Changing Mortgage Company

Q: My wife and I are purchasing a new home that will be finished sometime next February.
 

In searching for a loan, we allowed the mortgage company that offered the best 80/20 loan program and had the most complete good faith estimate to pull our credit history.

Now that we have received all of the loan paperwork, there are a number of items that were not disclosed in the good faith estimate that we don't agree with, such as prepayment penalties.

Is it a good idea to continue our search for a loan with different mortgage companies? If they pull copies of our credit history will it ruin our credit?

I have heard that our credit will not be affected as long as all of the credit histories are pulled within 90 days. My wife does not believe me and wants to continue working with this company so our credit doesn't get ruined, even though they have been very uncooperative.

Also, since the home will not be ready for approximately 6 months, should we lock in at today's rate? And how will our credit be affected if the mortgage company has to check our credit again in 6 months?

A: Here’s what I don’t understand about your question: Why would you work with a lender who attaches prepayment penalties to the loan without disclosing them to you upfront as required by law, and who is “very uncooperative?”

I wouldn't work with that kind of company and neither should you. Instead, start looking for another mortgage company. In fact, I recommend that you talk to at least 3 or 4 different lenders at the same time in order to be able to compare loans on an apples-to-apples basis.

Your wife's concern that you will trash your credit history and score is unfounded. You have 30 days in which to look for a mortgage and have lenders pull copies of your credit history and score without it causing your score to drop.

As for locking in a mortgage right now, you may pay extra for having a longer lock. On the other hand, rates are projected to rise slightly between now and the end of the year.

You have to do the math to see what makes the most sense financially. It may cost you more to lock in a loan now than to wait and see where interest rates are in a few months.

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