Abide to a Lender?

[sherrypeter]

Hi,

Where i stand now - Have signed a purchase contract for a new home & got pre-approved from preferred lender.

Construction have not started yet, but will be starting shortly in 2 weeks.

i got the GFE and TIL documents form preferred lender and have signed it along with Initial Disclosure papers.

I can lock in a rate only 60days before closing , which will be in march.

Question - When i have to decide with which lender i have to go with?

I can change the lender before i lock in the interest rate?

[basballguy]

You can change anytime you want. 

I prequal'd with one lender before i signed my contract. 
When it got time to do the official loan app, I did GFE's from 3 different lenders and ended up staying with the lender that pre qual'd me. 

But depending upon how much time you have, you can probably change whenever you want.  Although I have heard of issues for those that change lenders after their loans are sent through GUS for FHA, VA, USDA (i think).  Someone may have to correct me.

[StartingOver10]

Take a look at your contract to see what the conditions are for mortgage approval with other lenders than the preferred lender.

Sometimes the builder will pay some of your closing costs or part of your upgrades if you use their preferred lender, but not if you use another lender. This will be specified in your purchase and sale agreement.

Having said that, it is always a good idea to make application with another lender as well as the preferred lender. It is very possible that the preferred lender is charging a higher interest rate or more fees than other outside lenders IME. You won't know until you actually make application and get a full commitment with the interest rate and GFE to compare the two loans.

If it were me, I would go right away to make application with at least one other good lender - a mortgage banker. A mortgage banker funds their own loans but has many different resources to sell the loan to so you get very good rates (in general).

[sherrypeter]

Thank You to both of you for the valuable advise.

Explained below is a problem which i found with my preferred lender.

The initial understanding was that they will do the credit pull totally 2 times.

1st when i apply for mortgage (already done in nov 16th 2013)

2nd when they were to lock-in an interest rate(60days prior to closing) which will be around march 2014.

But contrary to the above said they pulled my credit already 2 times as part of application process.( 1st Nov 16th , 2nd Dec 17th )

The 2 credit pulls are seperated by 30 days.Am sure that will bring down my credit score.

Now again when we reach march ,60 days prior to closing they will pull my credit if i plan to go with them.

yes i did go to other 2 lenders and got a beter interest rate.

Wells fargo seems to be beter so far.Since the preferred lender already pulled my credit 2nd time on Dec 17th 2013 i have this whole week for cross-shopping

and decide on the best lender.Am going to submit the application with wells fargo and get the loan approved.

Again they also will lock-in the interest rate 60days prior to closing and will pull my credit in march for lock-in.

Preferred lender gives a 3k credit towards closing costs if i go with them.So i will loose that 3k if i go with wells fargo.

What is all your opinion on Wells fargo?

[Christian123]

You will most likely lose the $3k incentive for not using the builder's preferred lender.  I know that Ryan Homes will still give you the incentive if you don't use their in-house mortgage company, but that is only if you do not get approved.  Check with your Sales Consultant on their policy.

The problem that I have seen with the builder's lender's is that the interest rate is usually higher.  If you don't need the $3k then I would go with Wells.  We had so many incentives from our builder that we could not afford to go to another lender, but the interest rate was about .5% higher than Navy and USAA.

[Sunshine85]

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@Christian123 wrote:

You will most likely lose the $3k incentive for not using the builder's preferred lender.  I know that Ryan Homes will still give you the incentive if you don't use their in-house mortgage company, but that is only if you do not get approved.  Check with your Sales Consultant on their policy.

The problem that I have seen with the builder's lender's is that the interest rate is usually higher.  If you don't need the $3k then I would go with Wells.  We had so many incentives from our builder that we could not afford to go to another lender, but the interest rate was about .5% higher than Navy and USAA.

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Bingo! 

OP, this is how preferred lenders for builders are able to offer incentives... it's because you're actually paying for the incentive in some other manner. It will either be a higher rate or more fees. Also $3k isn't much in closing assistance, and I wouldn't be surprised if the "assistance" was them paying for fees that are customarily paid by the seller anyway. 

Do a search on this board about using Wells. You won't like what you read. You'll notice the same with all the big lenders. Many folks don't make it to the closing table even with the loan commitment or pre-approval, and it's often due to issues that existed at the time the loan was submitted. Don't base your decision on rates alone or closing costs assistance. Go with the most knowledgeable LO and processor and the timeliness of their responses to your questions. 

[StartingOver10]

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@Sunshine85 wrote:

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@Christian123 wrote:

You will most likely lose the $3k incentive for not using the builder's preferred lender.  I know that Ryan Homes will still give you the incentive if you don't use their in-house mortgage company, but that is only if you do not get approved.  Check with your Sales Consultant on their policy.

The problem that I have seen with the builder's lender's is that the interest rate is usually higher.  If you don't need the $3k then I would go with Wells.  We had so many incentives from our builder that we could not afford to go to another lender, but the interest rate was about .5% higher than Navy and USAA.

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Bingo! 

OP, this is how preferred lenders for builders are able to offer incentives... it's because you're actually paying for the incentive in some other manner. It will either be a higher rate or more fees. Also $3k isn't much in closing assistance, and I wouldn't be surprised if the "assistance" was them paying for fees that are customarily paid by the seller anyway. 

Do a search on this board about using Wells. You won't like what you read. You'll notice the same with all the big lenders. Many folks don't make it to the closing table even with the loan commitment or pre-approval, and it's often due to issues that existed at the time the loan was submitted. Don't base your decision on rates alone or closing costs assistance. Go with the most knowledgeable LO and processor and the timeliness of their responses to your questions. 

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+100. ^^Sunshine is absolutely right. It is your LO and processor that makes the difference between a smooth purchase and a bumpy road. A good LO anticipates what the u/w will ask for right up front and the processor is one of the most important 'behind the scenes' people. They are the one's that make sure the all the pieces are put in place for the u/w to review.

[Christian123]

I hear what you guys are saying about having a good LO, but I would seriously walk over coals barefoot and hand in the same docs 10 times a day for a 3.25% interest rate.

[sherrypeter]

Thank You again to everyone.

I might go with either wells fargo or coatal federal credit union.

I havent heard about coastal fedral credit union before ,so comfort level is less compared to wells fargo.

Am getting 4.5% with score of 736 for 30 year fixed and 10% down for 400,000 home.

But if i buy discount points for additional 4k the rate becomes 4.375.

i think 4.375 is good rate in todays market for 30 year fixed and me planning to keep home for atleast 15years i belive the extra 4k is worth spending.

[sherrypeter]

Today  i went in and pre-qualified with Wells fargo.

So am going to tell the builder that am going with Wells fargo and not preferred lender.