Hello: Can I please get some assistance. We are in the process of putting our house for sale and buying another. I am on the Pre-qualifying Process so more than likely my actual credit has not been used, ( if I am mistaken please correct me:) ). The next step will be to get Pre-approved ( I assume that is next since I've been given a list of documents to provide the mortgage broker to verify income). My main goal aside from getting a good house is buying points to lower my interest in order to maintain a comfortable payment, but I also want to shop around with different lenders for the best deal. I plan on checking with two other different lenders besides the one that I'm going through right now. Any advice will be greatly appreciated.

Thank you in advance:)

MEB4

Your credit score still probably be affected, but not by much. The way I understand it, whenever a lender looks at your credit score, it takes a "hit." Everyone of these "hits" has a small impact, though minor, can add up. Most lenders will take this into consideration, so I'm told. They know how it works. Good luck.

If you have lots of records applying for credit, it may have a small affect on your score.

Yes, it can affect your credit score. We did one of those online "we'll have 5 offers in minutes" things and found out later than we got 7 dings on our credit history. It doesn't look good if you are going to look to do other financing within 2 years of the search since that is how long it takes before they drop off.

We learned the hard way. I think it is completely unfair, how else are you going to shop around for a rate? If you do shop around you end up paying a higher rate because of all the inquiries.

Yes it will affect your credit score. More than likely the lender will require you to provide at letter to explaining why all the credit inquiries. Basically what they are interested in is if a lender is inquiring while you are in the process of purchasing a home that you are not taking on anymore loans or credit lines that will affect your credit score.

Also, once you've decided on a lender to use be sure to obtain a Truth In Lending Statement that discloses all fees and charges. Last thing you want is to get down to closing and the Lender has hit you with a hidden fee.

Thank you all for each of those responses. I sincerely appreciate it. :)

Sincerely,

MEB4

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Originally Posted by AW805

Yes it will affect your credit score. More than likely the lender will require you to provide at letter to explaining why all the credit inquiries. Basically what they are interested in is if a lender is inquiring while you are in the process of purchasing a home that you are not taking on anymore loans or credit lines that will affect your credit score.

Also, once you've decided on a lender to use be sure to obtain a Truth In Lending Statement that discloses all fees and charges. Last thing you want is to get down to closing and the Lender has hit you with a hidden fee.

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True. And use the letter be an opportunity to explain any other blemishes on your credit report... one time one of my father's credit cards showed up on my report! And we live literally diagonally across country from each other. I'm in Fl, he's in Washinton.

And don't be afraid to mention your also shopping for a lender and a rate.

Thank you CaptainRich... I really do appreciate all the information. Thank you again

-MEB4

A few years ago I sat through a 3 hour phone seminar hosted by Fair Isaac Company (FICO). They said that several inquiries from different mortgage lenders in a short time would count as one inquiry for scoring purposes. They were somewhat vague on the time, but I would think that a couple of weeks would be reasonable. They said the same holds true for someone shopping for a car loan. You made mention of your intent to pay extra discount points to buy the interest rate down. I generally advise against this. The yield spread for 1/2% difference in the rate of a 30 year loan is about 2 points. On a $100K 30 year loan, a 6.00% loan would cost you $2000 more than a 6.5% loan. The payment on the lower rate would be $32.52 less. At the lower payment it will take you 61.5 months to recover your $2000. If you keep the loan for the next 10 or 20 years, obviously you will come out ahead with the lower rate, but you will either sell or refinance the home long before that time. A small buydown or buy up in the rate can make sense, because the price between each 1/8th % increment is not the same. If you can get 1/8% lower rate at a cost of only 1/4 point, it is a good value. If you can buy the rate up 1/8% with the lender paying you 1/2 point to do this, then it's a good value. The days of major permanent rate buydowns is long past. During the reign of Mr. Peanut (Carter), when rates hit 17.5%, I saw a builder pay 29 discount points to buy the rate down for a buyer. Such things are no longer allowed, as excess seller contribution. Your bet bet is probably a loan with zero points and zero origination fee.

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Originally Posted by Dr D

A few years ago I sat through a 3 hour phone seminar hosted by Fair Isaac Company (FICO). They said that several inquiries from different mortgage lenders in a short time would count as one inquiry for scoring purposes. .

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And yet the original poster will pull their own credit and find in the list of derogs that there have been too many recent inquiries.

With Fair, Isaac, it's all smoke and mirrors.

If it wasn't confusing, they wouldn't have a product to sell.

If the process were straightforward, it would be too easy to rate creditworthiness and there would be no need for a score.

My wife and I was denied a loan due to the number of credit inquiries. When we pulled our credit report, 7 where from mortgage lenders shopping around, 3 from a furniture store because the idiot processing our loan messed up with the application three times and one for a credit card. If FICO states that it should only count as one, then Equifax and TransUnion are not following that. The mortgage credit inquires stated 2 years to remain on your credit report.

