Can I Apply for Home Mortgage Loans With Two Different Companies at the Same Time?

by Fraser Sherman

Lenders hate it when you apply for a mortgage with more than one company. The one who doesn't get your business has to go through the same amount of work, but doesn't get the big payoff. It's perfectly legal for you to apply to two lenders, though. It's also more expensive.

Credit

Applying for a mortgage loan knocks about five points off the typical FICO score, though the impact varies from person to person. Even if you decide not to apply with a particular lender, an initial credit check can affect your score. The good news is that multiple inquiries don't have to lead to multiple losses. If you apply to more than one lender but your applications are all within a two-week time frame, credit bureaus realize you're just shopping around and count it as one item.

Benefits

If you've got good credit, your lender's not going to throw you out for applying elsewhere. Knowing you've got another option pressures the lender to make her offer as good as possible. That's a valuable advantage because no matter what interest rates your lender quotes, it's not a done deal until you commit and lock it in. If a lender knows you can go across the street to a rival bank, it's a lot riskier for her to raise rates at the last minute.

Drawbacks

Applying twice isn't cheap. For example, lenders require an appraisal showing how much the house is worth. If they're not willing to accept the same appraisal, you have to pay for two. You'll have to pay at least a few fees twice, such as the cost of pulling your credit report. Some firms you deal with, such as the title insurance company, will want you to name one of the two lenders on the paperwork. If you go with the other lender, it could take a couple of weeks and more money to change the paperwork.

Alternatives

If submitting dual applications looks like more trouble than it's worth, you can still shop around. Getting good faith estimates from multiple lenders gives you some idea of your choices, even if the figures aren't legally binding. A GFE gives you not only the interest rate but the lender's fees and the total cost of the loan. The format is standardized, which makes it easy to compare estimates from different lenders. Having this information might help you if you want to negotiate lower fees or rates with a lender.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

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