I am stuck with a builders in house lender. Unfortunately, can’t switch per my contract. They given me multiple loan estimates with the origination points varying. I keep asking for breakdown of the origination points and they won’t answer. I have a 20% downpayment.
They can’t legally force you to use their lender partner. They can give you a big incentive and tie it to using the lender, therefore making it smartest to do so, but if there’s no free upgrades or cash toward closing or rate reduction, etc you can shop and use any lender. What state?
@Zola
I am in WA. I did have a choice and chose to use the preferred lender because of the incentives. Once I have selected the preferred lender, I can’t switch without permission.
Adley said: @Zola
I am in WA. I did have a choice and chose to use the preferred lender because of the incentives. Once I have selected the preferred lender, I can’t switch without permission.
They’ll do everything they can to pressure you into taking their loan but they cannot force you, it’s your right to choose a lender. What is on you is meeting your contract date or they could pull out of the deal.
They’re making about $13,000 on the loan. People get pretty scummy for that kind of money
Adley said: @Zola
I am in WA. I did have a choice and chose to use the preferred lender because of the incentives. Once I have selected the preferred lender, I can’t switch without permission.
Hmm. Still not sure it’s legal for them to try and force your hand here. They can retract the incentives, if that’s part of the deal. But you don’t need their permission to use another lender. What incentives did they give you?
Adley said: @Zola
I got $30k in in closing costs. I will do some form of temp buydown and use the rest on the closing cost.
Gotcha. $30k back is a nice incentive for sure.
Personally, I’d advise you to put it all toward your closing costs first. A temporary buy down is just putting that money into an escrow account specifically to pay a portion of the interest. It doesn’t “save” you money it just earmarks your money for interest. So if you’re good at budgeting, and investing, then a temporary buy down doesn’t help you much.
@Zola
To answer your question in general tho, the rate feels high, especially considering you’re paying almost 1% in points. Otherwise it doesn’t look too bad in fees.
That’s roughly a market rate, and the only people telling you otherwise are mortgage brokers who are sneakily soliciting by including their links in their profile. Yes you could potentially shop and get quoted a better rate, but the reality is that you’ve been given $30,000 which can be used to buy down your rate well below what even a cut rate broker could offer. Alternatively if you’re comfortable with the payment you’ve been quoted but you simply don’t like the rate then you could consider taking the temporary buy down and using the lower initial payments as an opportunity to make additional principal payments those first few years. That cuts several years and a bunch of actual interest paid over the life of your loan. If you’re curious then plug it into an amortization calculator and play a bit with the extra payments option. Keep in mind that a temporary buy down is essentially just a way for the seller (builder) to prepay a portion of your interest payments as an incentive.
@Charlie
That definitely is NOT “roughly a market rate” for that amount of points but realistically the incentives thrown at them make the deal way more appealing than it would be as a standalone offer without those credits
@Lesley
The national average is right between 7% and 7.125% and see my screenshot below if you don’t believe me. Keep in mind that those rates are based on 25% down and 780+ credit scores. OP is doing 20% and conveniently left out their credit score. Regardless being offered 7.125% at something like 0.8% isn’t entirely out of line it’s just a hair high in terms of cost which is of course entirely irrelevant if OP is receiving a $30,0000 incentive.
Edit: I forgot to include the screenshot. Here’s the source at mortgage news daily
@Charlie
It’s still high but that’s expected with a builder’s lender. They make back part of that incentive they give by offering higher than what they’d find elsewhere.
Like I said, if you take away the incentives it’s not a great deal.
I’m a broker and can easily look up the actual rates at 200+ investors, this lender is likely making around 3+ points on this deal which is way higher than you’d expect for a decent size loan like this if they actually had the ability to shop around without the incentives playing a large part
@Lesley
Again, it’s brokers such as yourself who refuse to believe it’s a market rate, but the numbers don’t lie.
You’re quick to point out how much the lender must be making, but how much do you suppose your wholesale lenders make if they pay you the broker 250 or 275 bps? Maybe you’re happy to swap the deal to borrower paid and take a huge pay cut to offer a better rate because this is such a desirable client for you, but that’s literally against originator compensation laws because if you’re willing to do that for OP it begs the question why aren’t you willing to do that for everyone? If regulators were to have a look at your funded loans would they find that you’re disproportionately offering better terms to certain classes of borrowers? Danger Will Robinson.
It is NOT a market rate, just jump on LoanSifter yourself and price it out and you’ll see it’s way higher than you’d see at a majority of lenders. You can expect the wholesaler to add 25-50bps from their end too to get the overall rough margin. It’s not complicated math.
And nothing I mentioned is remotely against LO comp laws. Perfectly legal to have a max comp set with lenders so that you’re more competitive on larger loans.
@Lesley
Now you’re subtracting out the wholesaler’s margin? The end consumer doesn’t care how the sausage is made they only care what their rate is.
I’m pretty clearly not in the broker world so I can’t exactly compare loansifter, nor do I trust that you’re really comparing apples to apples if it’s that far off. However, since I am in mortgage I do keep track of rates through services like Mortgage News Daily which I’ve linked and you’re still conveniently ignoring that the national average today is at 7.04%.. If you don’t trust their methodology then so be it, but to outright ignore it and call me stupid because I should look at loansifter and should take into account the wholesale lenders margin is just bizarre.
I see you have a habit of calling people stupid, braindead, etc, in your replies. If stupid or mean people seem to be following you around everywhere you go then at some point you would think that maybe they aren’t the issue.
@Charlie
No, not subtracting it, adding it…as the builder lender is likely correspondent if anything, so they make that. You can use that to figure out how much they’re likely making on this deal. Like I’ve said…not complicated stuff to people who actually know what they’re talking about. You…aren’t very bright at all.
National average is 7.04…OP is getting HIGHER with almost a full point buydown…
And yes, there are lots of dumb people on reddit that need to be corrected as they give incorrect advice, like yourself…
That’s absolute garbage. Current rates for no points is 6.75% for that scenario at a 720 credit score. You are most certainly not obligated into using a builder lender. They sometimes offer seller credits for using the builder lender and you would walk away from those. Essentially they stick 10k of fees on you in one place and credit you back 5k in another
For the fees you’re paying, you should be getting nearly a full % lower in rate (based on pricing from today)