Apply With More Than One Mortgage Lender?

Unlike applying for a credit card or auto loan, there is little benefit in applying to more than one lender for a mortgage loan. You might believe you are increasing your chances of getting the best available deal or giving yourself “insurance” that you will receive an approval. But, there are reasons that it is usually not in your best interest to do this.

• In addition to filling out lots of paperwork, it will cost you money to apply (credit report, property appraisal, and, possibly, an application fee).
• A full credit report, usually a “tri-merge” (reports from all three major credit reporting agencies) is required. This will cost you money (around $15) and also bring down your credit score, as each inquiry takes some points off.
• You will end up paying for more than one property appraisal (from $200 to $450).
• You may be required to pay one or more application fees (around $200 each).
• If you want to lock (guarantee) a rate at application and a fee is involved, more than one application will involve multiple fees, only one of which will benefit you.

If you locate an experienced, honest mortgage professional and provide him/her with the correct information, he/she will advise you of the best available terms for which you qualify. Therefore it is usually unnecessary and always costly to make more than one application with multiple mortgage lenders.

Information You Need to Apply for a Mortgage
Since the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) purchase the majority of home loans in the U.S., their standards are followed by most mortgage loan buyers. 

This means most lenders will require the same information from you. The differences relate to either the type of property being financed or the specific type of loan being used. The most common information all lenders require:

• Credit report : The mortgage source will get your report, but you should get one of your own BEFORE you apply so you know your current status in advance.
• Income verification : Keep your pay stubs for at least two months prior to making application. Also have copies of your last two years’ personal income tax returns in the event you need them, including W-2’s. If you earn overtime or other additional compensation, be prepared to prove that it is regular and consistent over time. To verify this, you will need more pay stubs, as many as you can collect. The same rules apply if you earn a significant portion of your income from commissions and fees. You must justify the level of income you wish to get credit for.
• Liquidity (Cash) : Regardless of the type of mortgage you receive or the property you’re financing, there will be costs to close your new loan. In all cases, you will need third party verification of the cash you claim to have. Have your bank or credit union statements for the past twelve months handy. Also gather up all information on investments, mutual funds, and other “cash equivalents”. If some of your cash is coming in the form of a gift, have the giver sign a “gift letter”. You can find appropriate wording from the Internet or you can probably get a demo letter from your mortgage source. Be aware that most lenders will allow a gift letter ONLY from an immediate family member (mother, father, sister, brother, son, or daughter).
• If you’re buying a property, you will need a Purchase & Sale Agreement : Once you make an offer that is accepted, your real estate broker will prepare a formal agreement to purchase the property. Most lenders will require this agreement before they will accept a formal application, since there is no deal without it.
• If you’re refinancing a property, have your current tax bill, hazard insurance information or policy, a copy of your deed and/or legal description of your home: This will greatly facilitate the processing of your application and result in a faster approval.
• If you’re purchasing or refinancing a condominium : Have your condominium documents (e.g., bylaws, budget, master insurance policy declaration page, homeowner’s dues information, etc.) ready.

There may be some other information you need to provide for different lenders but your mortgage source will make you aware of anything further they want.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.