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Old 08-20-2013, 09:06 AM
 
3 posts, read 19,327 times
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Hi, I live in columbus ohio and I am looking for some input. We went into a contract with a builder in May. The interest rates at the time were 3.25, since then they have gone up to 4.5%. Yesterday they went up to all time highs in two years to 4.8%. We are going thru the builders lender and we were told that we can't lock our rate until 30 days from closing. Here we are not locked and interest rates are rising and our payment has gone up over $100 per month. We are no longer comfortable with this and the builder wont let us back out. We were told they can sue us for the difference if they have to turn around and sell the home as a spec home. I have also talked to the lender and they tell us our DTI ratio is low and that we can still afford the house...little do they know yes we can but we will be house poor. The home is constructed with a foundation and framing complete. What do we do? Thanks!!
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Old 08-20-2013, 10:34 AM
 
Location: Phoenix, AZ > Raleigh, NC
14,297 posts, read 17,491,099 times
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First, contact your realtor and ask for help. You did you a realtor, didn't you?????

I'd be looking for another lender who offers a 3-6 month rate lock. Our builder had inhouse lending and that's what we did, with one free float down. Other lenders DO offer this.

Alternatively, maybe you could go out an buy a new car, make sure the new debt would screw the pooch on your DTI ratio, and that should can the entire deal. . .

How upsetting for you. I'm so sorry!
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Old 08-20-2013, 10:39 AM
 
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No, we did not use a realtor...wish we would have now. I have thought about purchasing something like a car to mess with DTI but really dont want the debt, plus that may screw us on another contract for an existing home that we could purchase if we can get out of this. Thanks
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Old 08-20-2013, 11:16 AM
 
3,317 posts, read 7,251,326 times
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What is the projected completion date? Who is the Lender? They can likely offer a 45- day lock at a decent rate, eat a little cost, and get you there?

BTW, counting on rates staying at 3.25% and BUILDING a house is your mistake for which you are responsible.
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Old 08-20-2013, 11:26 AM
 
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End of October is the estimated complete date...I understood when we did this that rates could go up but come on...3.25 to 4.8%. That is a bit much...
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Old 08-20-2013, 11:36 AM
 
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ANY lender should be able to lock right now to get you to the end of October. I would be sure to find out if the build is on time up to this point and who is responsible for any lock extensions if the builder does not finish the home on time. Sad part is ANY builder's lender should be able to do long term locks (i.e. 6 months).
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Old 08-30-2013, 10:17 PM
 
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There are extended rate locks out there, you just have to look. We just locked ours in for 12 months. House hasn't started construction yet but the way these rates are going, we felt better locking it In now.
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Old 08-31-2013, 08:59 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Quote:
Originally Posted by shanidane View Post
End of October is the estimated complete date...I understood when we did this that rates could go up but come on...3.25 to 4.8%. That is a bit much...
Even at 4.8%, the interest rates are still historically low. What if I told you that after this year, rates would be between 5 - 6% for the next few years before heading to 7 - 8%? What would you do? Wait until they hit 6% to buy? Everyone wants the lowest possible rate (with the least cash), it's human nature. Stop looking at this from the perspective of what you lost. You never had it. Look at this as to what you will loose in the future, if you don't move forward. Rates are not heading back down.

You messed up in a couple places, but given the competitive market when you purchased, it's quite possible you wouldn't have your current contract if you had tried to hold your ground. If you really want out, gather your contract and go seen an attorney. Chances are (depending upon your market), if the builder can successfully resell your home without a loss (in my area, they would be able to sell it for more), you could get all of your money back. But seeing an attorney is what you need to do immediately, not 2 weeks from now.

If the attorney can't assist with getting you out of the contract, he/she can probably make the builder real uncomfortable restricting your ability to obtain a fair market lock. Even without the attorney, I'm willing to bet if you threaten to contact the Consumer Financial Protection Bureau and file a complaint that you are not able to take advance of current rates where 60 day locks are quite common and the builder's lender only permits 30 day locks, you may see a sudden change in policy.

But you need to take some responsibility in this, as well. The news has been screaming for the past 3 years the Fed has been keeping rates low to get the economy going......and in this past year, the speculation has been when will the Fed let the rates go back up, you'd have to be deaf not to connect the dots. Are you truly out of tune with what has been going on in our economy? Or, did you hear all this and ignore it?

You need to decide if you really want out of this contract or do you want to proceed at current market rates and try to force a 60 day lock. (Going back to 3.25% is not an option). If you came here to just vent, we get that. You do have the company of many other buyers. Some actually couldn't move forward, so the builders did re-market their homes with a nice bump in price. But the bigger question is, what are you going to do if you do get out of the contract? Wait for higher rates and prices?

(Oh, buying a car or incurring additional debt is not the answer.....you will have deliberately altered your financial position, putting you in default, at least with the way most contracts are worded, and further in debt).
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