Can you get mortgage pre approval from multiple lenders

Applying for a mortgage may seem like a tricky process, but it doesn't have to be. With a little guidance, anyone can get started on the path to becoming a homeowner. With that in mind, we've laid out some of the most common mortgage application mistakes that would-be buyers make, as well as how to fix them. Read them over so that you can avoid falling into these all-too-familiar traps.

Not working on your credit first

Having good credit is one of the most important factors in applying for a mortgage. Not only is it vital to getting approved, at base, but it also determines what interest rates you'll be offered on your loan. With that in mind, you want your credit to be in the best shape possible before you apply in order to put yourself ahead.

Luckily, there are many tools you can use check your credit. These days, a score of 730 and above is considered excellent while anything below 600 needs work. That said, FHA loan programs will accept scores as low as 540, as long as your other financial components are in good shape.

As for how to build up your score, it's actually fairly simple. The most important thing is to make sure you're making your payments on time, every month. Be sure to pay as far above the minimum payment as possible to focus on paying down debt. Additionally, going forward, use as little credit as you can in order to improve your utilization score.

Getting prequalified instead of pre-approved

You've probably heard those commercials on TV where mortgage companies boast about their ability to pre-qualify you in minutes. While these claims might be true, they don't mean much anymore. There's a difference between a pre-qualification and a pre-approval. In recent years, the latter has become the gold standard to use when making an offer.

The reason for this change is because a pre-qualification isn't very reliable. To be pre-qualified, all you need to do is supply your own estimates of your income, debts, and assets. However, there is no confirmation that what you're saying is true, so it gives the seller very little reassurance of your ability to actually purchase the home.

With a pre-approval, on the other hand, you're required to submit financial documentation along with your request. The lender runs a credit check and looks at your pay stubs, debt records, and bank statements before making a final determination on whether or not to grant you a loan. In this case, there's much more credibility.

Forgetting to shop around for a lender

Many people assume that if they go to more than one lender when trying to get pre-approved for a mortgage it will negatively impact their credit. While this used to be the case, it's no longer true. These days, credit bureaus have agreed to treat all pre-approval inquires as one, as long as they occur within the same time period. (That time period varies between 15-30 days, so stick close to 15 days, just to be safe.)

This gives you more freedom to shop around. Different lenders may approve you for different amounts, give you different interest rates, or charge different fees. It's in your best interest to do your homework. Research the best lenders in your area, get pre-approved by a handful of them, and compare the rates they give you.

That said, sometimes finding the best fit isn't just about the rates they can offer. Before you make your final decision, be sure to interview each lender to get a feel for how well they can assist you. Think about how easy - or difficult - it was to get in contact with them. Ask them if you qualify for any special grants or programs to assist with your down payment or closing costs. Read reviews to get a sense of other people's experiences of working with them.

Letting the pre-approval set your budget

Once they have their winning pre-approval in hand, many buyers make the mistake of having that number become their budget for house-hunting. However, doing so increases their risk of becoming "house poor". In reality, the number on a pre-approval is the maximum amount that the bank is willing to give you in a loan. You don't have to - and probably shouldn't - spend that much.

Instead, the better thing to do is make a budget of your own. Use a mortgage calculator to play around with different sale prices until you come up with a payment amount that feels right to you. Then, plug that number into your monthly budget to see how it feels alongside your other expenses. When you have a number that works in both scenarios, make that your maximum - and stick to it.

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

Buying a house is a very involved process. There’s a lot of groundwork you should cover before applying for a mortgage. After you’ve narrowed down your home preferences and budget, research loan options to determine which mortgage lender is right for you.

There is no perfect number for how many lenders you should apply to, but the key is to look at multiple offers and compare them, and within a short time frame so it does not hurt your credit score.

Should You Apply to Multiple Mortgage Lenders?

Applying to more than one mortgage lender means you are able to compare interest rates and fees to find the best deal. It puts you in a stronger position to negotiate and secure a better loan package if you have multiple offers in hand.

Different companies also offer different kinds of loans. This is especially true if it is an online mortgage company versus a traditional bank or credit union. So you will want to cast a wide net and explore options in greater detail. Ask questions and take the time to understand what kind of loan might be the best choice for you. A housing counselor, mortgage broker and sometimes a lender will offer general suggestions to help broaden your search.

Depending on the lender and their business model, there are different approaches to how they structure interest rates and what closing costs are paid upfront or can be included in the loan balance. Several online lenders offer low or zero closing costs, but you will have to pay a higher interest rate in exchange. More traditional financial institutions will sometimes charge higher closing costs but give you a lower interest rate.

