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Old 05-15-2015, 10:31 AM
 
40 posts, read 39,163 times
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I am in process of deciding on Lender for my new home.
Building is giving me 3000 credit if i choose their preferred lender plus Lenders Title insurance.

So in order to compare if i can get a better rate from other lenders I got GFE from different lenders which are lower than my builder.

My builder told me they will try to match the competition plus give me 3000 but they want to see Closing Cost worksheet from other lenders. Other 2 lenders told me they can only provide GFE and that is best way to compare all fees and interest rate and they dont have anything like closing cost worksheet.

Builder refuses to match it if I cant provide a closing cost worksheet and would not accept GFE from other lenders.

What is the best way to compare apples to apples GFE or Closing cost fee sheet?
I am confused at this point.
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Old 05-15-2015, 12:43 PM
 
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That is confusing. The GFE tends to be more "set in stone" than other documents.

The builder, as the seller, will pay the Title Policy regardless of which lender you use, so focus on the $3,000 "incentive."

Due to market volitility, I think the best way for you to compare is to get quotes at the same time of day from each candidate. Otherwise, you can get a quote from lender A, then by the time you get it from Lender B, maybe rates have gone up or down and lender A has the same or better terms.

Also take note of response times from each lender, and if you think they can walk and chew gum.

Getting the best terms can be tricky. Title fees, taxes and insurance costs will be identical. Focus on the "Origination" box: Origination, Discount, "Points," Underwriting and Processing Fees are where you want to compare. And focus on YOUR needs: do you want the lowest absolute rate, or the least out-of-pocket cost? Try to see where their respective fees are at the SAME rate.

Happy shopping!
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Old 05-15-2015, 01:18 PM
 
Location: Austin
7,077 posts, read 16,885,085 times
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Quote:
Originally Posted by Pfhtex View Post

The builder, as the seller, will pay the Title Policy regardless of which lender you use, so focus on the $3,000 "incentive."
This is not true in all cases, so don't get the OP's hopes up. In my market, all incentives are tied to using the builder's mortgage company for most of the builders. Not all builders own the mortgage company, so that's where negotiations come into play.

As for the GFE verse Initials Fee Worksheet, this is where many people get confused and it's hard to compare apples to apples. GFEs aren't allowed anymore without full disclosures being sent out, which means you're going to use that lender. An Initial Fees worksheet is the estimated worksheet that shows estimates of all the fees for things. Are you building and a few months out? The builder's lender is probably working in a buffer to give a worse case scenario because who knows what rates will be in 4-6 months when the house is complete. Other lenders will just quote today's rate, so that's not apples to apples.

You also can't just look at the rate. How much does that rate cost. Does the lower rate have $3000 more in fees than the higher rate with lower fees? The builder's lender wants to see what you're getting elsewhere so he know if you're comparing the right things and not just trying to get him to reduce his rate when fees play a huge factor too.
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Old 05-15-2015, 01:31 PM
 
3,317 posts, read 7,251,326 times
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Quote:
Originally Posted by FalconheadWest View Post
This is not true in all cases, so don't get the OP's hopes up. In my market, all incentives are tied to using the builder's mortgage company for most of the builders. Not all builders own the mortgage company, so that's where negotiations come into play.

As for the GFE verse Initials Fee Worksheet, this is where many people get confused and it's hard to compare apples to apples. GFEs aren't allowed anymore without full disclosures being sent out, which means you're going to use that lender. An Initial Fees worksheet is the estimated worksheet that shows estimates of all the fees for things. Are you building and a few months out? The builder's lender is probably working in a buffer to give a worse case scenario because who knows what rates will be in 4-6 months when the house is complete. Other lenders will just quote today's rate, so that's not apples to apples.

You also can't just look at the rate. How much does that rate cost. Does the lower rate have $3000 more in fees than the higher rate with lower fees? The builder's lender wants to see what you're getting elsewhere so he know if you're comparing the right things and not just trying to get him to reduce his rate when fees play a huge factor too.
How do you know this? Do you not think that other lenders will ask a single question about the time frame?

