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Old 05-23-2017, 09:24 PM
 
1 posts, read 475 times
Reputation: 10

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Hi! As first time home buyers we are really confused about choosing the right lender. My builder has offered us preferred lender who is quoting us a interest rate of 4%. So we went around looking for other lenders who can offer us a lower interest rate. And we found one such lender whose interest rate was lower for 3.75%. We found lower rate was the right thing to do and went ahead with the second lender. However, the appraisal report came back short and the second lender submitted a reconsideration request with proper comps this time. The results are awaited and might be available in a day or two as per the lender. We are a week away from closing and its nerve wracking. The second lender is confident that all will go well but my real estate agent urges me to go with the builder's preferred lender to avoid any delays and be ready for closing on time. Also, my contract says that if the closing is delayed there is a penalty of 1.5%. We therefore cannot afford to miss the closing date at any cost. What would be the right thing to do now, should we go ahead with the preferred lender at 4% interest rate and avoid possible delays? OR should we be hopeful about appraisal reconsideration results and stay with the lender who is offering us a better deal on interest rate? By the way the builder's preferred lender is based out of Colorado which is where my new house is built and the second lender is a non-local based out of Texas.
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Old 05-24-2017, 07:40 AM
 
Location: Northern Colorado
698 posts, read 1,703,347 times
Reputation: 688
Assuming a $300k mortgage, the difference between 3.75% and 4% is $42 per month, or a grand total of $3,528 over the average 7 year ownership period of a home. Is $3,500 more than you will lose if the loan doesn't close on time? If it is close, it might be worth it for the peace of mind. If your mortgage amount is less than $300k or if you plan on staying in the house fewer than the average 7 years, the difference is even less.

I typically encourage my buyers to use a local lender because I have had bad experiences with non-local lenders. When things get challenging with a loan, I can go stand in the local lender's office and get a response. That is not possible with an out-of-state lender.
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Old 05-31-2017, 12:55 PM
 
Location: Boise
606 posts, read 575,383 times
Reputation: 1323
The lender has zero control over what value an appraisal will come in at. I don't think it has anything to do with where their office is located.

The reconsideration request is the only tool they have if the appraisal comes in low. Still, be prepared for the appraiser to stand by their original value. Reconsideration of Value Requests have a very low success rate in my opinion. You are basically saying the appraiser didn't do their job adequately and you have to prove you have more/better information than the appraiser. Its a tough process.

If this is an FHA loan, the builder could be stuck with the value given as FHA appraisals are tied to the property for 180 days. If so, stand your ground. They wont be able to sell to another buyer who is using FHA and get a higher appraisal.

If you are in a VA or FHA loan, there are escape clauses if the property doesn't appraise. I would go back and look at your offer and loan discloses carefully.

That being said, its better working with someone local. Sometimes its relationship thing, the agents and builders are most comfortable with a lender who has a reputation of solid pre-approvals and closing on time.

I hope it turns out well. Once you move in, all the stress and problems with the loan approval will just go away.

Good luck with your new home!
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