So, it’s time! You are making a big change and purchasing some real estate, but you need help getting a loan from a lender before you can take this step. The right lender is a huge asset during this process, so don’t be nervous; there are many benefits to finding the right one.
As a first-time buyer, finding the right lender is a priority. Your lender should provide excellent assistance throughout this process, and you should trust them with responsibilities like running your credit and finding the right loan for you. This undertaking can feel overwhelming without some guidance, so avoid unnecessary mistakes by conducting a thorough lender search!
Does a credit check lower my credit score?
If you have been frantically searching online for the answer to “Do lenders run credit before closing?” you’ve probably heard how a credit check can lower your credit score. While it’s true that your score may decrease when a hard inquiry occurs, note that it only decreases by five points. Fewer than five points are taken if your credit history is strong.
Soft versus hard inquiries: Soft inquiries occur when you check your own credit report or when a company making promotional credit offers checks it. Your credit score is not affected as the result of a soft check. Hard inquiries occur when you’ve submitted an application and a lender is checking your credit report. Your credit score may decrease as a result of a hard inquiry.
Why it’s important to consider your options when it comes to lenders
We highly recommend you interview with at least three lenders before selecting your chosen candidate for helping you obtain a loan. In addition to interviewing lenders, there are numerous preparations you should make in anticipation of applying for loans. Interviewing lenders in particular gives you insight into their dedication and work ethic, which are key attributes in this role. You can also compare estimates to see what works best for you.
You are looking for several positive assets in your chosen lender:
· A great mutual relationship: If you and your lender understand one another, they will be more enthusiastic about helping you. This will also help make the process of obtaining a loan much more enjoyable.
· An excellent listener & communicator: You are applying for loans for many important reasons, and you care about the outcome and your future financial position. If your lender listens well and with care, they will find the right loan for you and expand upon your application, increasing your chances of getting it! And if they can communicate and clarify key points about your situation, they will better understand what next steps are right for you.
· Availability “after hours:” Time is of the essence in this business, so your lender should be accessible after they punch out. If you’re in a hot buyer’s market, this asset is particularly essential.
· Should access multiple programs & offer to provide them within parameters: Your lender should be offering several loan programs and, if possible, provide you with them, so long as it’s appropriate to do so.
· Willing to prep you (the buyer) if necessary: This potentially overwhelming process can be hard to navigate if you aren’t familiar with it. Your lender should help prepare you for your loan applications and further communication with other channels.
Lenders can’t help without running your credit to find the best options in their list of loan programs
A credit run can sound daunting due to its ability to decrease your record score. However, keep in mind that your lender can’t help you without running your credit. This credit inquiry helps them select the best options for you from their list of loan programs.
If you’re anxious about how lenders use your credit report, don’t fret. It’s simpler than you think. And if you’re nervous about your credit score, there are ways to clean it up before potential lenders take a look.
How Lenders Use Your Credit Report
A lender credit report states the facts about your credit, and these facts are all your lender is looking to find. They want to accurately determine your credit risk, which they can only calculate based on information found in a lender credit report.
Ultimately, your lender is there to help you. Just be sure to select the right one!
