As we reviewed in an earlier section, the credit bureaus’ scoring formulas take into account that consumers shop for the best rates and compare different loan programs. Each bureau will differ slightly in its treatment of multiple inquiries. FICO recommends focusing your rate shopping in a 30 day period, which raises the question of when you should start applying.
The short answer is there is no magic answer. Instead, you should consider these key indicators:
- Your credit score. Is it high enough to qualify for the loan program of your choice?
- Your income. Do you have a history of a steady and increasing income?
- Your savings. Do you have enough saved up for your down payment?
- Your debt-to-income ratio. Do you have a DTI of 43% or less, which will help you qualify for loans easier?
If you’re in good shape in these major areas, and you’re personally ready, then you know it’s the right time to move forward and begin your mortgage journey.