Talk Irvine

General => Real Estate => Irvine Real Estate => Topic started by: ucla bruin on July 21, 2021, 12:47:57 PM

Title: Loan with the builder?
Post by: ucla bruin on July 21, 2021, 12:47:57 PM
We're finally at the point of getting close to completion on a new construction *insert nervous.gif* and considering between builder's lending or our own.

How competitive do builder's lending get? I've heard that they have a very high (9/10) rate of owners going with them. Not really sure.

What's the market like now between conventional vs jumbo? We can swing either way, of course it'd be nice to hang on to more cash, but wondering what you guys would recommend as a good approach in getting the best deal?

Thanks.
Title: Re: Loan with the builder?
Post by: USCTrojanCPA on July 21, 2021, 12:49:15 PM
We're finally at the point of getting close to completion on a new construction *insert nervous.gif* and considering between builder's lending or our own.

How competitive do builder's lending get? I've heard that they have a very high (9/10) rate of owners going with them. Not really sure.

What's the market like now between conventional vs jumbo? We can swing either way, of course it'd be nice to hang on to more cash, but wondering what you guys would recommend as a good approach in getting the best deal?

Thanks.

Jumbo purchase rates are lower than conforming rates.  Just shop the rates with 2-4 lenders and go with the lowest rate.  Good luck.
Title: Re: Loan with the builder?
Post by: moc on July 21, 2021, 01:49:07 PM
We're finally at the point of getting close to completion on a new construction *insert nervous.gif* and considering between builder's lending or our own.

How competitive do builder's lending get? I've heard that they have a very high (9/10) rate of owners going with them. Not really sure.

What's the market like now between conventional vs jumbo? We can swing either way, of course it'd be nice to hang on to more cash, but wondering what you guys would recommend as a good approach in getting the best deal?

Thanks.

We got quotes from 3 lenders including the builder's lender and theirs was the best offer, so we went with them. It was a pretty easy and simple decision.
Title: Re: Loan with the builder?
Post by: Soylent Green Is People on July 21, 2021, 01:51:47 PM
Builder referred/owned mortgage company capture rate is often less than 30% and that's during a good year.

Jumbo products sometimes have higher FICO rate improvement tiers than high balance conforming. You can also park some cash with the lender to reduce your rate. Interest Only loans are available on very competitive ARM loans. Jumbo lending also has significantly tighter debt to income ratio guidelines and deeper post closing reserve requirements. In some cases you'd need 6-12 months of PITIHOA for cash reserves, but only 50% (3-6 months) can be in a retirement based asset. Self-employment also can be challenging as at least one major bank has rolled back Debt To Income ratios to 35% for the Self-Employed compared to 45% or higher for Conforming Agency loans.

An outside jumbo lender can close a new construction purchase within 20-30 days. A late closing can happen if your loan officer is a n00b so vetting is more important than rate in some cases.

Did you lock with the builder? Pricing today has been off.

My .02c
Title: Re: Loan with the builder?
Post by: Cares on July 21, 2021, 03:43:23 PM
If you want the maximize your money always shop an outside lender. Even if you don't use the outside lender it will make the builder's lender more competitive and offer you more credit or better rates.

I have always beaten a builder's lender though but margins are razor thin for me.
Title: Re: Loan with the builder?
Post by: AccidentalAnalytics on July 21, 2021, 10:25:35 PM
You’re seriously on point.  One thing you didn’t mention are the LTV requirements for Jumbo vs Conv High Balance.

Builder referred/owned mortgage company capture rate is often less than 30% and that's during a good year.

Jumbo products sometimes have higher FICO rate improvement tiers than high balance conforming. You can also park some cash with the lender to reduce your rate. Interest Only loans are available on very competitive ARM loans. Jumbo lending also has significantly tighter debt to income ratio guidelines and deeper post closing reserve requirements. In some cases you'd need 6-12 months of PITIHOA for cash reserves, but only 50% (3-6 months) can be in a retirement based asset. Self-employment also can be challenging as at least one major bank has rolled back Debt To Income ratios to 35% for the Self-Employed compared to 45% or higher for Conforming Agency loans.

An outside jumbo lender can close a new construction purchase within 20-30 days. A late closing can happen if your loan officer is a n00b so vetting is more important than rate in some cases.

