Profile picture for bell1970

Almost 90 days to close, my lender said I can’t lock until 60 days to close, House is under construc

 
  • June 10 2009 - Nova
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Answers (6)

You can probably get an extension to 90 days but it will cost $$.  I would be hesitant to lock new construction until I was pretty sure we could close.  Lots of stuff can cause delays and 90 days moves pretty quick.
  • June 10 2009
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Profile picture for TravellingAccountant
I would be hesitant to lock new construction also as we are purchasing new construction and have received 5 settlement letters from the builder over the last 60 days and we still have not closed yet!

I dont know how your rate lock agreement is structured but ours is a 6 month agreement that states we have to lock in anywhere from 45 to 7 days before closing. However, noone told me that if I locked in when the builder indicated closing was going to happen but we didnt actually close, that could "bust" my agreement (whatever that means!). If I had know this, I would never have locked in especially because we have a cap on the rate in the agreement which doesnt expire for another month (see my discussion - Locked in or not locked in, that is the question). Anyway, I'm not even sure whats up with our rate at the moment, that is, whether we need to pay more money now to extend the rate we locked in or whether we have lost the whole agreement altogether but I'd just hate to see this happen to someone else if I can help
  • June 10 2009
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Profile picture for SoCal Engr
I was going to build, and had several discussions with my bank officer about loans/funding, both during the construction phase and bridging from construction to permanent.

His comments pretty much aligned with Andrew's. Your permanent loan won't be able to close until you get an occupancy permit on the new construction...and things happen during the construction process. As you get closer to finishing the construction, the number of these "things" decreases, and it becomes easier to project when you will actually be "finished". Starting the process too early simply allows for too many variables to be able to affect the ability to get the final inspection/permit, which then affects the ability to close the loan.

p.s. I ended up selling my lot/plans, so I never got to have the pleasure of actually going through the build. However, I have purchased two houses that were new construction. The first ended up being finished 7 months behind schedule (small contractor and small development). The second finished "on time", but only because I was initially given a window - which was then narrowed to a specific date about 3 months out.
  • June 10 2009
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New construction loans are always an adventure.  Unfortunately hind sight is 20/20.  1st thing I would do is find out the status of your lock.  Is it locked, can it be extended...Then I would be going to the builder and see if you can get them to share in the costs...can't hurt to ask!
  • June 10 2009
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Profile picture for TravellingAccountant
Thanks Andrew, that's exactly what I've been trying to find out from my broker for the last week but I can't get on to him. I guess I'm going to have to become the client from hell today and call back every hour to try and get some answers. I will probably go back to the builder as well as like you say it won't hurt to ask especially since we're already paying a 1% origination fee and 2.375 pts for the buydown so if we have to pay yet another point, we're talking about quite a lot of money! 
  • June 10 2009
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Profile picture for bell1970
Thanks for your infromation guys, My lender asked to me wait until mid july to lock, other wise needs to pay 1% to lock 90days.
  • June 10 2009
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