I have successfully gotten a contract on a house to be built. Will be finished late July or early August. My realtor referred me to his mortgage guy. Process is going fine but someone said it wouldn't hurt to see other options. I have started the process with Rocket Mortgage/Quicken.

Much easier to deal with. She's telling me rates are around 4.25 right now and she has convinced me to go Conventional rather than FHA because I've got pretty good credit and it's not that much more of a down payment...5% vs 3.5% with the FHA.

The other mortgage guy is telling me the rate will be near 5% with the FHA loan and is just harder to deal with/get a hold off. He's someone local.

Am I wrong to try and find the best deal? It seems like Rocket Mortgage may be the way to go. My realtor called saying the listing agent got a request for the contract.

Any other advice would be appreciated. I did offer $5000 more to have the builder pay that amount towards closing also.

I would tell the local guy that it is a competitive situation and that he should prepare any proposals accordiugly. I imagine his new proposals to you will show how hard he was going to screw you originally..

I would also consult 2-3 other banks - also telling them that it is a competitive situation.

Bankrate.com will also give you a good idea ballpark range of rates for the different loan products.

You have my sympathy as well as my hope about dealing with financial institutions.
I've looked several times in the last 5 years at re-financing my home. I have been lied to, put off, had my credit score repeatedly hammered, bait 'n switched, and treated like dog poo. I have had an "appraiser" belittle me about housekeeping (I was single and working full time + part time).

I hate banks period.

But I wish you well. You might want to retain a lawyer to cover your butt.

I wouldn't even consider financing a house without a least three and preferably five or six mortgage offers. Fee's, terms, lockin rules, a zillion things that matter are all on the table. If you have credit/earnings to get a mortgage then you will benefit from shopping.

I've had a few mortgages through U.S Bank. They service their loans for the entire term, if that matters to you. I use the web page below to shop rates. That page says rates are 4.5% as of today. If you can get a 4.25% I'd say that is a good deal.

https://www.usbank.com/home-lo.../mortgage-rates.html

That's what has pissed me off with the local guy. His rates are ridiculous compared to what I've seen on the open market and what Rocket Mortgage is quoting.

quote:

Originally posted by Oldrider:
You have my sympathy as well as my hope about dealing with financial institutions.
I've looked several times in the last 5 years at re-financing my home. I have been lied to, put off, had my credit score repeatedly hammered, bait 'n switched, and treated like dog poo. I have had an "appraiser" belittle me about housekeeping (I was single and working full time + part time).

I hate banks period.

But I wish you well. You might want to retain a lawyer to cover your butt.

You are probably aware but watch out for add on fees to be padded.

Here's what I do: I always insist on no closing costs, no origination fees, no interest pay downs. I want a straight APR.

The interest you are quoted should match what it says in the APR box. What I mean by this is with interest pay downs or origination fees, you will pay a smaller interest rate on the loan (for example, 3%) but for the APR box, they have to account for the origination fees and so the actual APR comes to 5% (again, for example).

The things you'll be expected to pay are escrow fees, documentation fees, maybe prorated property taxes. The escrow and doc fees should be in the hundreds of dollars at most.

I just went with a Dave Ramsey recommended mortgage broker. The total cost of arranging the mortage-I mean everything-was less than a thousand bucks. Rates were competitive with everyone else. Took very little time to arrange and close.

Of course you should get other offers and shop around.

You should be getting a good faith estimate of closing costs from each lender you are considering.

The only advantage to one mortgage broker over the other is service. If you're current person stinks and/or you get a better rate have your loan package moved.

But base your rate comparison off the effective interest rate from the good faith estimate. Low initial rates can be offset by higher fees and closing costs.

I've been a real estate Broker for almost 20 years and I'll just say that the interest rates/closing costs/monthly paymnent some lenders (certainly not all) will verbally tell you is not even close to what their final numbers end up being.

I would certainly shop around as much as you can. A tenth of a point can easily cost you tens of thousands (or even more) of dollars over the course of a mortgage. I prefer shopping locally too, but when that kind of money is involved it becomes a lot less important.

A little percent difference in rates can make a huge difference in your monthly payment. So I would definitely shop around.

We recently built a house and it was a miserable experience. Nothing like we naively thought it was going to be. So good luck!

I tried a mortgage broker once. He had $1,500 in for his fee and the rate he was proposing wasn't any better than what a local banking was proposing sans fees. Shop around and don't feel the slightest bit guilty about it. It's your money and your credit.

With such low down payments, both FBA and conventional loans are going to require mortgage insurance premiums. With the FHA loan it is .85% for the life of the loan no matter how much you pay it down. With a conventional mortgage you'll pay private mortgage insurance (PMI), but it goes away when you pay the mortgage down to less than 78% loan to value ratio (LTV). The cost of PMI varies, but is more than what FHA charges. Also there is a front end fee for an FHA loan of $1,750 per $100,000 borrowed.

The mortgage broker's rates are negotiable. He gets paid a premium from the bank for securing a rate above par.

Shop it. You owe nothing to anyone. Make them earn your business.

I was a broker at one point - I will say I prefer dealing directly with my bank.