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We are currently in the market to buy a new home, and it's our first time dealing with shopping for mortgages. Our realtor put me in touch with her brokerage partner, and I've also been in touch with my bank (I plan on talking to other banks as well).

Both the broker and my bank are, obviously, eagerly trying to get my business. I was trying to just get the pre-qualification process done, but they both went into the pre-approval process (fee free). Credit reports have been run, good faith estimates provided, etc. Both have pre-approved us, and are now asking for all the fun documentation like W-2's, bank statements, and tax returns. I haven't actually signed anything with anyone, but I'm concerned that I'm going too far down the application process with each party simultaneously.

I've read this Q&A, which indicates I can change my mind which bank to use as long as I haven't signed anything indicating a commitment, and I fully expect that to be the case. I don't see any harm in providing the documents to all of them, but I want to make sure I'm not overlooking something or going too far into the process to be able to back out if I find a better option.

At this point, both parties have come back with exactly the same interest rates (3.5%), with the only variance being a slightly lower closing cost at the broker because of a discount for using the realtor. I don't foresee finding a lower interest rate on a 30 year loan in this market, so really I'm just hoping to find an option with the lowest closing costs and best customer experience.

TL;DR How far through the mortgage application process should I go if I'm talking to multiple banks simultaneously?

  • Something to consider - at some point in the mortgage approval process, the banks will be performing credit checks; this may in some circumstances create a hit to your credit score. – Grade 'Eh' Bacon Jul 21 '16 at 14:02
  • @Grade'Eh'Bacon Yes, they've already done that. I'm not worried about my score too much, and I know that as long as you're shopping around within a 14-45 day time frame, multiple pulls won't have any significant effect as that's what credit companies are expecting you to do. The second bank I talked to did ask me to sign a Credit Explanation letter to verify what the other credit pull was for. – BobbyScon Jul 21 '16 at 14:11
  • Isn't that up to you? Providing all that documentation is a lot of work. Each place will want something a bit different. – Pete B. Jul 21 '16 at 14:44
  • @PeteB. That's my question, I guess. Is it up to me? 90% of the documentation will be identical, so I only need to gather it once and provide it on request. I've got the pre-approval from both, should I continue down the application path, or do I stop here until I make a final choice on a bank? – BobbyScon Jul 21 '16 at 14:53
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As per my comments, I think this is up to you and how much work you want to put forth. I do not feel it is trivial to provide documentation even with 90% of it will be the same among lenders.

See this question: First answer, third and fourth paragraphs.

You need to go as far as understanding the total cost of the loan, you probably need a good faith estimate. I would also compare a minimum of three lenders.

  • 1
    Thank you. That's a great link. GFE's have already been provided, so it sounds like I don't need to go through the effort of providing all the documentation until I've made a final selection. (I will be obtaining info from more lenders, I just got through these 2 and then was worried about going too far down the rabbit hole.) – BobbyScon Jul 21 '16 at 15:07

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