Wow, looks like I'm taking another six months off from CD.
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Old 05-15-2015, 01:36 PM
 
Location: Austin
7,077 posts, read 16,885,085 times
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Quote:
Originally Posted by Pfhtex View Post
How do you know this? Do you not think that other lenders will ask a single question about the time frame?

Wow, looks like I'm taking another six months off from CD.
I know this because that's what happens in my market everyday with my buyers. They call to get quotes and tell them they're building, but lenders still give today's rate to compete. Then the builder's lender has to go and say, "Well, I can quote today's rate too, but that's not the rate you will get in 6 months, 8 months, whatever time frame..." and then everyone gets defensive, so it's a heads up about how you need to compare apples to apples because today's rates mean nothing when you're shopping for the best rate in 6 months.

No one can predict the future rates, you can only give estimates, so comparing fees is really the only true way to compare lender vs lender until you have a set closing date.
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Old 05-18-2015, 10:12 AM
 
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thank you for your responses. I am 45 days away from closing my house. I confirmed with the builder, they will only pay owner title insurance if I go with their preferred lender. If i choose my lender, i will have to pay it, i confirmed with two lenders and the owners title insurance is about $2,500. So overall 5,500 credit if i go with the builder. Even with little bit higher rate they are offering me on same day. It is better overall. I was able to push them to match the rate with only providing GFE from other lenders and not the closing cost fee sheet as other lenders did not provide that.
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Old 05-18-2015, 09:24 PM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Tell them you found a lender that will refinance your loan 2 weeks ( or 2 months) after closing. Now they are going to have to pay buckets of penalties and they will likely ask you to go with the lender you like and they will still pay for the extras. Little unknown fact. If you have equity, maybe actually refinance. Not everyone has a minimum wait to refi and most expenses won't be full price, but sharply discounted.

There is a way to have your cake and eat it too. (I am mostly joking, but this is something to consider if the rate is that much higher).
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Old 05-20-2015, 08:17 AM
 
3,313 posts, read 4,090,891 times
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Quote:
Originally Posted by SmartMoney View Post
Tell them you found a lender that will refinance your loan 2 weeks ( or 2 months) after closing. Now they are going to have to pay buckets of penalties and they will likely ask you to go with the lender you like and they will still pay for the extras. Little unknown fact. If you have equity, maybe actually refinance. Not everyone has a minimum wait to refi and most expenses won't be full price, but sharply discounted.

There is a way to have your cake and eat it too. (I am mostly joking, but this is something to consider if the rate is that much higher).
Will this really work? What kind of penalties they will have to pay?
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Old 05-20-2015, 08:19 AM
 
3,313 posts, read 4,090,891 times
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Quote:
Originally Posted by gskataria1 View Post
thank you for your responses. I am 45 days away from closing my house. I confirmed with the builder, they will only pay owner title insurance if I go with their preferred lender. If i choose my lender, i will have to pay it, i confirmed with two lenders and the owners title insurance is about $2,500. So overall 5,500 credit if i go with the builder. Even with little bit higher rate they are offering me on same day. It is better overall. I was able to push them to match the rate with only providing GFE from other lenders and not the closing cost fee sheet as other lenders did not provide that.
Run this number over the life of your loan to compare apples to apples. There is no suck thing as free money from preferred lender - these money are rolled elsewhere in your fee.
In our case we really had to compare origination fee and title insurance amounts, all other numbers in GFE were pretty much equal between all lenders.
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Old 05-20-2015, 11:39 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Quote:
Originally Posted by EngGirl View Post
Will this really work? What kind of penalties they will have to pay?
It's true, but will it work? Only if the threat gets to someone that completely comprehends the business.

The penalties are much larger than you would think. It depends on how the loan is being delivered, but on average they would have to pay a 1% penalty +'their earnings (what they made on the loan), possibly more. Almost all loan officers have a clause in their compensation agreement if any loan that pays off that was originated in the past 6 months, the commission must be paid back.

EPO's are a big deal in the mortgage biz. Now, the trick is figuring out before you start to make noise is if it applies. Almost all builder mortgage companies (owned by builder, not a preferred lender, two completely different things,) would be in the penalty category. (Almost anyone that delivers their loans to a third party - not Fannie or Freddie, but WF or other bank).
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