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Thanks, I really appreciate the advice. My builder thought I was nuts for chasing down financing right now also, I guess typically since the construction loan is the same 3.99 everywhere no one really cares until the time to pay the actual mortgage and THEN is when the rate matters.
There is one local lender with an OTC coupled with a 30 year rate lock, though it's a tenth or two higher than the usual for the benefit of not having the uncertainly of the rate 5-6 months from now.
From what you're saying is it's better to just do the construction now, gamble on the 30 year rate, and when you're a month or so out from moving into the new house, see what your current lender wants to give you for a rate, and also shop around.
My take was that I was sort of locked into the mortgage coming from the bank who writes the construction loan, but if I'm not beholden to them at all, then maybe I can have my cake and eat it too, yes?
Barring a prepayment penalty (which I would be very surprised), you can refinance your debt at any time. If you are dead set on shopping your rate, don't pay for a 6 month lock now - there's a lot of pork in that lock. Wait until you are close to completion - about 4 weeks out and shop what your current lender is offering you. The worse thing you would be facing is an ARM until you refinance. You would meet the criteria of having ownership for 6 months, so you could refinance at any time. I recommend if you do this, you aim to do it at the time of modification. It's at that exact point your construction lender may choose to match any other quotes you have.........they may not match it even, but enough to make it worth your while to leave it there. And if they don't come thru, you at least gave them a shot.
Thanks, that's what I'll do then. I kind of thought the same thing...I don't get why all these agents and lenders (and even my builder) seem shocked that I might want to actually do the construction loan at one bank, then set up the mortgage at another. They seem to think that transforming the construction loan to the fixed mortgage is a one-lender deal.
I can do so much better by setting up the construction loan locally and then taking the mortgage to a national lender with a better rate. And I agree that waiting is worth the risk of rising rates, especially given they are already inflating it on me to lock now.
If you are pretty sure that my lender has no right to be the initial lender that my mortgage is set up with (and they don't lock me into this at the time of the construction loan) then there's really no reason not to write the construction loan up with my favorite local lender (that piece seems pretty cut and dry same price and rates no matter who) and then when the house is almost done, move the debt to any lender I want THEN.
As long as you do understand you are taking title and signing a note for the entire loan at the beginning of construction and paying your closing costs upfront. And then, when you refinance, you will have to pay closing costs again (albeit much reduced).
This far out, it is impossible to say whether refinancing would pay for itself or not.
Totally understood. The big fundamental understanding I lacked but gained from this thread is that I can actually change lenders right after the construction but before the initial mortgage. Everyone in the process so far except one lender (including the builder and realtors) all think it is not possible or confusing (they ask me why I would want to finance the mortgage with a different lender than the one who did the construction loan).
It's sort of weird why anyone would even think that is unusual, with THIS much money on the table, why would you not want to shop the ultimate BEST interest rate?
The builder commented to me "I have never seen anyone shop more lenders in my life" but that again astounds me - Do people just walk up to the first bank they see, take the quoted rate for 30 years and shake hands and walk away? At this amount of money every TENTH of a point is a big savings. It's very strange.
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