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Old 01-11-2019, 12:42 PM
 
4 posts, read 3,661 times
Reputation: 10

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I’m in the process of buying a new home. It’s still under construction, and will be for another month or so. My dilemma is related to the mortgage and how to handle a mortgage rate lock.

I went through the typical process of exploring a variety of lender options for my mortgage. I’ve decided to go with the bank that we use for everything else because I’ve really liked working with them, plus the rate they’ve offered is competitive and they’re close to matching the discount we’d get using the builders preferred lender.

Here are the details:

· $400k home that we’re using a conventional loan for.

· Rate was locked in at 4.5% in December (when the bank had advertised rates at 4.75%), and is up for extension next week. The cost for the lock is $500 per 15 days, meaning we’ll spend between $1,500 and $2,000 on the lock.

· The preferred lender has been in regular contact with us trying to pry our mortgage away from our bank.

· The advertised mortgage rate has gone down .375%. This amounts to about $90 per month.

· Our bank is saying that they won’t reduce the rate until we’re days from closing, which could be in February.

· The preferred lender is offering to beat the rate and lock it in for 45 days, for free. This would effectively save us $90+ per month on our mortgage. The closing costs would also be lower.

I might be wrong about this, but I believe we can still switch lenders until we start signing closing documents. The loss for switching lenders would be the appraisal fee ($500) and the loan origination fee ($600).

I would feel bad about leaving our bank, given the work they’ve done on this loan, but it’s hard for me to justify spending an extra $30k or so through the life of the loan and more in closing costs.

What are your thoughts? What am I missing here?
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Old 01-11-2019, 01:08 PM
 
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Did the builder's lender send you an official Loan Estimate showing their offer?

Also, as much as I hate mid-stream rate shoppers, I can't blame you for listening to competing offers.

If I were you, I would obtain an official Loan Estimate from the Preferred Lender and present it to your current lender. A loan of that size has sufficient revenue for your current lender to play ball, in the face of losing the deal. 75% of Something is much better than 100% of Nothing.

Just don't tune your lender out, you might be surprised at how well they can match the competing offer.
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Old 01-11-2019, 01:20 PM
 
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Thanks for the response. I've been internally debating this issue all day.

The builder's lender has not sent us an official loan estimate. I'm hesitant to press them for it because I really don't want to be in a position where I'm forcing lenders to do that back-and-forth. We sort of did that months ago when this process started and I like the idea of that headache being over. I'd rather my current lender compete with themselves right now, knowing that their rate is far lower than it was a month ago.

I don't like the idea of being a mid-stream rate shopper, but it's hard to avoid, especially with the rate on a downward trend. If I don't press my lender, then I'm leaving tens of thousands of dollars on the table. I'm also paying higher closing costs with them. It's sort of a lose-lose if I don't do something now.
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Old 01-11-2019, 02:17 PM
 
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Have you spoken to your bank about the competitor's offer and your concerns about the difference in cost to you? I'm guessing with this much work put into your loan already, they would be willing to look at the options of letting the rate expire and relocking at the lower rate, or renegotiating the rate closer to closing (maybe the latter is what was offered but not explained well?).
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Old 01-11-2019, 03:02 PM
 
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I have a call scheduled with my lender on Monday. They'll definitely renegotiate when we're closer to closing. What I'd like to do is renegotiate now and keep the future renegotiation option open. Having a one-time float down option seems reasonable, but it's hard to justify sticking around when I have another lender that's openly courting me at a lower rate.

At this point, I'm paying $1,000 per month to lock in a rate that I could beat by going to another lender.
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Old 01-11-2019, 09:16 PM
 
566 posts, read 566,576 times
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We did this with our last home purchase. I really would remove any emotion or guilt you feel out of it. If the first bank didn't want to lose your business they would renegotiate the terms. Go with the lender that you feel will save you money. $90 a month will add up to a whole lot over time.
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Old 01-14-2019, 09:22 AM
 
216 posts, read 296,509 times
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I've had good luck with my Lender in the past; have used 3 times and currently a 4th.

My 1st lock in December 3, 2018 I locked in at 4.75
Then I noticed that rates were dropping (so was the market). I contacted my Lender and had him kept a look out for rates/Bonds
Jan 3, 2019 he did the (free) one time rate adjustment to 4.5
Jan 4th he used some extra closing costs that needed to be spent to buy down my rate and get me locked in at 4.375

Out of pocket - I'm saving $94 monthly, all for $1000 discount points; break even is 10 months

Good Lenders will keep you in mind and (help) you out where they can
...I know mine pretty well as I've used him TOO MUCH!
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Old 01-15-2019, 08:42 AM
 
4 posts, read 3,661 times
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Quick update, for anyone curious. The current lender basically said they don't have flexibility. I've asked my contact to connect with a manager to double-check, given our situation. I should hear something today. It's kind of incredible how limiting their internal policies are.
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Old 01-16-2019, 05:44 AM
 
216 posts, read 296,509 times
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I would honestly check the RE-check the rate/APR of the 'perferred lender'
Bonds and mortgage rates have increased/held at an average 4.5% in January.
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Old 01-16-2019, 05:47 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 1 day ago)
 
Location: Cary, NC
43,060 posts, read 76,592,428 times
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Quote:
Originally Posted by NewMDBuyer View Post
Quick update, for anyone curious. The current lender basically said they don't have flexibility. I've asked my contact to connect with a manager to double-check, given our situation. I should hear something today. It's kind of incredible how limiting their internal policies are.
And....

It is quite possible that the builder's lender will sell your mortgage to your bank.
Amazing how often that happens.

Strange but true. Banks sometimes buy loans they will not write.
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