Switching from Builder's Preferred Lender

Anonymous · ‎09-18-2021

I'm buying a home from DR Horton. I started with their preferred lender DHI.

I have not enjoyed my experience. The homebuying process already heightens my anxiety and DHI did not help with their slow responses and rude attitude.

I located the lending officer who helped with my current home. I love her and she was able to get me a rate of 2.9% compared to 3.5% and cut my closing costs by $4000 even with the so called $4000 credit from DHI.

The house is still under construction and my tentative closing date is November 29th.

Would my lender switch cause any problems?

Creditplz · ‎09-18-2021

Congrats!!! I dealt with DR Horton on multiple levels, mortgage and work related (sub-contracted).... I absolutely hate doing any business with them but the condos we built were nice and affordable!

When I went to buy one since I could lease it out immediately after (May 2018) their mortgage person in the office asked for tons of info that pertained to my current home.... assets etc..

did it all and waited for a response... took forever and gave me a horrible rate at that time compared to what other mortgage brokers could get, talked to a mortgage specialist at BofA and got it there much much easier and faster.. still won't give me a cc though 🤣

Montana-Hats-702 · ‎09-19-2021

If it would be a problem or not would depend. Better off running it by your agent who knows the details of your purchase contract.

brk1971 · ‎09-22-2021

I bought a new construction home from DR Horton here in San Antonio. As will most new construction, the contract required being preapproved by their lender. I did not find their mortgage rates to be competitive. I shopped around and ultimately chose Navy Federal over PenFed in a close (elsewhere explained) quasi-unintentional process. No real issues on the purchase transaction, but several things that you need to either do or be aware of:

1. IF your contract includes incentives as a condition of using DHI Mortgage, this incentive would no longer apply. (In my case, there were $3500 in closing costs tied to using DHI, but they also charge origination / other fees that use up most of that 'incentive'...)

2. You will want to do an addendum indicating the new lender if your agreement specifies the use of DHI Mortgage.

3. Make sure your new lender can close in that timeframe. (Appraisals are slow, but you've got two months.)

4. Make sure any rate lock with the new lender incorporates any potential delays in construction / closing date. Mine was about 3 weeks late, others on my block were more than 2 months.

5. Applying will cause other hard pulls that affect your score, so do your best to consolidate any shopping you do to the combining period.

6. If you are not a Navy Federal member, I recommend strongly that you include PenFed in your evaluation. No military or government association is required to join and their rates were the most competitive overall. In the end of my saga, I went with Navy Federal as they matched PenFed's rate, but Navy Federal does not have PMI on their loans (at all).

7. While I did use Navy Federal, I still chose to use DHI Title for the closing services. DHI Title was the most competitive for me for that, as the various charges are marginalized. (e.g. property survey was $300 compared to market $450 - this is because DR Horton does surveys for all their homesites as a part of the project management, and it was not necessary to order one as would be required by a different title company... )

Good luck.

Mortgage-Specialist · ‎09-22-2021

These preferred lenders play that game all the time. Fake incentives.

Anonymous · ‎09-22-2021

We are considering a dr horton loan through dhi. If you dont mind me asking, what were the estimated closing costs through dhi and the purchase price? What were you going to be responsible for out of pocket after their incentive? They are offering a 5k incentive where I am and will buy down rate

brk1971 · ‎09-22-2021

@Anonymous wrote:
We are considering a dr horton loan through dhi. If you dont mind me asking, what were the estimated closing costs through dhi and the purchase price? What were you going to be responsible for out of pocket after their incentive? They are offering a 5k incentive where I am and will buy down rate

Without digging it out, it was about $1k in origination fees, a funding fee, and a couple other junk fees I didn't see elsewhere. The rate quoted was 2.75% and the APR was right at 3.25% - I remember being struck by the difference at the time. Most to all of the fees on their estimate that were not charged by other lenders were washed away by their incentive. (Which negated it's value.)

I closed at 2.375% with an APR of 2.398% with NFCU. My cash at the table was my DP plus about $2k.

How much of the incentive is used in fees? Get their estimate then shop it to NFCU (if you can join) and PenFed (if you can't join NFCU). I think the choice will be very clear once you do (and both of those credit unions have will at least try to match).

Anonymous · ‎09-23-2021

Thank you for the response. That is exactly my plan as I am a member of NFCU so hopefully that will work in my favor with them.

brk1971 · ‎09-23-2021

In my case, detailed elsewhere on the forums here, I got a much better rate from PenFed... it was NFCU's matching of the PenFed rate that both got me to the most competitive rate and ALSO saved me the PMI... (and putting down more than 5% did not make financial sense, as it's certainly earning far more than the 2.375% I would be saving...)

Good luck!

Anonymous · ‎09-23-2021

My biggest issue is lack of downpayment funds. So we were looking to use DPA or NFCU zero down mortgage. Those both come with higher rates but we could refi down the road I suppose unless we just decide to wait to save up for a downpayment.