Identity theft is a huge concern these days, and most of us are pretty vigilant about guarding our personal information (unless we’re teenagers with Facebook accounts,...

Identity theft is a huge concern these days, and most of us are pretty vigilant about guarding our personal information (unless we’re teenagers with Facebook accounts, anyway). So it can be a little creepy when mortgage lenders ask for our Social Security numbers in order to give us interest rate quotes. Should we provide this information  or should we tell the Nosy Nellies to back off?

Mortgage Information: You Have to Give in Order to Get

Getting mortgage quotes in today’s lending environment is not like it was a few years ago. Before the foreclosure crisis and the recession, your credit score was a factor in whether you could get approved for a mortgage, but it had little effect on what you paid for your home loan. You could look at published rate sheets or advertisements and know that your own offer would be pretty close. That’s no longer the case.

Let’s break down a typical advertised rate (which I’ve copied from an actual lender’s Web site). Its 30-year fixed rate is 3.875 percent with an APR of 4.042 percent. However, that rate comes with a slew of assumptions:

  • You have a down payment or home equity of at least 25 percent.
  • Your representative credit score is at least 740.
  • The house is a single family residence (and not a condo or manufactured home).
  • The house is your primary residence.
  • You have no previous bankruptcies, foreclosures or unpaid judgments.
  • Your are not taking cash out or requesting certain features like interest-only payments.
  • Your debt-to-income ratio falls within the lender’s guidelines.
  • There is no second mortgage on the property.

If all of the above-listed assumptions apply to you, a generic mortgage quote might be reasonably accurate . But look at how a few small differences can change your rate:

  • Your credit score is 719.
  • You have 15 percent home equity.
  • The house is a condo.

You just incurred 1.75 percent in pricing adjustments. For a $300,000 loan, that’s $5,250!

When Is a Mortgage Quote not Worth the Paper It’s Printed On?

We often recommend that you ask for a Good Faith Estimate when collecting mortgage quotes, because a “scenario” or “worksheet” doesn’t offer the same protections that a GFE does. However, lenders can’t provide a GFE unless you give them enough information.

That said, you can get quotes without providing your Social Security number. I recommend that you request your free credit report at www.annualcreditreport.com and pay the nominal fee to get your credit scores. Your representative credit score is the middle score from the three bureaus — Experian, TransUnion and Equifax. Check your report for unpaid judgments, bankruptcies, foreclosures, etc. to make sure it’s accurate and to refresh your memory. By providing this information to every lender when you request a quote, you should be able to get quotes and make an apples-to-apples comparison.

But Wait; There’s Less!

However, your lenders probably aren’t using the exact same scoring models that the bureaus use for consumers. Many mortgage lenders have their own proprietary scoring models. The Consumer Financial Protection Bureau says that 20 percent of consumers are likely to receive a score that is “meaningfully” different from the score used by a lender to make a credit decision. Even your FICO score isn’t the same as the lender’s FICO score — while you receive only one type of FICO score, lenders can choose from 49! So quotes based on your “home-grown” score might still be off.

What Will All Those Inquiries Do to My Credit Score?

Answer: not much. Many folks are concerned that by giving out their Social Security number, they can’t control the inquiries on their credit report, and they’re worried that all those inquiries will tank their FICO. That’s no longer true if you shop the right way. When you get quotes from multiple lenders, you don’t have to get dinged for a gazillion inquiries. Credit bureaus will acknowledge your first credit pull and ignore subsequent ones for 14 days. This means that you can have your credit checked by an unlimited number of lenders within two weeks and they all count as one inquiry.

Caution! Don’t Give Your SSN to These Guys!

When providing your financial information online for a loan, make sure the URL starts with https:// and  a closed security lock icon, the way LendingTree.com‘s does. Know about the company that you are working with; if you do not know them, don’t give them any identifying information. Be especially leery of companies that send you unsolicited email inviting you to apply online (especially if the email contains multiple exclamation points or tells you that the President wants you to refinance).  Getting multiple mortgage quotes online from competing lenders can save you thousands in mortgage costs, studies show, but stick with reputable firms and contact them intelligently.

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LendingTree

LendingTree is the nation's leading online loan marketplace providing consumers an easy way to shop and compare funding for life's matters. With LendingTree's marketplace, you can connect with multiple lenders that compete for your business. You can also find an array of credit based tools and tips on LendingTree, including free monthly credit scores to help you stay empowered financially.

  • Chuck Landi

    Why can’t you include people who have first and second mortgages? My second mortgage is killing my first mortgage. It will cause me to walk away from this house. I put in a search for the mortgage company that put my loan together. Instead I got Lending Tree. All I know is that CNN Mortgage got me a second mortgage. I want to know if they can get me a second mortgage lender with a lower interest rate or lower payments. Lending tree is not helpful in this area.