When you buy a home, the focus is almost always on the property itself. You obsess over the square footage, the neighborhood, and the inspection report. But while you are negotiating the price of the house down by $5,000, you might be unknowingly agreeing to pay $30,000 more than necessary on the loan that pays for it.

The mortgage you choose will determine your true housing costs for decades to come. Yet, a surprising number of homebuyers skip the most crucial step: shopping around. This is especially critical right now, as recent changes to federal lending rules have created hidden opportunities that most borrowers—and even some traditional loan officers—might miss.

The 620 Credit Score Barrier Has Fallen

For years, a credit score of 620 was the “magic number.” If you fell below it, you were typically locked out of conventional financing and forced into higher-interest alternative loans.

That barrier is gone. Recently, Fannie Mae eliminated the hard 620 credit score minimum for loans underwritten through their automated system. Instead of rejecting applicants based on a single number, their system now uses a “comprehensive risk assessment” that looks at your entire financial picture—including cash reserves and down payment—to determine eligibility.

This is a game-changer for many borrowers who assume they are stuck with expensive financing. You might believe you only qualify for a high-rate product, when in reality, you might now qualify for a standard conventional mortgage with significantly better terms.

How Lenders Who Use AI Can Help

While the rules have changed, not every lender has updated their manual processes to catch these new approvals. This is where modern technology becomes essential.

Lenders who use AI can help borrowers detect these specific opportunities. Because the eligibility criteria are no longer just “Is the score above 620?”, it takes sophisticated analysis to see if a borrower’s unique mix of assets and income triggers an approval under the new Fannie Mae guidelines.

Advanced AI tools are designed to filter loan requests and identify if a borrower shopping for private money actually qualifies for a conventional loan. If the system detects this opportunity, it can direct the request to conventional lenders who will compete for the business, potentially saving the borrower a fortune in interest.

The Government’s Verdict: Loyalty Costs You Money

Even if you have perfect credit, shopping around is mandatory for saving money. The Consumer Financial Protection Bureau (CFPB) has repeatedly found that interest rates vary significantly between lenders for the exact same borrower.

According to the CFPB, by shopping, you can save 0.5% to 1.5% on a standard conventional loan. Over the life of a 30-year mortgage, that small difference compounds into tens of thousands of dollars in retained wealth.

You can read more about the government’s findings and recommendations on how to request and review multiple loan estimates here.

The Investor’s Edge: Finding the Right Capital

For real estate investors, the stakes are even higher. If you are flipping a house or buying a rental, the cost of capital directly impacts your profit margins.

Investors often turn to Private Money Lenders for speed and flexibility. However, this market is fractured and unregulated compared to standard mortgages. Fees and rates vary wildly from one lender to the next.

Because of the fractured nature of the private money industry, shopping for a private money loan could save you 2% to 10% in total costs. One lender might charge “points” (upfront fees) equal to 4% of the loan, while another might charge 1% for a similar product. Without a side-by-side comparison, it is impossible to know if you are overpaying.

Comparison is Key for Non-Traditional Loans

The need to shop is arguably most critical when seeking alternative financing like that from Hard money lenders. These loans are unique to each lender, with different terms for prepayment penalties, draw schedules, and interest rates.

Using a platform that aggregates these offers allows you to see the entire market at once. Instead of settling for the first offer you receive, you can use technology to bring multiple offers to you, ensuring you find the right leverage for your investment strategy.

Take Control of Your Financial Future

Whether you are a first-time homebuyer benefiting from the new Fannie Mae rules or a seasoned investor looking for the best ROI, the principle remains the same: you must shop around.

Don’t assume you are disqualified because of an old credit rule, and don’t accept the first rate you see. Use the resources available—from the CFPB guides to AI-driven comparison tools—to ensure you are getting the best possible deal. Your financial future is too important to leave to chance.