Help me find a lender!

March 29, 2012 1:58 PM

Filtering through lenders for a mortgage in a home building situation.

We live in a market where real estate is abundant and cheap -- Texas. We were able to find a great deal on a build which was right in our range. We have great credit, 20% down, but our issue is how to find a lender when everything is so complicated with a build.

They have their preferred lender, and we have been in contact with other lenders trying to get our numbers straight. We have been quoted everything from 3.8 to 4.8%. We obviously want the lowest rate possible, but how soon do we need to lock in with a lender? We made a contract deposit last Saturday, and we are going in this Saturday with a list of our upgrades to add, depositing 50% down on those. So within 5 days of signing and putting down our deposit, we had to give them a completed loan application with a loan commitment approval letter. Does providing these lock us in with any particular lender? How does one shop around for a loan when all of these requirements are needed so early on -- 4 months before we actually close and ~3 until we can lock in a rate. Also, we don't to hurt our credit by having our credit ran too many times.

Thanks for any insight or advice!

I've purchased an existing home in the past and I don't remember it being this complicated.

posted by phox to home & garden (4 answers total)

So within 5 days of signing and putting down our deposit, we had to give them a completed loan application with a loan commitment approval letter.

Are you sure that a "commitment letter" is what you need at this stage? The commitment letter is a promise from the lender that they will make a particular loan for a particular situation, and the lender will want to take a very careful look at the situation before making that promise. I'm currently buying a house (an existing house, not in TX, so not the same situation) and it took considerably longer than 5 days to get a commitment letter from the lender. Getting to that stage required an appraisal, survey and inspection, all at my expense. I'm not locked into that lender in any legal sense, but the cost of those services eclipses any savings I could hope to get by switching lenders, so I may as well be locked in.

Perhaps you need a preapproval letter, which only requires a brief explanation of your financial situation and a credit check?
posted by jon1270 at 3:24 PM on March 29, 2012

Thank you for that explanation! We did already have a preapproval, and that makes sense now the way you put it :)
posted by phox at 4:44 PM on March 29, 2012

Definitely use a broker. They shop all the mortgages for you and find the one with the best rate and terms for your specific situation. I'm not sure if they work in the US at all, but Champion Mortgage is fabulous. They have this system where they check your mortgage 5 days a week, to see if you'll save money by switching to a different mortgage. Message me if you want details about them.
posted by Jade_bug at 10:06 PM on March 29, 2012

Credit reporting agencies count a "cluster" of inquiries (for example, from a bunch of auto dealers) as a single one. This is from 2007, for example: ""So for example, if you're shopping for a new mortgage and three potential lenders pull your credit score within three weeks, that is looked at as one inquiry for that purpose," says Steven Katz a spokesperson for TransUnion's TrueCredit.com."

I don't know exactly what the time range is now, but certainly all inquiries within one week will be treated as single one, and will thus have minimal impact on your credit score.
posted by WestCoaster at 6:00 AM on March 30, 2012