Create a Shortlist of Mortgage Lenders

Tap your social network about how they chose their mortgage lender, whether it’s family, friends or coworkers. If you’re working with a real estate agent, they might also recommend lenders that they have worked with, and those that might not be the best fit.

Be sure to ask everyone you consult why they chose a particular lender. For example, it could be because of a good experience with a specific loan officer. Make sure their reasons match up with your criteria so you don’t waste your time with lenders that are not right for you.

What’s a Good Number of Mortgage Lenders to Apply to?

Speaking with multiple lenders allows you to get a better sense of your options, and determine which loan officers you would be most comfortable working with. It’s likely you will spend weeks working with the lender and sending documents, so you want to make sure it’s someone you feel communicates clearly and quickly.

But how many mortgage lenders should you apply to? The Consumer Finance Protection Bureau (CFPB) recommends that you contact “at least three lenders” on your shortlist.

There is no formula that tells you the exact number of mortgage applications to submit. Considering the time commitment required, some people are content with applying to two lenders and choosing which comes up with the better offer. Others prefer to shop extensively and will apply to as many as six or seven lenders before they decide.

Tips for Applying to Multiple Mortgage Lenders

If you take the path of least resistance and only apply to two lenders, keep in mind that you could miss out on a better deal. On the flipside, you are putting your credit score at risk if you submit too many applications exceeding 45 days.

Another reason to be wary of engaging with too many lenders is that the national credit agencies sell your information to other mortgage companies that you have not applied to. This is known as a trigger lead.

Once other lenders know you are actively shopping for a mortgage, you might get inundated with phone calls, emails and direct mailings from would-be competitors with offers that might be too good to be true.

In order to pick the best mortgage, you should request a loan estimate from multiple lenders. This way you can compare and contrast to see which has the best deal. Also, requesting a loan estimate is straightforward and no paperwork is required.

The only information you have to provide is your:

• Full name
• Annual income
• Social Security number (SSN) for the credit check
• Desired loan amount, based on how much you plan to provide as a down payment
• Preferred sales price of the home you want to buy, or an estimate if you are trying to get preapproved

Be sure you are comparing the same kind of loan from each lender, with similar features, so you can easily make the comparisons.

Research Their Rates

The interest rate has the biggest impact on both the size of your monthly mortgage repayments and whether it will change over time.

Related: Compare Current Mortgage Rates

If your priority is keeping your principal payments and interest rate payments the same over the life of the loan, then a fixed-mortgage rate is likely the better option. The only things that could alter your monthly payments are your property taxes, homeowner’s insurance or mortgage insurance.

On the other hand, adjustable-rate mortgages (ARMs) come with a much lower interest rate in the near term but are more unpredictable. This is an option for those who plan to sell the house within the initial fixed period of the ARM loan. This way you will avoid dealing with future rate increases.

Ask About Fees

Fees are another way to eliminate lenders from your list. According to the CFPB, the only fee lenders can charge you before providing a loan estimate is a small upfront fee to pay for pulling your credit report. The fee will usually be no more than $20, but some lenders do not charge this fee so ask ahead of time.

The loan estimate you receive from the lender will include a breakdown of the additional fees they will charge to finalize your loan. Mortgage companies must wait to charge you these fees until after you select an offer and inform the lender that you are ready to move forward with the application.

These include the mortgage origination fee and the appraisal fees for the home you want to buy.

Compare Down Payment and Other Requirements

The size of your down payment also impacts your interest rate. You should compare by how much each lender will reduce your borrowing costs based on the preferred size of your down payment.

In addition to your down payment, there are other closing costs that will be part of the loan package. Some lenders offer credits to offset your closing costs. However, you will have a higher interest rate as a result.

Compare these as well as the closing requirements demanded by each lender to determine the best option for you.

Will Applying to Multiple Lenders Affect My Credit Score?

You can apply to multiple mortgage lenders and it won’t negatively impact your credit score so long as all the credit inquiries happen within the same 45-day window.

Within that time period, multiple credit checks from different mortgage lenders are recorded by the credit bureau as a single inquiry.

However, the CFPB says “even if a lender needs to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small, while shopping around for the best deal can save you a lot of money in the long run.”

The Best Way to Get a Mortgage

Ultimately, the best approach to getting a mortgage is by doing a lot of research to understand what is a great deal in the current lending climate. Use this as your benchmark when reaching out to different lenders—and eliminating those who cannot match or beat those terms—until you find the best deal.

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Can I get pre approved from more than one lender?

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