Mortgage for a new build
We are purchasing a home through a national builder. From the time we sign the contract to completion of the home will be 8-11 months. If it matters, I doubt the mortgage will exceed $250K, and it's in the state of NC.
The builder has some kind of deal where we can lock in the rate up to one year in advance for an additional fee. There is one free float down and I think it costs 1/2 a point. As I understand it, the rate would not exceed 1/2% higher than market at the time I agree to do this deal. If I later decide to go with another lender, I owe them a full point as a penalty for moving the loan (to compensate them for the advancing the bank lock fee and their work, I guess).
I don't have ALL the details on this yet, but I wanted to get myself educated a bit before I start listening to their sales pitch. And yes, I have contacted another mortgage broker to discuss what they can offer in this situation.
Please, will the experts here give me a quick education on these kinds of deals, and what should I be looking out for? Your opinion of whether or not I should do this kind of one year lock arrangement is also most appreciated!