Did you lock with the builder? Pricing today has been off.

My .02c
Title: Re: Loan with the builder?
Post by: ucla bruin on July 23, 2021, 12:45:01 AM
Thanks guys.

We're working with both now and will see what we get. I understand there are many factors involved, what is considered a competitive rate for jumbo right now?
Title: Re: Loan with the builder?
Post by: Cares on July 23, 2021, 08:05:46 AM
Thanks guys.

We're working with both now and will see what we get. I understand there are many factors involved, what is considered a competitive rate for jumbo right now?

2.75% or so with lender credit.
Title: Re: Loan with the builder?
Post by: USCTrojanCPA on July 23, 2021, 11:36:51 AM
I was quoted a 2.625% 30-year fixed rate at 0pts recently for a loan in the $2m range.
Title: Re: Loan with the builder?
Post by: Irvinehomeseeker on July 23, 2021, 11:45:55 AM
i have a 180 day rate lock at 2.625 for 30 year fixed with lender credit. Jumbo loan. But I need to park some cash with the bank. Otherwise it would have been 2.75 rate.
Title: Re: Loan with the builder?
Post by: Yousr on August 14, 2021, 01:44:41 AM
i have a 180 day rate lock at 2.625 for 30 year fixed with lender credit. Jumbo loan. But I need to park some cash with the bank. Otherwise it would have been 2.75 rate.

Do you mind sharing how much they charged for the 6-month rate lock, and if the rate floats down? I am assuming you purchased a new build and hence the longer closing timeline. I am in a similar situation and just wasn’t sure how to manage the uncertainty regarding the closing date. Since it’s a moving target, I don’t want the lock to expire before closing.
Title: Re: Loan with the builder?
Post by: Cares on August 14, 2021, 07:34:39 AM
The advantage of the builder lender is usually their rate locks can extend infinitely. You usually can get 1 rate float down within x days of closing. The downside is also that they lock you in with a rate that can sometimes be up to 0.5% higher than you shopping yourself.
Title: Re: Loan with the builder?
Post by: Yousr on August 15, 2021, 09:52:04 PM
The advantage of the builder lender is usually their rate locks can extend infinitely. You usually can get 1 rate float down within x days of closing. The downside is also that they lock you in with a rate that can sometimes be up to 0.5% higher than you shopping yourself.

Thanks. I haven’t actually tried with the builder lender. BOA said they would charge a 0.5 percentage point fee for a 180-day lock of current market low rate but it can’t float down. Also, if it expires I need to pay another fee to renew. This is why it’s not entirely obvious to me I should go down that route, especially if the rates maintain their level over the next couple of months
Title: Re: Loan with the builder?
Post by: Irvinehomeseeker on August 15, 2021, 10:53:08 PM
I got better rate and pricing with Citi compared to BofA. With BofA, I was charged me 0.5% upfront fee.  I lost my 0.5% upfront fee paid to BofA . Yeah, that's a bummer that I lost money with BofA but Citi has better Relationship Discount tiers, gave me lower rate than BofA and also gave me enough lender credit to offset the upfront fee that I  lost to BofA.

Citi doesn't charge 0.5% fee but they do charge around 1000$ for the lender fee. That's the money that is at risk if you back out from them.

The loan officer at Citi tells me that they can extend past 180 days at the same rate in most cases. May be another 2 months past 180 I would think.

In retrospect, my experience with Citi for extended rate lock was much much better than BofA. I just wish I had got to know about Citi back in May/June timeframe when I was looking for extended rate lock. Also, working with the right loan officer makes a difference for Jumbo loans.

PM me for Citi contact. Happy to help.
Title: Re: Loan with the builder?
Post by: IrvineCastello on August 16, 2021, 09:33:09 AM
Hi! I would like to get the Citibank contact information.  We bought new construction in Highland with a December close date.

Thanks!
Connie
Title: Re: Loan with the builder?
Post by: Irvinehomeseeker on August 16, 2021, 09:41:45 AM
Hi! I would like to get the Citibank contact information.  We bought new construction in Highland with a December close date.

