders.

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Editor’s note: The opinions, analyses, reviews or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, approved or otherwise endorsed by any third party.

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