lenders for existing homes vs new builds

[TimeToRecover]

Hello All,

So I am getting nervous already and this is just for a first meeting with a mortgage broker next week (unless my other appts fall though, but thats a different story).  I have started collecting all the paper work and will have everything but the foreclosure deed which noone seems to know how to get or even what it is.  I will be speaking with her in person about this.  In the last 2 weeks I have been dong alot of on line looking using lots of online calculators etc and I have narrowed down my max to 275,000.  So with that decision I open up the possibility of new builds as well.  I have been looking online at these as well and see some really nice floorplans that I like from lennar, in areas that I like within my price range.

But My question is: when working with a mortgage broker how does that work in with new builders like lennar that seem to have their own financiing lenders etc.  plus it appears if you use theirs you get extra $ towards some upgrades etc....

so if I go thru all of this with the mortgage broker and then decide I would prefer the new build do I have to go thru it all again with the builder lenders as well?  I am not looking at moving till sept-dec time frame.  will having the credit pulls from both kill my score if they are not within 30 days.  I was going to use working with the mortgage broker to learn my scores and standing for approvals etc.  the broker I am working with does a fully financed pre approval where you have already been thru underwritting.  I don't know how the new builder lender differ?

Sorry that may have sounded like a lot of questions.  If i didn't have the foreclosure from 2009 still looming on my reports I would be totally confident but I know this limits my options.

[StartingOver10]

"Foreclosure Deed" is the deed that shows the property going back to the bank.

Different geographical areas use different names. Here we call that deed (officially):  Certificate of Title and it can be abbrievated at CT

Look in your counties public tax record section in the history and you should be able to download a copy of that deed that shows your previous home going from you back to the bank.

As far as using the mortgage broker the builder recommends - it is always a good idea to get an outside quote. The builders broker has, in the past (and I have purchased from Lennar too) had either higher costs to close or higher rates. This changes all the time so you want to have a couple of quotes to compare. You are doing the right thing by getting your quote now from the outside lender. The builder will require you to make application with their lender, but they can't force you to close with their lender. That's why they try to offer an incentive. However, the incentive is usually offset by something else - so compare carefully.

Ask as many questions as you need to ask to get comfortable with the process. I'm sure you will be fine. Just get your paperwork together so you don't have any unexpected bumps along the way.

[dollar_bill]

I went with a new home and the builder required that I get approved from their "lender".  None of the people in my area liked nor wanted to work with an outside lender. In the end their lender pulled my credit, so I had two inq's but I figured who cares? I still used the lender of my choice.  The builders lender acted shocked when he called me a couple of weeks later and I told him I was not using him. He said, "I wish you would of called me sooner". I said, "why? you're that one that has this deal worked out with the builder, it's your job to call me instead of assuming I was using you". All I did was forward him copies of the same stuff I had already provided to my lender so it was pretty much hassel free. I never intended to use the guy, but the builder is trying to finish his project and doesn't want to have deals fall though so they like to get a pre-qual from someone they trust.

Borrowing hundreds of thousands of dollars is and should be a pain in the arse I suppose. But don't for a second act like they are doing you the favor, it's the other way around IMO. You're the one that is taking on the massive debt and responsible for everything.

One thing I didn't think about at the time... a local lender is great because you have them right there, you're not subject to a phone call or e-mail. It adds stress when their is something you want to know and you can't get an answer. Not to mention chances are they have an underwriter right across their hallway, not in an underwriting department four states away like the bigger box lenders will have. You can have a guy who should/might be fighting for you.

In the end, I went with the best rate and the best deal, and for a few weeks of torture, it's worth it.

[ezdriver]

I am a sales counselor for a national builder. We require that all buyers be preapproved by our lender partner and we contribute 3% [of the final price] closing cost assitance if you use our lender partner. We sometimes allow the buyer to get the 3% with outside lender if our lender partner is unable to do the loan. Federal law prevents you from being forced to use any particular lender.

[tooleman694]

If you go with the lender the builder has typically you get more money upfront but the rate is going to be higher. If you go with your own lender then you lose the money but get a better rate.

So its up to you. If you need the money go with the builder, if you dont need the money then get your own lender.

We went with the lender of our builder because we were needing the extra stuff to pay closing costs.

[ezdriver]

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@tooleman694 wrote:

If you go with the lender the builder has typically you get more money upfront but the rate is going to be higher. If you go with your own lender then you lose the money but get a better rate.

So its up to you. If you need the money go with the builder, if you dont need the money then get your own lender.

We went with the lender of our builder because we were needing the extra stuff to pay closing costs.

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Not necessarily true and a buyer should always verify by getting quotes from other lenders. Several of my buyers in the past six months work for banks ... big and small. Some had mortgage brokers in their family. I encourage all of them to shop around since which they finace with is always their own choice. We do not give cash so that our lender partner can charge more. We give the 3% becuase there is value to us in knowing the status of a transaction and check on it three times weekly. Unfortunately, we can never get outside lenders to work that closely with us. We have had outside lender approve buyers and not be able to close. That of course is a bad thing for us. We feel that our closing cost contributions is money well spent.

BTW, the rates that our lender partner are quoting right now are 4.5% on conventional and 4.125% on VA/FHA/USDA.

[tooleman694]

In my case I could have gotten a better rate with a different lender. I got stuck with a 3.75 on a 30 year. Not bad so I took the cash.

[ezdriver]

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@tooleman694 wrote:

In my case I could have gotten a better rate with a different lender. I got stuck with a 3.75 on a 30 year. Not bad so I took the cash.

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How long ago was that mortgage originated? What type of mortgage was it?

To get that rate on a 30-yr mortgage today, one would have to buy the rate down with a lot of cash.

As a builder, a big fear is that we build the house and the buyer can't close on it. We don't like to carry inventory like some other builders.

[TimeToRecover]

This information has been quite helpful.  So now my next question is are there any builders out there to be leary of?

[ezdriver]

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@TimeToRecover wrote:

This information has been quite helpful.  So now my next question is are there any builders out there to be leary of?

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Ask every builder rep to explain their process from beginning to end. If they cannot do that in a simple, understandable way in one minute, you will likely have disappoints between signing the purchase agreement and closing on your home.

Here is my version of an answer:

You select a floor plan, then a homesite on which to build it. I'll help you select the structural options and sign the contract after which our design studio will help you finish your personalization of the home. When the building permit is received, you will meet with the construction super for a pre-construction review then he will start building your house. You will meet with him again before we hang drywall and when the house is 100% done. You then close and collect your keys.