We recently purchased a new home…a brand new town home. We made the offer last December knowing the home wouldn’t be built until fall of 2007 (town homes have to be built out in rows, so they can’t just build it as soon as you buy it). We closed in late September of 2007. Like most, we couldn’t pay for it all ourselves, so we needed a lender for a portion of the costs.
The Application Process
The builder of our home had a lending company so we entertained their offers. Applying with the builder’s lender (DHI) was easy. They had me apply when we made the offer and settled on a price for the house. Over the next 9 months we got fully approved and bombarded them with questions and requests for good faith estimates. Imagine following mortgage interest rates from December 2006 to September 2007. I was a wreck by close from all the money I knew I’d lost (due to rates moving up).
Also, we bank with Bank of America so I thought I would check to see what kind of offer they could make. To sign up with Bank of America I simply called up my local branch (around mid August) and expressed interest in the No Fee Mortgage. Since it was a new build I was transferred to someone in California who handled the process from there (apparently new build loans are handled away from the local branches). I forget what all I gave them, but it was enough to receive full credit approval and get a good faith estimate. A week or so later I received a application disclosure package in the mail. I didn’t go much further with Bank of America once I saw the numbers.
In addition to these two lenders I checked mortgage rates with maybe 5 others who’s good faith estimate’s didn’t warrant any further discussion.
Deciding on a Lender
We decided we needed a 30 year fixed rate and were going to put 20% down. Ultimately it came down to a better value.
- DHI offered the following: Closing costs of $5,498 (including $412 to buy the rate down .25% Points); $5,000 towards closing costs (incentive for going with the builder’s lender); and a rate of 6.375%
- While Bank of America offered: $0 Closing Costs. …well, almost. I’d just need to pay a whopping $3,731 to get the loan down 2.141% points to 6.375%
In my estimation DHI was a better deal by $3,233 (3,731-498). Alright you Mortgage Experts, am I wrong about this calculation or the assertion that this was the better deal?
By the way, Bank of America must have considered DHI’s offer a better deal because they gave me $250 just for trying them.
Closing the Deal
We then proceeded to the closing with DHI. This was a quick and painless process in my opinion. We had our Realtor there to help us with any questions, so it went smooth. Took about one hour once we got going.
If you are looking for new purchase or refinance rates, be sure to check out my new mortgage rates table page.