mortgage through the builder or 3rd party (loan officer, interest rate, credit)

[woodinvilleguy]

I am having a house built. The builder owns a mortgage company and will pay $3k towards closing costs if I use their lender. I also get to lock in a rate today and then re-lock if lower within 30 days of closing.

They are at 6.375% with a point, APR 6.53%

If I do a 3rd party, they are at 6.25% with no points and we can't lock until the house gets closer to being built. (The claim December)

Any thoughts? It is so confusing.

[sonarrat]

Mortgage rates might be much, much higher in December. They've already come up about a point from the low, and the Fed says they might hike interest rates.

[chet everett]

The Fed does not set mortgage rates! The odds of a big spike are pretty low. I do not trust most builders. Sick though I may be, I have no problem with "regular" mortgage lenders. Shop as many as you have time for -- from banks to credit unions to mortgage brokers there are a multitude to options.

I would recommend signing as little as I could whenever in the builder's office, giving them as little deposit as they'll accept and generally insulating yourself from them as much as possible.

[woodinvilleguy]

Looking at the paperwork from the lender I see that they basically are paying for the title insurance. Doesn't the seller typically pay for title insurance? Is it different for new construction?

I'm leaning towards going with a 3rd party since I think the $3k pretty much pays for their convience fees. And assuming that rates don't sky rocket in the next 3 months, I will at a minimum break even.

This descision sucks.... My understanding is that when the economy sucks that the bonds become more attractive and the mortgage rates go down.

[vukinjo]

Have you looked into Bank of America's no fee mortgage plus program? If you have decent credit and 5% down its worth a look.

[Dave1215]

Originally Posted by woodinvilleguy

This descision sucks.... My understanding is that when the economy sucks that the bonds become more attractive and the mortgage rates go down.

Bonds and Interest Rates have opposite reactions... when interest rates are going up then bond yields are going down... when interest rates are going down then bond yields are going up.... but I'm not sure what that has to do with your original question about which Mortgage plan to go with.

[joecustomer]

Originally Posted by woodinvilleguy

I am having a house built. The builder owns a mortgage company and will pay $3k towards closing costs if I use their lender. I also get to lock in a rate today and then re-lock if lower within 30 days of closing.

They are at 6.375% with a point, APR 6.53%

If I do a 3rd party, they are at 6.25% with no points and we can't lock until the house gets closer to being built. (The claim December)

Any thoughts? It is so confusing.

Get a good faith estimate from both and make sure you are comparing the exact same type of loans. Loan officers will usually hide commissions in the orgination fees and interest rates. I would request a good faith 60 days out so you can lock in the rates without excessive fees.

Sometimes the 3rd party companies don't always deliver what they promise no matter how big or small they are. I would apply at both and use the builder lender as a back up.

Sounds like you are a little out on locking in the rate, no need to make a decision yet. Also do a comparable of how much you save in payments over the course of living in the home vs. the 3k.