mortgage comparison question?

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My husband and I found a house, been through the contract business, and have been approved through the builder’s lender.
Now I want to compare other lenders and their rates and closing costs.
Is it really even possible to get a decent comparison considering rates change so frequently and the good faith estimates are only …well… estimates of your closing costs?
should I be filling out full loan applications with each lender I want to compare or will pre-approval be enough for that?
Will we have to pay a fee for each loan application submitted even if we chose not to go with their offer?
Also what can you negotiate as far as rates and closing costs?

  1. Reply
    David Z
    February 24, 2011 at 8:34 pm

    do not fill out application everywhere.

    Ask for lender’s good faith costs. You do not care about title company costs or prepaids. All you want to know about is lender’s fees.

    Ask for interest rates with no points.

  2. Reply
    Michelle C
    February 24, 2011 at 9:22 pm

    NOOOOO – everytime you actually fill out an application they run your credit report which show as credit requests/ inquiries which lowers your score. All you need to do is ask what their current rates are. You have been approved through the builders lender which may not be a regular bank so may not qualify as a preapproval – are you using a realtor? If not maybe you should.

  3. Reply
    Glenn S
    February 24, 2011 at 10:08 pm

    Generally speaking large builders can provide you with below market rates and fee’s if you go through their lender. Often builders will also pay a high percentage of your closing costs if you go with their lender only. Companies like Horton, Pulte, K&B, Toll, etc have special loan rates and packages that beat the market by a up to a full point that will save you literally $ 10,000’s over the lifetime of a loan.

    A few months ago my son purchased a brand new home from Pulte. Pulte paid $ 10,000 of his closing costs, and a slightly below market rate, but he had to use Pulte’s lender to get these benefits.

    Builders can’t demand that you use their lender but often it is to your advantage to do so.

    At least in my state, title companies cannot cut their title insurance fees. Those fee’s are approved the the State Insurance Commissioner”. A few years back both Fidelity National Title and First American Title ended up paying very large fines for giving discounts to some buyer but not to others. Every fee adjustment has to be approved by our state insurance commissioner.

  4. Reply
    Paul in San Diego
    February 24, 2011 at 10:20 pm

    Go to a mortgage broker. They get rate sheets with various companies and loan products they offer. The broker can then suggest a number of loan products from different lenders for you to choose from.

    When you apply for the loan, you just apply through the mortgage broker. And, if one lender’s funding falls through for some reason, you can go with another one without having to re-apply.

    From what I have seen lately, the rates available through developer financing are a lot better than what’s available on the open market. That’s because the developers want to move these properties and the lower rates are their incentive to get people to buy.

    But, the rates for different loans are based on various factors, such as your credit worthiness, amount of down payment, interest rate, etc. You can also pay a fee up front called discount points, where you pay a couple percent of the mortgage amount up front to reduce your interest rate. Have your mortgage broker do a cost analysis for you to see how long you would have to pay on a mortgage before you break even with the discount points (how many months will it take for the amount you save each month to total the cost of the discount points). Depending on how much you put down, you may also be able to roll any closing costs and discount points into the loan.

    Another popular option these days is what they call a “no-cost” loan. A mortgage broker gets a commission from the lender for securing a loan. And, the commission is based on things like the loan amount, interest rate, etc. So, your broker may be able to get you into a loan product that has a 1/4 to 1/2% higher rate, but he’s making a bigger commission. So, he uses that higher commission to pay all of your loan fees, while still making enough of a commission to make it worth his while.

    And, by using a mortgage broker, you don’t have to negotiate anything. You just go with what makes the best financial sense.

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