Background Info: My wife and I are looking to purchase our first home/condo. Given our combined gross annual income of ~$100k and lack of any actual debt, we're looking at properties in the $200-250k range. We currently have enough cash to put down ~10% and some semi-liquid stock assets (UTMA funds) to bring that up to 15% and have still some emergency cash. We wanted to save up 20% to avoid PMI and tax escrow and whatnot, but we ran the numbers and decided we'd be paying less than rent even with PMI and such included. Apparently we have to continue paying PMI for at least 2yrs (at least with our bank we would), but our plan is to pay down the principal faster and keep the PMI to a minimum.
Question: It seems that getting pre-approved (not just pre-qualified) for a mortgage can help make the decision between you and another non-pre-approved applicant and makes closing quicker and easier (with some of the leg work up-front), but I'm having troubles reconciling that with 1) getting multiple quotes for mortgage rates (which tend to change from time to time :p) and 2) limiting potential damage to your credit score from multiple hard-pulls.
My understanding is that (correct me if I'm wrong here) a pre-approval would require a hard-pull of both of our credit reports from all three bureaus as well as additional info like proof of income, tax returns, residence history, etc. (requirements here may depend on lender, but my understanding is that they [generally?] get scores from all three and use the middle one, and I don't know if it's possible, or even worth it, for them to get scores without the report - credit reports & scores continues to be a confusing matter)
Any pulls within the same ~30 days count as one credit inquiry as far as credit-scoring is concerned, though, so it would seem to make sense to have all potential lenders pull it within that time period. I'm considering four lenders (two brokers recommended by friends, one broker recommended by Google maps reviews, and my standard local/national/international bank - too many?), which seems like a lot of work, but I assume much of that will be similar for all four (e.g., we don't have different tax returns, income stubs, etc. to give to different lenders - they'd all be the same).
I'll sum this up in two somewhat-competing questions:
- Assuming you're within the 60-90 days that the pre-approval is valid for, will the lender do another hard-pull before approving the final loan? I assume not, but if that's not the case, it would seem to weaken the argument of getting multiple pre-approvals right away b/c you could have just had one done, find the best rate later, and close with the lender with the best rate (who would then do a final pull).
- If you just get pre-approved from one lender, what's to say they'll have the best deal when you decide to close? (no matter which method you use to pick that one initial lender)
Alternatively, am I over-thinking this? I do tend to do that, and perhaps an initial pull and a later final-pull won't hurt that much anyways... After all, the final-puller would know what the initial pull was all about...