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LO denying lower interest rate

Regular Contributor

LO denying lower interest rate

I received a pre-approval and loan committment for my new construction built in October 2018 with a middle mortgage score of 672, 5/1 arm 6.75% interest rate. Since then, I've paid off 6 credit cards, and have raised my middle mortgage score to 752. House will be complete in 2 months, and I asked lender if I could be offered a lower interest rate since my credit score and DTI increased substantially-- and he has shot it down completely. Smiley Sad I know every lender is different, but it's so unfortunate. Yes, I know I have an option to switch lenders, but this is a preferred lender, and I received $35,000 builder incentive for going with them, I'm afraid pulling out of it would cause me to lose the incentive. 


Guess i'm just venting -- but in the event anyone has a piece of advice, or how I could negotiate with the lender (if possible) please let me know.


Mortgage Lender: Homebridge Financial

Community Leader
Super Contributor

Re: LO denying lower interest rate

OP, this truly is unfortunate and 6.75% is really high for a 5/1 arm even back in October.


So you're right, you will not only lose the $35K builder incentives, but you could also lose your deposit if you walked away.


If you do have to swallow and go along, you could always refinance after one year. 

DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799

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Message 2 of 5

Re: LO denying lower interest rate

Hi, OP --


This definitely sucks, but it's not altogether surprising. The lender has you locked into a higher rate -- meaning they make more. It's not in THEIR best interest to give you a lower rate.


I agree with the poster above. Don't lose your incentives ($35K is a lot) and your deposit and aim to refinance in one year.

Message 3 of 5
Frequent Contributor

Re: LO denying lower interest rate

Why on earth did you agree to a 5/1 arm at 6.75%? I can't think of a scenario in the current environment that that makes sense when 15-30 year rates are almost half of that and you don't run the risk of your mortgage ballooning in 5 years. I don't want to be Mr. Negative but 2008 was not that long ago. How quickly we forget. I don't care what the incentive is, I'm walking away if you don't lose your earnest money. I'm sure the builder has other preferred lenders. I would contact them and see what you can work out. 

Sept 07 EQ 419

April 2012 EQ- 669 EXP- 680 TU-700= Proud New Homeowner!
Message 4 of 5
Regular Contributor

Re: LO denying lower interest rate

We're self employed, therefore our best interest was to do the Bank Statement Only Program which adds a 2% onto the current rate. Since our business in another state, and our home is another state. Definitely going to refinance once we settle and establish our new business. But thanks for everyones opinion -- 

Message 5 of 5
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