Author Topic: Loan with the builder?  (Read 2157 times)

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Offline ucla bruin

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Loan with the builder?
« 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.

Offline USCTrojanCPA

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Re: Loan with the builder?
« Reply #1 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.
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Offline moc

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Re: Loan with the builder?
« Reply #2 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.

Offline Soylent Green Is People

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Re: Loan with the builder?
« Reply #3 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
My .02c

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Offline Cares

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Re: Loan with the builder?
« Reply #4 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.

Offline AccidentalAnalytics

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Re: Loan with the builder?
« Reply #5 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

Offline ucla bruin

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Re: Loan with the builder?
« Reply #6 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?
« Last Edit: July 23, 2021, 01:29:11 AM by ucla bruin »

Offline Cares

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Re: Loan with the builder?
« Reply #7 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.

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Offline USCTrojanCPA

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Re: Loan with the builder?
« Reply #8 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.
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Offline Irvinehomeseeker

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Re: Loan with the builder?
« Reply #9 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.

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Offline Yousr

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Re: Loan with the builder?
« Reply #10 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.

Offline Cares

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Re: Loan with the builder?
« Reply #11 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.

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Offline Yousr

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Re: Loan with the builder?
« Reply #12 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

Offline Irvinehomeseeker

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Re: Loan with the builder?
« Reply #13 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.
« Last Edit: August 15, 2021, 10:59:46 PM by Irvinehomeseeker »

Offline IrvineCastello

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Re: Loan with the builder?
« Reply #14 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

 

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