Yes the labyrint of FICO scoring is confusing, to say the least. Until a few years ago the whole system was a closely guarded secret. The keeper of the system felt that if consumers knew how the scores were arrived at, that they would change their behavior in order to "manipulate" their scores. That is akin to playing a baseball game without knowing what the rules are. Fortunately, too many inquiries comprise a small part of your credit score. Be advised not to borrow from a "finance' company, because that can drop your score. Much of the paper for 90 days same as cash, is sold to finance companies, which can drop your score. The main things are to pay on time and not use too much of your available credit.

Thank you all! I really am paying close attention to what is being said in answer to my posted question. I am working through a local mortgage broker and plan on contacting two more banks, one of which is currently financing our house. Other than that I don't plan on doing anymore inquiries. Unless I am mistaken, by me working through a mortgage broker directly my loan could end up being sold w/in a few weeks (as that is what happened with my current home loan) is that correct?
Last time I did not pay any close attention to what was being done or how it was being done as long as we got a comfortable house payment with the house that we wanted. In this instance I plan on thoroughly researching my options and not limiting myself to what only one person says that I can get... I have made sure all my payments are made on time with my current mortgagor, but also have good faith in the assistance that my bank provides to its members... this is why I am certain that if I do "shop around" I will not go past the three finance options that I have in front of me.

I am still confused on the point buy down though... the first time my mortgage broker quoted me she gave me a 7% int on the quote. Within 2days she called and advised me that we were pre-approved for a 30year loan with a 6.25% interest... After reading up on it that evening I mentioned to her the next day that I would be interested in buying points to lower my interest. I was told it was good to do that and that to bring it down to a little over 5% ( I don't remember the exact percentage... )that I would need to pay an approximate $4,500.00 plus the closing costs.

I plan on selling my current home and price it accordingly hoping for a quick sell... the market is favorable for buyers and I am confident that I can find a good house for a good price in the area that I want. I want to inform myself as much as I can so that I may get what is best for my family and I. THANK YOU FOR ALL OF YOU FOR PROVIDING ME WITH YOUR OWN EXPERIENCES AND KNOWLEDGE.

My most sincere thanks,

MEB4:)

Basically, lenders are willing to give a lower interest rate if you pay some of the interest upfront. Just for arguments sake, lets say that at 6.25% you will pay $150,000 in interest over 30 years. Over the 1st 2 years you might be paying $14,000 in interest. At 5%, your total interest might drop to $125,000 with $12,000 over the 1st 2 years. So the lender winds up with $2500 more upfront that they can invest in other mortgages. That's the advantage to them. The advantage to you, is that you pay less in total.

If you plan on staying in your home for a long time, then paying points to lower your rate is a good idea. However, if you expect to move within 4-5 years, don't do it.

Disclaimer: those numbers were made up just for explaining they would not equate to any real loan.

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Originally Posted by MEB4

I am working through a local mortgage broker and plan on contacting two more banks, one of which is currently financing our house. Other than that I don't plan on doing anymore inquiries. MEB4:)

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You need to make it absolutely clear to these other people that you don't want them to pull your credit more than once.

Also, when they know that they're competing for a loan, they'll often quote rates that creep up by the time you reach the closing table. You usually don't find out about this until you're actually looking at the docs.

Make sure you get a Good Faith Estimate from whomever you choose, along with a list of any conditions for the pre-approval.

Seeing as how you haven't sold your house, your pre-approval will likely expire and you'll have to re-apply by the time you are able to execute a purchase.

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Originally Posted by MEB

4Unless I am mistaken, by me working through a mortgage broker directly my loan could end up being sold w/in a few weeks (as that is what happened with my current home loan) is that correct?MEB4:)

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Count on it... even if you get your loan from a bank, there's no guarantee they'll carry it in their portfolio. Even credit unions sell a percentage of their loans.

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Originally Posted by MEB4

In this instance I plan on thoroughly researching my options and not limiting myself to what only one person says that I can get...

... After reading up on it that evening I mentioned to her the next day that I would be interested in buying points to lower my interest. I was told it was good to do that and that to bring it down to a little over 5%
MEB4:)

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Where did you hear that this is a good idea?

I suggest you stay in "homework mode" until you've thoroughly researched this topic. I believe Ric Edelman addresses this topic in one of his books... The Mortgage Professor may have a calculator to help you figure out if this makes sense... bottom line, it rarely is a good idea to buy down the rate. Furthermore, I believe that you have to write off the points over a period of years, rather than taking a full deduction in the year that they were paid.

Sorry for the delay in responding. I do thank you all for your assistance! Than you Home Retention Agency... I continue my search for what's best!

-MEB4