Mortgage Shopping 101

Step 1: Before You Start Shopping for a Mortgage

1. Check Your Credit Report and Score

• Obtain your credit report and scores from the major credit bureaus.

• Review your credit report for inaccuracies, such as misspelled names or incorrect account information.

• Dispute any discrepancies with the credit bureaus to ensure accuracy.

2. Understand Different Loan Types

• Familiarize yourself with various mortgage loan types, such as:

  • Fixed-Rate Mortgages

  • Adjustable-Rate Mortgages (ARMs)

  • FHA Loans

  • VA Loans

  • USDA Loans

• Each loan type has different requirements, benefits, and costs.

📌 Check out the blog: Mortgage Loan Types

3. Prepare Your Financial Documents

Gather necessary documents to verify your income, employment, and financial status, including:

• Recent pay stubs

• Tax returns

• Bank statements

• Information on current debts and assets

4. Avoid Any Financial Changes Until Closing

• Do not open new credit accounts or make large purchases!

• Maintain stable employment and income until the loan is finalized.

Step 2: Understand How Long You Have to Shop for a Mortgage

• As a homebuyer, you have the freedom to shop and compare mortgage lenders to find the best rates and terms.

• The timeframe in which you can shop without affecting your credit score depends on the credit scoring model used by lenders:

1. FICO Scores (Most Commonly Used for Mortgages)

• Lenders typically use FICO Score 2, 4, or 5 for mortgage applications.

• You have a 45-day window to apply with multiple lenders, and all rate inquiries within this period will count as one hard inquiry on your credit report.

2. VantageScore and Older FICO Scores

• Some older scoring models (including VantageScore and older FICO versions) offer only a 14-day window for rate shopping.

• However, these models are less frequently used by mortgage lenders today.

3. How to Maximize Your Shopping Period

• Most lenders use the latest FICO scores, meaning you likely have the full 45-day window.

• You can ask lenders which credit scoring model they use to confirm your exact shopping timeframe.

Step 3: Understanding Pre-Qualification vs. Pre-Approval

Pre-Qualification

• A quick estimate of how much you might borrow.

• No formal documentation is required—lenders base it on self-reported income, debts, and savings.

• Usually no credit check or a soft inquiry that won’t impact your score.

• Provides an estimate, but not a guarantee of approval.

Pre-Approval

• A formal commitment from a lender confirming how much you can borrow.

• Requires submission of financial documents:

  • Pay stubs

  • Tax returns

  • Bank statements

  • Credit check (hard inquiry, which affects your score).

• You receive a pre-approval letter, showing you are a serious buyer.

• Pre-approval is not final approval, and your loan could still be denied.