How is Shopping Around for a Mortgage Accomplished?
Let's go to the website and see some questions from real users on the savingthousands.com forums. Bruce MacDonald asked about getting multiple mortgage quotes. He said he was told that if he had multiple inquiries on his credit report in a short period of time, it would affect his credit score. So he wanted to know how shopping around was accomplished.
I let Bruce know the credit score used by most lenders, which is called the FICO score and was created by a company called Fair Isaac. According to Fair Isaac, "90 of the top 100 lenders in the US financial institutions use the FICO score to make consumer credit decisions." And I know from experience that every lender I've ever worked for also uses FICO.
FICO clearly states on Fair Isaac's website that "FICO scores are more predictive when it treats loans that commonly involve rate-shopping, such as mortgages, auto, and student loans, in a different way when it comes to inquiries. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days the inquiries will not affect your score while you're rate-shopping.
In addition, the score looks at your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fell in a typical shopping period as just one inquiry when determining your score." So you can see from Fair Isaac's website, the creator of the FICO score, that shopping around will not hurt your credit score.
Mary Robertson signed up at the Saving Thousands! forums to let me know that I'd given her some advice a few months ago about trying to get a loan modification and sticking with the process and being persistent. Mary checked back in to let me know she was finally successful and is now on the trial modification program. Congratulations, Mary. You're an inspiration to all the other people out there who are fighting with mortgage lenders to get that loan modification or get some relief. The programs are out there. They're mandated by the government, and lenders need to get involved and do a better job of making them available to clients.
User sqrtofpi on the RP funding forums asked me about a co-signer and getting a gift for down payment. I explained that having a co-signer can help if your income isn't enough qualify for a home but can't really do anything to offset poor credit. So if you're trying to qualify for a home and your income just isn't enough, adding a co-signer may be an option. This co-signer's income and debts can be combined with your own and to see if you together would qualify to purchase the home you're looking for.
It turned out that their question really had to do more with getting the down payment from the co-signer, not necessarily helping their income situation. In order to give down payment, the person doesn't have to co-sign with you. They can actually just make the down payment in the form of a gift, which requires specific documentation but would allow you to use that money for the down payment on your new home. To see the full conversation with myself and this user, visit savingthousands.com and click on the forums. And remember, you can ask me questions yourself by clicking on the Ask Robert Palmer link and signing up and joining the forums.
Thanks for watching. Be sure to join us again next week as Robert Palmer shares more ideas on how you can save thousands of dollars on everyday decisions. That's next Saturday at 10:00 AM, right here on TV 27.