If you're a first-time buyer, looking for a mortgage can seem daunting. Where do you start, and what should you be looking for?
You can get a home loan from several different sources—a credit union, commercial bank, mortgage company, finance company, government agency, mortgage broker, and even the seller.
Note, however, that many lenders have tightened their credit standards in light of increasing foreclosures and higher delinquency rates.
Where to start? Begin your search by calling at least half a dozen lenders to inquire about the types of financing available, current rates on each loan type, loan origination fees and number of points, other loan features and their credit requirements for borrowers.
Once you actually apply for a mortgage, the lender will pull a recent copy of your credit report. That inquiry and any and all others are recorded and become a part of your credit file. Normally, several inquiries during a short period are viewed negatively, as a sign you are trying to open several new accounts. Such a move lowers your credit scores; and lower credit scores mean you will be offered a higher mortgage interest rate.
However, there is a caveat. Credit scoring software generally detect that you are shopping for a single mortgage, if you shop within a short, 30-day window. So multiple inquiries pulled roughly within this timeframe will only count as one inquiry and should not affect your FICO, or credit, score. Checking your own score also will not lower your credit score.