When you apply for a mortgage, you obviously want to get the best interest rates. How do you know what the best interest rate is? You'll have to shop around and apply for loans at a variety of different institutions. Each time you apply for a loan, the lender will want to pull your credit to see how risky you might be as a borrower. As you may recall from earlier in this book, each time somebody pulls your credit for the purpose of getting a loan, your credit suffers just a little bit. These hard inquiries can be a tipoff that you are having financial difficulties. How can you shop around and not damage your credit?

Forty-Five Shopping Days

If you're going to shop around for the best mortgage rates, you should do so within a short period of time. The newest FICO credit-scoring models allow you to shop rates within a forty-five-day period without counting all of the inquiries. Instead of counting all of these inquiries individually, they are treated as one single inquiry for a mortgage loan. Therefore, you should focus your rate shopping into just a few weeks. If you drag the process on for too long, you'll actually see the rates get higher and less attractive.

Good Loans from Good People

To get a good loan, it is essential that you have good credit. However, good credit by itself does not guarantee that you'll get the best loan available to you. You need to have a knowledgeable expert help you get the right loan. If you don't already have a person or institution in mind, you'll need to find a good mortgage lender who will act in your best interests. You need a person who will leverage your credit, however good or bad it may be, and get you the best terms possible. How do you find such a person? Much like searching for any other professional, you should ask around. Check with your friends, families, and coworkers to see if they have had positive experiences with anybody. Interview the person to make sure you will work well together, and don't be forced into making decisions before you're ready.