Profile picture for rdhing

Mortgage for new home

Hello folks we are building a new home in Allen tx and as per builder home should be completed by mid jan, 2013. I am just confused how should i do about applying for mortgage and locking a rate. The builder is offering 5K towards closing and paying for seller title only if i use their preferred lender. My question:
1) how do i start the process of mortgage rate right now or should i wait till jan 2013?,
2) Do start off with asking my builder's Preferred lender a GFE and get GFE from say a bank/mortgage and both?? So the process is Compare rates/ negotiate? and select one and lock rate??
3) Should i do a lock in rate right now?
4) Are there any gotchas i should be aware of when shopping for mortgage lender?
4) What if home is not completed by date and i have a rate locked? what are the consequences?
5) Anything else i need to be aware of ??
6) What institution offers the best rates and low cost closing??
7) Are banks allowing no cost closing???
8) What if i can't put down 20% but yet would like not to pay PMI?? any strategy?
 
  • November 16 2012 - Dallas
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Answers (6)

I think that I know what builder you are using based on the questions that you asked.  And to be honest with you, I do a lot of loans for people that are using this builder because part of the 5K that they will pay is normally a 1% origination fee plus all of the other costs that are involved in the closing of the loan.  I can always beat their deal and always end up saving my customers money in the long run.  I am based in Frisco and work for a bank.  Another thing to consider is that the builder mortgage company is going to sell the loan once it is closed and it will probably end up at a servicer that you have never heard of before.  If you close with us, we will also service your loan so you always know who to pay.  Please contact me via my profile if you would like any other information.  Thanks
  • November 28 2012
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You do need to start now. The process usualy takes 20 o 45 days from start to finish. I always inform my clients that going with the 3 top banks in aAmerica usually takes more time they are slower at processing loans. Rate shopping does not harm your credit score in any way as long as you do all your shopping within 30 days. The process usually doesn't cost you anything because they all want your business. A great idea for the current market is to get an FHA loan. The benefit of the FHA loan allows for very little down and the best thing about FHA loans is they are assumable. This means when you go to resale your home years down the line and interest rates are back at 7 or 8 % you will be able to attract buyers with your low rate assumable loan that will make your home more attractive to all buyers.
  • November 26 2012
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Your first step is to contact the builder's lender and get that good faith estimate.  Keep in mind that when you buy new construction, title fees tend to be higher, so make sure that it's reflected from other lenders.  This is something they (lenders) don't control.

It's going to be almost for anyone else to beat the lender's fees because the 5K PLUS title policy (.08% of sales price) would be a substantial amount.

Builder's lenders tend to be very competitive with their rates.  How about you get what they give you and then post it here and you'll be told if anyone else can beat it.

Another plus for going with the builder's lender is they actually are in close communication with the builder so they would advise you on when to lock the rate avoiding you any extra fees if the home is not ready within the lock period.

Naima
  • November 17 2012
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1) how do i start the process of mortgage rate right now or should i wait till jan 2013?,

Yes, you want to start now


2) Do start off with asking my builder's Preferred lender a GFE and get GFE from say a bank/mortgage and both?? So the process is Compare rates/ negotiate? and select one and lock rate??

Yes.  Locking the rate (now or later) is personal choice that I or another mortgage professional can potentially help make you make.

3) Should i do a lock in rate right now?
 
This is complicated.

4) Are there any gotchas i should be aware of when shopping for mortgage lender?

Until you're there are some lenders that will promise you the world.  Make sure you use someone with lots of good references.

4) What if home is not completed by date and i have a rate locked? what are the consequences?

It really depends.  But, most likely worst case is extension fees or worst case pricing (meaning todays rate or the rate later, whichever is worse).  Each lender has specific policies here.

5) Anything else i need to be aware of ??


Lots of things, but nothing is coming to mind.

6) What institution offers the best rates and low cost closing??

Mine?  This changes on a daily basis.  Don't get too caught up in getting the very best deal.  It's a recipe for disaster.  Use someone that has a competitive offer and more importantly a long history of proven results and comes highly recommended.  You will ALWAYS find someone that can promise you a better deal.   But results are what matter.  

7) Are banks allowing no cost closing???

Yes.  Absolutely.

8) What if i can't put down 20% but yet would like not to pay PMI??

There are a lot of options here.  Feel free to click on me and contact if you want an in depth, or short version, explanation.

I'm also happy to try and compete with the builder's 5k credit offer.   Sometimes those kinds of offers are very tough to compete with because the lender has a good reputation and provides highly competitive loans.  Sometimes they are no more than smoke and mirrors.  Buyer beware. 

Good luck!!
  • November 16 2012
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I could answer all of your questions but bldr has made you a "captive buyer"  He is using the $5k to steer you to his lender. You now have to decide whether that is agreeable to you, and do all of the leg work to determine if the $5K is a viable alternative to a possible higher rate/closing cost of their lender vs other lenders.
The only way you will know is to start the approval process (which should have been completed before construction started) with bldrs lender. Get an Itemization of Fees including rate for a 45 day close, and contact me through my profile ( I am in Plano) and at least you will keep the bldrs. lender competitive.
  • November 16 2012
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Profile picture for Cindy Quinton
I can't answer all of your questions, but in order to close mid January, you should start now. 

If you are a Native American, Veteran, or in a area/income bracket that has Rural development loans, you may be able to avoid PMI. But other than that, there may be some options to pay as little as 5% down and some upfront mortgage insurance, but most loans require some version of it, either up front or monthly for a time period.
  • November 16 2012
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