With mortgage rates rising rapidly, it pays homebuyers to shop around with lenders for the best mortgage rates. But some people worry that it will hurt their credit rating.
With mortgage rates rising rapidly, it pays homebuyers to shop around with lenders for the best mortgage rates. But some people worry that it will hurt their credit rating.
But a LendingTree survey of recent buyers found that more than half – 56% – said they don’t compare offers from multiple lenders. Why not take the time to compare rates?
“According to our survey, 25% said they didn’t shop around because they just wanted to use the bank recommended to them by their real estate agent, and 22% felt competitive pressures to make quick mortgage decisions” , said Jacob Channel, senior economic analyst at LendingTree.
Another 20% didn’t compare rates because they feared it would hurt their credit score.
A lender will not commit to a firm rate without verifying a potential borrower’s income and creditworthiness. Sometimes lenders do what is called a “soft checkout” on a credit score, which does not present itself as a firm credit application. But even if a lender does a full credit check, it probably won’t hurt a house hunter’s immediate credit score.
“If you’re shopping for something like a mortgage, the inquiries don’t show up until 30 days after the initial inquiry. And even after that 30 day period, there is usually a time frame between 14 and 45 days where the same type of request will be counted as one request,” Channel said.
LendingTree’s survey shows that it often pays to compare mortgage rates from different lenders. Of those who did, 46% said the first offer they received was not the lowest.
How Many Lenders Should Homebuyers Compare? The survey found that 24% of recent borrowers received two offers from lenders, 14% received offers from three, and 6% received offers from four or more lenders.
As for the primary reason given for not comparing rates they might qualify for, using a real estate agent’s recommendation is fine, Channel said. In most cases, buyers trust their agents.
“Under no circumstances should you ignore what your real estate agent says. But it helps if you’re willing to go a bit beyond that and do a bit of independent investigation on your own,” Channel said.
The LendingTree report was based on survey responses from 1,055 mortgage borrowers and was conducted in April. Full survey results, including breakdowns by demographics and income level, are posted online.
