How to Shop for a Mortgage Without Wrecking Your Credit

There is a persistent fear that talking to more than one lender will hurt your credit score. It keeps people from comparing offers on the largest purchase of their lives, and it is based on a misreading of how mortgage inquiries work.

Mortgage inquiries are bundled

The major credit scoring models treat multiple mortgage inquiries inside a single shopping window as one event. Pull your credit at four lenders in the same stretch and the models count it once. The window varies by model, but it is measured in weeks, not days — enough time to shop properly.

Two rules keep this working in your favor:

1. Cluster your shopping. Do it inside a few weeks, not spread across four months.
2. Compare the same thing. A quote is only comparable if the loan amount, down payment, program and lock period match. Otherwise you are comparing a number to a different number.

Compare Loan Estimates, not conversations

Within three business days of a real application, every lender must give you a Loan Estimate on the same standardized form. That form exists precisely so you can lay two offers side by side.

Look past the rate to:

• Origination charges in section A — this is what the lender is charging you
• Discount points — you may be looking at a bought-down rate, which is fine if you wanted it and expensive if you did not
• The lock period — a 15-day lock quotes lower than a 45-day lock and may not survive your actual timeline
• Cash to close — the number that decides whether you can do this at all

What not to do while shopping

Between your application and your closing, your credit gets re-checked. Do not open a card, finance furniture, or buy a car. Do not pay off and close old accounts on a whim. Do not move large sums between accounts without being able to explain them.

The house first. Everything else after the keys.