Thanks!
Connie

Sent you a PM.
Title: Re: Loan with the builder?
Post by: USCTrojanCPA on August 16, 2021, 11:01:17 AM
Just a heads up, jumbo rates don't move around as much as conforming rates because they aren't based upon where the MBS mortgage bond market is.  Jumbo rates are more based upon the cost of capital for the jumbo lenders.  I know that jumbo rates have roughly ranged from 2.625% to 2.75% for the past 3-4 months so it might not worth paying a longer term lock fee for a jumbo loan IMO.
Title: Re: Loan with the builder?
Post by: sleepy5136 on August 16, 2021, 01:19:29 PM
I'm actually surprised that Citi has some nice benefits when considering a jumbo loan with them. One is 180 lock (need to ask if there is a fee) and the other is no PMI on jumbo loans. BUT they do require you to put 50k in their account until close of loan in order to take it out.
Title: Re: Loan with the builder?
Post by: Irvinehomeseeker on August 16, 2021, 01:31:06 PM
I'm actually surprised that Citi has some nice benefits when considering a jumbo loan with them. One is 180 lock (need to ask if there is a fee) and the other is no PMI on jumbo loans. BUT they do require you to put 50k in their account until close of loan in order to take it out.

I don't think the 50K needs to stay from time of lock to close of escrow. That 50K - for a .125% reduction should be new money in a citi account at time of closing  as i understand.
Title: Re: Loan with the builder?
Post by: sleepy5136 on August 16, 2021, 01:56:32 PM
I'm actually surprised that Citi has some nice benefits when considering a jumbo loan with them. One is 180 lock (need to ask if there is a fee) and the other is no PMI on jumbo loans. BUT they do require you to put 50k in their account until close of loan in order to take it out.

I don't think the 50K needs to stay from time of lock to close of escrow. That 50K - for a .125% reduction should be new money in a citi account at time of closing  as i understand.
Ahh. That's great. Do you know if their jumbo rates are competitive to other lenders? Any rebates along with the lock?
Title: Re: Loan with the builder?
Post by: fatduck on August 16, 2021, 02:50:50 PM
I'm actually surprised that Citi has some nice benefits when considering a jumbo loan with them. One is 180 lock (need to ask if there is a fee) and the other is no PMI on jumbo loans. BUT they do require you to put 50k in their account until close of loan in order to take it out.

I don't think the 50K needs to stay from time of lock to close of escrow. That 50K - for a .125% reduction should be new money in a citi account at time of closing  as i understand.

they check after closing.  so it just has to be there for a few days for them to check.  it also has to be extra money on top of your cash to close, so not your down payment.  you can take the money out of citi after they check the balance, but you do also have to autopay your mortgage from a citi account to keep the rate benefit, so you will have to keep some money with them.

i worked w/ them a few years ago and their rates were pretty competitive.  they do require at least 85% LTV for jumbo, or they did back then.  i ended up going w/ another lender but not because of the rates.
Title: Re: Loan with the builder?
Post by: sleepy5136 on August 17, 2021, 09:55:19 PM
i have a 180 day rate lock at 2.625 for 30 year fixed with lender credit. Jumbo loan. But I need to park some cash with the bank. Otherwise it would have been 2.75 rate.
Did you have to shop around to have citi give you a good rate + credit? I’m noticing that with big banks, they don’t give you the best rate by default and instead make you work for it which is quite annoying.
Title: Re: Loan with the builder?
Post by: Irvinehomeseeker on August 17, 2021, 10:17:41 PM
i have a 180 day rate lock at 2.625 for 30 year fixed with lender credit. Jumbo loan. But I need to park some cash with the bank. Otherwise it would have been 2.75 rate.
Did you have to shop around to have citi give you a good rate + credit? I’m noticing that with big banks, they don’t give you the best rate by default and instead make you work for it which is quite annoying.

I did some shopping around.  But Citi gave me a good rate to beat what I got from BofA.  It's peace of mind you get if do an extended rate lock. As Martin pointed out earlier, one can wait until 60 days of closing if you consider that Jumbo rates are relatively stable. But, who knows what rates will be like 6 months from now....heck, who would have thought home prices in Irvine would go up 20% when looking back 6 months?
Title: Re: Loan with the builder?
Post by: sleepy5136 on August 20, 2021, 08:17:01 PM
has anyone had experience with ally for new construction? i know a bunch of people use them for refinance. wonder if they are good for new construction as well. only thing is they can only lock 75 days at most.
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