Ryland Mortgage Interest Rate Protection Program

[chris_ut]

Originally Posted by nimbusdog

.625% is a pretty big difference. What is the term and what is the rate? For instance, on a $300k, 30 year mortgage the difference between 4% and 4.625% is about $110/month. But it will take a while for that to add up to their contributions toward closing.

When you get the GFE, pay close attention to the lender fees. They are going to try to charge you a 1% origination fee, a funding fee, underwriting fee, processing fee. These are all fees for which you can find other lenders that do not charge. This is how they can justify giving you a 3% contribution towards closing, because a lot of that is just going towards paying them back for these fees. They also make it up in the interest rate spread.

It's going to be hard to justify using another lender and giving up this contribution, but I'd still shop around and run the numbers just to make sure. And even then, I'd still shop around for other GFEs, show them to Ryland and tell them they're not competitive and see what they can do for you. Every little bit you can knock off their GFE - whether in lender fees or in interest rate - helps.

So they give you $10,500 now and you pay an extra $49,600 in interest over the life of the loan for the rate difference. Good deal or not depends on how long you own the house, the longer you do the worse fo a deal it is for you.

[nimbusdog]

Originally Posted by chris_ut

So they give you $10,500 now and you pay an extra $49,600 in interest over the life of the loan for the rate difference. Good deal or not depends on how long you own the house, the longer you do the worse fo a deal it is for you.

That's the gist of it. It's actually $39,600 if you assume it's a 30 year mortgage taken to full term. And the $10,500 is actually reduced if you consider the fact that they will charge you fees that other lenders might not. For instance, let's say that the house is $350k and you're taking out a $300k mortgage just to make this easy. So the incentive is $10,500. They're going to charge you a 1% origination fee. That's $3000. They'll charge you an underwriting fee (~$300), processing fee (~$400), and funding fee ($100). When you subtract all that from the incentive, you're down to about $6700 in incentives. That's still a pretty good chunk of money.

So what you have to do is get a bunch of GFEs from good, competitive lenders (I'm not talking Bank of America here), and compare what the difference is in their lender fees (don't pay attention to insurance, taxes, prepaid interest, etc). Subtract the difference in these fees from your incentive, and then compare that to the difference in monthly payments between the two.

In the example I've given, you've got a $6700 incentive versus an additional $110 mortgage payment every month. So it takes 61 months (just over 5 years) before the additional interest you're paying every month exceeds the incentive dollars you got up front. That's the break-even point. If you plan on keeping the mortgage for longer than that period of time, then it's a financial loss to take the incentive up front. But that doesn't mean people won't do it. A lot of people would rather have $6700 more in their pocket now than pay an additional $110/month for some indefinite period of time. Most people aren't going to keep their mortgages for 30 years, but if you do, then you can calculate that the $6700 now costs you $32,900 over a 30 year period.

[wheretogo]

When I did my home purchase, I got it in writing that if the builder's mortgage rate is more than 0.25 of the competition, they would let me keep the allowance but allow to use other lender. When it came to closing, their rate was 0.25 more than the competition, so they matched their rate to it (though they added a $500 fee). I took it as they had my loan all set for approval and did not want to start with another lender. Its all about negotiation and being persistent. (To make the comparison easier, I always asked for a 0 point 0 lender fee GFE from any lender..As third-party fees are more-or-less the same, this help you to compare the rates easily.

[sarahsgrove]

Originally Posted by wheretogo

When I did my home purchase, I got it in writing that if the builder's mortgage rate is more than 0.25 of the competition, they would let me keep the allowance but allow to use other lender. When it came to closing, their rate was 0.25 more than the competition, so they matched their rate to it (though they added a $500 fee). I took it as they had my loan all set for approval and did not want to start with another lender. Its all about negotiation and being persistent. (To make the comparison easier, I always asked for a 0 point 0 lender fee GFE from any lender..As third-party fees are more-or-less the same, this help you to compare the rates easily.

Was your Ryland also ?
Very good advice, I will ask them to give me the same in writing.

[sarahsgrove]

Update on our design center pre view visit. We went there on wed and it worth it. Our sale person was also there for a schedule appt with some other client but she managed to spend 1 hr with us, showed us all big items and helped us with color, matching and themes. She is being really helpful. Anyway our schedule appt is on Tues, I will post after that.

[Playful Beginnings]

Originally Posted by sarahsgrove

Update on our design center pre view visit. We went there on wed and it worth it. Our sale person was also there for a schedule appt with some other client but she managed to spend 1 hr with us, showed us all big items and helped us with color, matching and themes. She is being really helpful. Anyway our schedule appt is on Tues, I will post after that.

One other thing about Ryland design center. Their flooring is almost triple retail cost, and charge crazy amounts for things you get free with other flooring companies )like an extra $2.25 per square foot to lay tile in a pattern). The structural upgrades of course are the ones I would focus on, as well as cabinet upgrades, where which reasonable.

The advantage of Ryland is their awesome floor plans, and our was fantastic. Design center and financing were not their strength.

One other thing - the design center girls are salespeople, who don't even work for Ryland (Wisenbacher). Keep that in mind as they show you stuff.

[HoustonBornNRaised]

See, I found the cabinet upgrades to be very expensive and the flooring to be reasonable, with the exception of tile patterns, like you mentioned. Laying tile on a diagonal was stupid-overpriced.

We had to consider the price of removing old flooring and the inconvenience of having new flooring installed, so paying their prices for tile and hardwood was worth it for us. Others may not look at it that way though. I work at home and have two large dogs, so it would be a major pain for us to have had to have flooring put down at a later date.

[TheRiz33]

Just closed on a new Ryland home myself. I was reluctant using Ryland Mortgage as it felt I was being pushed to use them(which is the case) with the 3% closing cost incentive.

A little persepective from what I gathered through the process. They will sell your Mortgage to most likely Bank of America or Wells Fargo. So, those bank sites are a good place to find rylands going rate sheets. The bigger banks rates always seem .25 or at least .125 higher then what is posted at mortgagenewsdaily.com or zillow marketplace. You can sign up on wellsfargo.com to get emailed when there rates change if you want to track it. Or just check each site a couple times throughout the day when you get within your lock window.

So to be clear. You won't get the very best rate using Ryland. They will probably be 1/8 to 1/4 higher then your wholesale lenders. But, it's streamlined(one stop shop). They were very good answering my questions and concerns(great customer service) and you do get the 3% to close, without having to haggle(not for everyone) with the sales rep(if it's even possible to get the incentive removed from using only Ryland Mortgage.)

As far as the Ryland Mortgage Interest Rate Protection Program. I did use that through them. There really is no harm, if you honestly plan to close with Ryland. They refund your deposit at closing and it does protect you from market volatility. Initially, I was quoted about .5% "cap" over the going rate. I challenged, using the avg. rate posted on mortgagenewsdaily.com(before I knew they used the bigger banks) and they brought it down to .2 over that rate(so actually capped less then .25). Not sure if it works for everyone, but it did work for me. As we got within the 30day window to close. Rates had actually dropped and we locked our rate at a lower rate then the cap. The program, I felt, was straight forward and does allow you to float your rate while still adding insurance that it won't get to out of control(to high).

It is also insurance for them, as with tighter lending standards(more so if going with a conventional loan). If your close to your maximum DTI ratio and they approve you at that capped rate. They don't have to worry about a higher mortgage rate pushing you outside your maximum allowed DTI ratio.

Good luck with everything. It was a stressful and exciting time. And yes, the documention required through the mortgage approval process is crazy, stupidly, insane!