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Note: This applies to the State of New York (the NYC metro area), in the United States.

I'm shopping around for mortgage rates. I'm not sure if I have to get a preapproval mortgage to get their rates. I was told all the rates are basically the same, but I'm not sure if that's even true.

I want to check multiple lenders, but I'm worried that for each lender, there is a hard inquiry. A loan officer at Wells Fargo, if I understood him correctly, stated that getting a preapproval letter from another lender will result in an additional hard inquiry (he also said the letter would be valid for four months). In other words, what I want to make sure is that if I get a preapproval from X lenders, that those inquiries will only count as one hard inquiry in a specified amount of time.

So, my question is can I get multiple preapproval letters and have it count as one hard inquiry and what's the time frame for this? 30 days? 60 days?

Thank you very much.

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3 Answers

Rates are usually only locked at the application stage, so no point shopping for rates now (and they are more or less the same, and usually are advertised).

When shopping for loans, it is expected to have multiple inquires from the same kind of lenders over a short time (2 months is what I know, wait till @JoeTaxpayer gets here, he's more knowledgeable on this issue). These are indeed considered as once for the score calculation, but the lender that you'll eventually go with will require a written explanation about each and every one of them.

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You don't need to go through the preapproval process to compare rates. If you go into a mortgage provider and tell them your circumstances, including the fact that you have good credit, they should be able to quote you a rate. The rate won't be locked in, but that doesn't really matter yet. At this stage of the game you only need to know the rate to work out what you can afford. You shouldn't be buying a place where the difference of a fraction of a percent interest makes the difference between affording it and not.

So get some rate quotes to work out what you can afford. Then get preapproved to show sellers that you are in fact a serious buyer. Find the right house and seal the deal. THEN go and do a serious rate comparison, comparing lots of vendors, and pick the one you like best. That doesn't have to be the people you got preapproved with. When you pick one they will do a credit check to approve you; if that changes the rate for some reason so they are no longer the cheapest, move on to the next vendor.

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Switch from the company that you were preapproved by to another company negates any time savings. –  mhoran_psprep Oct 4 '12 at 19:41
    
As far as I'm aware, pre-approval isn't there to save time. it's there so you can know - and sellers can know - that you are likely to qualify for a mortgage. –  DJClayworth Oct 4 '12 at 20:19
    
@DJClayworth - I want to agree, but I think this answer assumes that the closing process can be leisurely. In some markets, the seller has the upper hand and could have a compressed time frame. I think you are right technically, but there are practical reasons to have the financing worked out early on. –  MrChrister Oct 9 '12 at 7:16
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You should absolutely shop around for rates. This will give you leverage when deciding which lender to go with. If you look at the GFE statement there is a "shopping cart" list that has 3 columns that is provided for you to compare various lenders. You can have a tri-merged report(a so-called "hard inquiry") as many times as you want within 60 days without it affecting your credit. Even after this 60-day window, another pull will establish a new window. Furthermore, it is unlikely you will fall down a class(720+ = excellent, 680+ = good, 620+ = OK) from an inquiry. Use the lower rates you might get elsewhere to barter the banks down.

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