Interest rate question

[Spider07]

Hi, I am looking for some input from the professionals on the board or others in my situation.  I need some advice on interest rates.  A little back story,  We signed our purchase contract on a new build in December 2016.  We went to a prefered lender of our builder to get the pre approval, they offered to pay for the lender and owner title policy and 1000 towards closing cost which comes to about 3100 in lender credits.  The builder is giving us 8820 in incentive money to use towards our closing cost as well.  In December 2016 our mid score was 605 and we were quoted a rate of 4.75%.  

Fast forward to today.  We are roughly 45 days out from closing so I contacted our lender to talk about going ahead and locking our rate (60 day lock). Our mid score is now 649.  The purchase price of the house is 324,516.00.  Our dti is roughly 37-38% including the new house payment.  The lender said he could lock me in today at 4.5%.  I think that is very very high given the market to day.   Oh this is an FHA loan, 3.5% down.  Quite frankly interest rates have fallen more than .25% since december, so even if we didn't raise our mid score, our rate should be lower than 4.5 or at least I think it should.  

So before I fire this guy and find another lender, i wanted to get the thoughts of people on here that do this for a living and see if that is a fair rate for todays market or if this guy is taking us to the woodshed. 

[Anonymous]

I'm not an expert in this type of situation, but in my last mortgage and the current one i'm going through right now, they each offered a floating lock type of option, which guaranteed our rate could not go up, but it could go down by up to a quarter point based on the market. Not sure if that was part of your deal or not.
Also, i'm thinking one of the pros on here will say that you might be better off without the lender credits, which often come with higher rates.

[NC_Mtg_Loaner]

Has the property been appraised yet?

Have you spent any non-refundable fees with the builder's preferred lender yet?

This is rather typical and ought not to be too surprising that the builder's preferred lender may often times NOT have the lowest rate/APR to offer their buyers simply because all the costs the lender 'pays' on your behalf and they pay by providind you a slightly higher than market rate, but here's where you have to determine the value of staying with the builders lender or switching becuase you'll stand to lose some of those incentives perhaps. 

good luck....

[Spider07]

thank you.  No, we haven't done any fees with the current lender yet.  The builder incentive is in our contract, we get that incentive regardless of what loan place we use.  The lender is putting about 3100 in.  

[Anonymous]

Use an online mortgage provider to get a competitive rate. I did this, used their lower rate to leverage a lower rate from my builders lender. FHA rates are supposed to be lower right now so I am surprised you're not sub 4%.

[Spider07]

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@Anonymous wrote:
Use an online mortgage provider to get a competitive rate. I did this, used their lower rate to leverage a lower rate from my builders lender. FHA rates are supposed to be lower right now so I am surprised you're not sub 4%.

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I am speaking with another lender today.  I am not big on using online companies but I may to in this case.  I was shocked at the rate he quoted.  Actually pissed off would be a better term.