Builders (Pulte) Mortgage. Anything better? (Roseville: sales, real estate, mortgage broker)

[mikefarinha]

I'm in the process of buying a new Pulte home in WestPark Roseville. I was wondering if anyone else has dealt with Pulte Mortgage and compared them with other mortgage companies after factoring in the $10k Pulte gives you for using their mortgage company.

[quasi888]

Mike,

Looks like we'll be neighbors. My Wyndham will be done in late September.

I am financing through Pulte Mortgage too. The process has been pretty smooth so far. Their rates are a bit higher than other lenders (assuming similar terms), but that should come as no surprise, given the incentives Pulte (the builder) contributes.

What does come as a surprise to me is the $10k incentive you mentioned. I'm surprised they're not pushing better incentives, given that the past year has been pretty slow for them. Have you looked at any of the lots they have that will be ready before the end of this year? They are making some great deals on those.

For reference, when I signed my purchase contract in late December 2006, my incentive was 2% ($10k) toward closing costs, and 3% ($15k) off sales price. I just got word a few weeks ago that they are offering even further incentives on houses that will be done before year-end -- houses that are already built but unsold (or back on the market), and houses that are under construction, like mine. So they are taking an additional $55k off my sales price, making my total incentive $80k ($70k off sales price, and $10k toward closing costs). So as you can see, it is totally worth it for me to go with Pulte Mortgage.

In your case, if they are only giving you the $10k off, it would probably be worth it to shop around and do the math. Still, if you haven't already done so, you should really go check out their current inventory and see if you can find a lot that you like.

[mikefarinha]

We'll be moving into the Denby Square development. We already have a lot and model picked out, the "Wagner." We signed the original papers in mid April but the price of the house has come down by over $50k. It is now listed on their website as being $298k, which is down from $354k.

We are going in today to resign the papers, but I think they are going to stipulate that we only get the cheaper price if we use Pulte Mortgage. So that would be a $55k discount plus the $10k cash bonus for going with Pulte.
I'm going to find out today if that is the case.

[quasi888]

Oh OK, that makes more sense then.

I forgot about Denby. I'm going to be in Amberley Place. You'll be just down the road.

[UseJeff]

With the way the market is, builders trap you into using their mortgage company. Any of us at mortgage brokerages can almost always crush their rate, and often their fees... but there's no way to compete with 10's of thousands of dollars in discounts either from overall price, or upgrades. If you feel you are getting a higher rate than the average market rate... do your best to get no prepayment penalty. Even if you take a higher rate initially... a loan without a prepay can be refinanced in as little as 1-2 months from your close of escrow. Be sure to read the fine print in your contract, and be sure there's nothing holding you back from this to be safe.

Overall though, you would see an owner of a mortgage brokerage use the builders lender because they would save so much money. Assuming they of course were buying the builders house...

[mikefarinha]

Hey quasi, when do you expect to move into your new home, September? We are hopping to move in this December or January. I'm anxious to see how the whole park/town square development turns out!

Since we signed to buy the house and put down $5k we are locked into the initial rate (Unless we want to back out and lose the $5k). Since the house price has dropped so much Pulte has been reducing our price as well (This is the 3rd time). As of today they have dropped the price by about $53k from the original price, not including the $10k in bonus cash. If we keep our current contract we have to use Pulte Mortgage or we'll lose the $53k (discount) + $10k (bonus).

I'm assuming that we could probably back out completely (and lose our $5k deposit) and then resign up for a new lot if we really wanted to go with another mortgage company. However we are happy with the house location and elevation and are anxious to move sooner rather than later. So much as I can tell, so far, Pulte Mortgage has decent customer service and competitive rates... However I won't feel right if I don't do my due diligence in looking at other loans and options.

If anyone else has any other input please post! Thanks.

[quasi888]

Mike,

Yes my home will be done in September. Closing on Sept 28, to be exact. We've been living in the area now for just over a month (moved from Bay Area), so I've been checking the progress every couple days or so. They are moving along very well, and I am impressed with the work. Exterior is done, and stucco roof tiles in place. Interior is all finished and painted as well; cabinets and interior fixtures are starting to go up.

Sounds like you're doing well so far with the price reductions. Really, Pulte has no choice but to honor the price reductions for folks currently under contract like you and me, otherwise they would be flooded with cancellations. But are you sure you are locked into the initial rate? Pulte Mortgage did send me a good-faith estimate of my closing costs and monthly payment, but that was based on the rate at the time. The rate is not locked until you tell them to lock, typically 30 to 45 days before the estimated closing date. I'm planning on locking sometime in the next month. You may want to clarify this with them.

Also, if for whatever reason you decided to go with another lender, you are correct in that you would probably lose the $10k incentive on closing costs, but I do NOT believe you would lose the $55k "discount" off of your original purchase price of $354k. Talk with your sales agent. Mine was fairly truthful about it all. Bottom line is they want the sale. Of course they want you to choose their lender, but bottom line is they want the sale.

About the town square: yeah we are looking forward to it too, but honestly, I don't see that happening for at least another year or two. Westpark needs more residents, period. They have already pushed back the opening of Junction Elementary School (2 blocks from us) to Fall 2008 because there are not enough kids in the area yet to justify it. (Which kinda sucks for my wife, because she's an elementary school teacher who is trying to get into the Roseville district, but with no new school opening up, that means no new positions opening up either.) So anyway, it looks like my son (4-1/2 y/o now) will be in the very first kindergarten class at Junction.

[SES]

I took advantage of the incentives and was forced to use Pulte mortgage. I was also forced to use their title company. before I start they are both against the law The Real Estate Protection Act (RESPA section 6 and 9). Here's what happened to me. Yes, I received incentives, but my interest rate was manipulated and in the end, at the closing table those incentives were subsumed into my interest rate. My rate should have been .50 to .75 less than I was given. No, I couldn't take the paperwork to a lawyer before hand because they would not allow me access to it until I sat down at the table. Oh yes, there were additional junk fees (I was charged about 1K) that they won't tell you about until you close. I have now found out that it is too against the law not to allow you copies of final closing documents before closing. Oh yes, right when I sat down at the table they made about $6K off me. All of this has been validated and is being investigated by the bank commissioner in the state I live.

My suggestion? shop around. you may find that you can get a better rate and it will end up costing you less even if you took those incentives. please remember there is no free lunch. -

Regardless what you do, search the web and read a lot about predatory lending and mortgage fraud. You will be glad you did.

[quasi888]

Thanks for the heads-up SES.

So are you saying that there were additional closing costs above and beyond what were disclosed in the good faith estimate that (I assume) you had received?

[SES]

yes. My documents have already been documented and I have been a victim of predatory lending and mortgage fraud. It is currently under investigation. Buyer beware. I have learned a lot about builders in-house mortgage companies. They are actually what I think are called table lenders. They hold the mortgage for about 6 months and then sell them in bulk to a financial institution like Chase mortgage.

I requested the paper work before hand and they gave me some BS story (which I believed at the time) they couldn't have it ready - BS. There were also additional junk fees (25$ here, 100$ there add up fast) which were explained as something that was just 'agreed' upon or initiated by the builder.

If I had to do this again, first I wouldn't use an builders mortgage and I would have an attorney look over the closing papers before closing. It probably would have cost less than what I was stuck with in regards to interest rate. I am going to guess the builder will say I am a disgruntled homeowner, but I have already been through two government agencies and the state bank commissioners office and well, they are the experts.

It is not a good feeling. My motto now is to trust no one except myself.