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It pays to get moving when you’re looking for the best mortgage rate. Read on to see why. 

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The average 30-year mortgage rate today is 6.62%, according to Freddie Mac. But that doesn’t mean you won’t find a mortgage lender that will offer you a lower rate.

There are different factors that lenders consider when deciding how much interest to charge for mortgage loans. And a big one is your credit score. The higher that number, the more competitive an interest rate you’re likely to snag, since a lender is likely to look at you as a minimally risky borrower if your credit is outstanding.

You should also know, however, that the mere process of applying for a mortgage has the potential to cause your credit score to drop. If you go about that process strategically, though, you can minimize that damage so it’s basically negligible.

It pays to do your rate shopping quickly

When you’re applying for a really large loan like a mortgage, it’s important to lock in the best rate you can qualify for. To that end, you’ll need to apply with different lenders to see what rate each one is willing to give you.

Normally, when you apply for a new loan or line of credit, a hard inquiry is made on your credit report. A single hard inquiry usually won’t cause much damage; it might lower your score by five points or so, which, for the most part, isn’t a big deal.

And it’s especially not a big deal for someone with a credit score in the 800s. A lender is unlikely to differentiate between an applicant with a credit score of 827 versus 822, since both numbers are outstanding.

However, you also don’t want to end up with too many hard inquiries on your credit report. A single five-point hit isn’t so bad. But if you take four different hits of that nature, you’re looking at a 20-point drop. That’s more significant.

The good news, though, is that when you apply for multiple loans of the same nature within a short period of time, it’s generally counted as a single hard inquiry for credit scoring purposes. So if you don’t space out your mortgage applications too much, you might walk away with just a single hard inquiry on your credit report.

How quickly do you have to move?

Equifax says that loan applications made within 14 to 45 days are usually counted as a single hard inquiry, depending on the credit scoring model being used. That’s a pretty wide range, so to play it safe, you may want to stick to the lower end of it.

As such, what you should really do before you start submitting mortgage applications is check out different lenders’ sites, read reviews, and look at roundups of the rates different lenders are offering. That at least gives you a baseline to work with.

It’s also a good idea to check your credit report and credit score before applying for a mortgage. That way, if you spot mistakes on your credit report that paint you in a less favorable light, you can work to correct them before submitting a mortgage application.

Similarly, if your credit score isn’t as high as you’d like it to be, you’ll have a chance to boost your score before submitting your home loan application paperwork. And even a modest boost to your credit score could result in a lower borrowing rate on your mortgage, which could translate into a huge amount of savings over time.

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