Individual credit inquiries each ding your score slightly
The trick is in how you go about engaging the lenders. So seven different inquiries for different purposes would collectively chip away at your score. However, if the inquiries are for the same purpose (e.g. an auto loan or a home loan) and they are made within a window of no more than 4 weeks, they count as a single inquiry for the purposes of calculating your score.
So, you can shop several lenders in a 4 week period and let them all pull your credit, and although all the inquiries will show up on your report, they will only count once against your score as if a single inquiry
While on the topic of credit score it is also worth pointing out that scores within the same range generally net the same rate. So your score could drop from an 810 to a 790 and your rate would very very likely remain the same. Rates are based on the ranges (and other factors) not on a specific individual score.
“2. Only work with lenders that can complete your entire loan in 30 days, with a 30 day lock. I would consider a 45 day lock at the most. Here’s why: when a lender “locks” a rate, they’re committing money to the loan for the duration of the lock period. The longer the lock period, the worse the rate. It costs the banks money to lock loans and the rate on a 30,60 and 90 day lock will be very different. If the lender is going to take 90 days to get your loan done, you’re not getting the best deal.”
I would agree that you want a lender that can close as quickly as possible, but it heavily depends on the circumstances. Actually, for a purchase it depends on the contractual closing date. You’ll find that most large depository lenders (a.k.a. the too big to fail banks) have a minimum lock of 45 days and an accelerated lock of slightly less, perhaps 35 days. Their infrastructure is larger and generally moves more slowly – it’s just the way that it is. If they do not believe they will close on time they’ll extend the rate lock often at their own cost, not the borrowers. But that doesn’t help the borrower, especially in a purchase for which missed deadlines may come with other financial consequences. So, yes, find lenders that have a proven track record with a high close-on-time rate.
“4. If you have a loan with an existing big bank and have paid on time for decades, they will offer you no prefential treatment than a customer that entered their bank for the first time and asks for a loan.”
This is a misunderstanding of the way the system works. Banks would LOVE to provide preferential treatment. Oh they’d love to. Now doubt it would be very lucrative for them. unsecured personal loans Missouri However, when it comes to home financing they cannot. Volumes of regulations and laws require that every borrower be treated the same.
“5. If you don’t need your spouse to qualify for the loan, don’t put them on the loan. They can still be on title. To me, there is only downside when adding unnecessary borrowers.”
And both the government and investors will periodically audit closed loans to make sure nothing was done outside of established guidelines
This is where context is critical. Borrowers should think about this scenario VERY carefully in their own context. From a narrow perspective of qualification for the loan, this appears to makes sense. If you can qualify on your own, why add another borrower? Well, as a couple you’ll want to address the bigger picture. Death, divorce and other potential future issues can quickly turn this arrangement into a huge headache.