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Guest

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?

smithsussane · Posted: Thu Jan 15, 2009 10:02 pm Post subject:

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

michael_ueltschey · Joined: 11 Jul 2008 Posts: 15 6.47 Dollars($)

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.

Guest

Could you provide more information on the builder rate cap? Thanks

michael_ueltschey · Joined: 11 Jul 2008 Posts: 15 6.47 Dollars($)

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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