The best approach to applying for a mortgage is to engage with multiple lenders at the same time. It helps you compare rates and fees and lets you negotiate the best deal for yourself. While most people know that applying to multiple mortgage lenders is the right way to get the best deal, they can’t settle on the number for “multiple.”
In this post, we will answer the question, “how many mortgage lenders should you apply to?” We will also shed light on why you should apply or not apply to too many lenders.
Should you apply to two lenders? Should it be three different mortgage companies? Applying to half a dozen lenders will fetch you the good deal? There isn’t a fixed number of mortgage lenders one can apply to get the best deal. Sometimes, people can get the best deal while working with a single mortgage company. In contrast, some can’t find the best option despite applying to five different lenders.
The collective wisdom of those who have worked with multiple lenders and found the best deals suggests that one should work with 2 to 3 mortgage lenders.
Let’s suppose you decide to apply to three lenders A, B, and C. Lender A offers you a 5% interest rate with $3,000 in closing costs. Lender B comes with a 4.75% rate at the same closing cost as the one offered by Lender A. Then, Lender B comes with a 5% interest rate and a closing cost of $2,700.
In this case, you now have offers with different interest and closing costs to pick from. If you plan to sell or refinance after a couple of years, you should pick the lender that offers lower closing costs (Lender C). On the other hand, don’t mind the higher closing cost and stick to the lower interest rate if you opt for a plan with a repayment term of 5 years or over.
When you receive different deals, you can play them against each other as well. For instance, you can show Lender A the deal from Lender B (the one with a lower interest rate in comparison) and Lender C (the one with a lower closing cost in comparison) to negotiate a better deal with them.
While it’s good to work with multiple mortgage lenders, you should refrain from working with too many lenders for these two reasons.
If you want to work with a single mortgage lender to get the best deal, try Northwest Mortgage. We ensure that our clients can get the best mortgage deals without exhausting themselves from dealing with different mortgage lenders.
For more great tips on buying your dream home, check out our other blog posts.
Mark Klein- 132598
NW Mortgage- 128113