Can you get more than one prequalification letter for a loan

Question

Can you get more than one prequalification letter for a loan from a lender? How do you shop around for a good lender for a prequalification letter. I want to work with someone that will explain to me all the details. Someone mention Prospect Mortgage and PNC, so I am looking into the area. Will a prequalification run my credit report more than once if I decide to shop around for a friendly lender. I'm looking to get a FHA loan or Homepath. Thanks in advance for you answer

Dana Anghel · Answer

If you're using the qualification letter only to show you're serious about your offer, you only need one, and it doesn't matter where it comes from.

Every lender will want to pull your credit to qualify you, and you don't want too many inquiries (or at least try to keep them within a 30 day period, 14 days is even better).

Credit pulls are good for 90 days, so if you proceed with the initial lender that did the pre-qualification within that time frame, they will not need to run your credit again (advantage).

As for shopping around for good lenders, I suggest to look for someone that will meet with you face to face, but avoid big banks. Don't just compare interest rates, compare costs. Ask for a quote on how much the adjusted origination charges will be for the particular rate, and for the next rate higher/lower. All the other fees are pre-paid items and they will be pretty much the same with everyone (title fees, escrow, daily interest).

When shopping lenders, try to get quotes the same date, because interest rates change often and can jump significantly from one day to another. If there is a huge difference, ask if the rates changed recently (perhaps give the date you received the other quote).

Very important is the time frame in which the loan will close. Some lenders are more bureaucratic than others. A direct lender might be better than a broker, because they do everything in-house. A broker might have access to a lender with better pricing, but those lenders are often very picky and you might experience delays (especially with underwriting).

Get a feel for the loan officer. A good indicator is how much they listen as oppose to how much they talk. Excessive talking is usually an attempt to prevent getting challenged on anything.

Better Business Bureau is making money off accreditation.. but I would still take a look at the complaints. There are a lot of them with loan-mill companies that care more about the volume than the service. You will be just a number in a pipeline.

Why are you going FHA? Unless you are thinking about buying a home that requires an FHA loan, the increases in mortgage insurance are pretty ridiculous. you're looking at 1.75% of your loan balance in up front mortgage insurance fee, and as high as 1.3% in annual mortgage insurance (for the life of the loan).

Hope this helps.

Dana Anghel · Answer

That makes sense. 3.5% downpayment vs 25% for a 4 unit.

Good luck with everything.

When you find a lender, see if they will put your loan through underwriting when pre-approving you. This will make your loan go a lot faster and eliminate a lot of the "surprise" document requirements ;)

Jordan L. · Answer

Wow Dana Thank You for your insight. I am doing FHA because of the low deposit . Im looking for 4unit at the moment.

Dana Anghel · Answer

Also, most lenders and brokers have access to both conventional and government programs (unlike most credit unions and banks). They will always offer the basic 30 year and 15 year fixed, along with maybe one version of an ARM (the safest one, that most people chose).

If you want something more diverse, than a broker can locate a lender that offers multiple ARM loans (3, 5, 7 or 10 year ARMs) or a loan term such as a 23 year fixed (this is handy for people that want to refinance but not extend their loan term). This preference will usually have a price - from my experience, those lender have less competitive rate sheets.

If you have a popular local website with all sort of adds, look there for listings of loan officers and contact them.

Be careful submitting online quotes - a lot of websites are representing lenders - they are "fly traps" and they will sell your information to the highest bidder (usually 4 of them). By the end of the day, your phone is blowing up with calls from 20 different people that mostly harass you into sending them your documents without providing any real information.

Duncan Taylor · Answer

Go the extra step and get a pre-approval letter from your lender of choice.

Yes, absolutely shop the rates. But, do it in the shortest period of time you can. All 'similar' inquiries in a 30 day period are counted as one for FICO scores.

Jesse Gonzalez · Answer

@Jordan Lives

I'm a mortgage broker and I can tell you that multiple inquiries should not affect your credit score.  This is an excerpt directly from myfico.com, "most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score."

Also, if you work with one bank, one lender only, then you're stuck with their rates and pricing for those rates.  If you work with a broker who has access to 50 lenders then they will shop for the best rate for you which is much more in your favor and believe me it makes a big difference.  As broker's we are subject to strict compensation guidelines that are more stringent than banks too so that works out well for you in most cases.  Best of luck.

Wayne Brooks · Answer

203k is FHA, owner occupied only.  Homepath is FNMA, and available for investors, but is ONLY available for purchasing FNMA REO's, which are usually over priced, which is why they offer the Homepath with no appraisal requirement.

Jordan L. · Answer

I would look into Supreme Lending, FHA and Homepath are they the same thing same loans? Or two different components? Im asking because thats one of the advantages that I saw Prospect Mortgage has that they offer Homepath loans, if they are not same thing. But if they are I can go the supreme lending route. Thanks for your input on this

Wayne Brooks · Answer

What advantages with prospect?  FHA is FHA, it's just a matter of lender fees and internal overlays/restrictions.

Jordan L. · Answer

To be honest I don't want to deal with the big banks, I do have a relationship with a credit union but they don't offer the loan I want like Fha. How do I know who to pick amongst all the competitors for my prequalification letter, curently at the moment Prospect Mortgage has a the most advantage

Can you get more than one prequalification letter for a loan

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