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First time home buyer locking question

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j791

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Post Posted: Thu Jan 15, 2009 6:42 pm    Post subject: First time home buyer locking question
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I am building a 210K home with 20% down and have a pre-approval letter from the bank. It will take 5 months to build the house and with rates this low, 4.8 for a 30yr fix, I think locking in a rate now might be the best bet. One lender only offers a 2 month lock for no additional charge and the other lender offers a 4 month lock for $630 and a 5 month lock for $820.

My question is can I go with the five month lock at 4.8 and then two months before I'm ready to close on the house go with a different lender who is offering lower rates? If so, what kind of fees would I owe the first lender for locking my rate and processing the loan?

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Icon Mini Profile smithsussane
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Post Posted: Thu Jan 15, 2009 10:02 pm    Post subject:
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Hi j!

Welcome to forums!

I don't think the lender will agree to give you a rate lock period for 5 months first and then again two months before you are ready to close on the property. In my opinion, 2 months rate lock with no additional charges is a good option. You should try going for it.

Feel free to ask if you have further queries.

Sussane
Icon Mini Profile michael_ueltschey



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Post Posted: Thu Jan 15, 2009 10:39 pm    Post subject:
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There is a product specifically for new construction that allows a 6 month lock with a float down option within 60 days if rates get better. It is called Builder rate cap. You can post here if you want more info.
j791

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Post Posted: Sat Jan 17, 2009 3:26 am    Post subject:
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Could you provide more information on the builder rate cap? Thanks
Icon Mini Profile michael_ueltschey



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Post Posted: Sun Jan 18, 2009 7:30 pm    Post subject:
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There is a 100% refundable fee of 1.25% of the loan amount. The rate is locked for 6 months. If rates get better within 60 days of closing you get a one time float down option. The 1.25% up front fee is credited at closing to pay closing costs and prepaid items.

This is no brainer program for anyone building. It is for new construction only.
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