Construction loan modification

cherstafApril 20, 2009

Hope some of you can help me understand our construction loan modification. We initially closed the loan in October at 6% construction rate. We finished our build and locked the rate at 5% and now with all the re-fi business my lender will not be able to close by next Monday when my rate expires. Should I be able to relock at a lower rate? My lender is telling me he can extend the rate lock but I prefer to let it "expire" and then re lock at a lower rate? What is the deal with this? Does it really have an "expiration" date or is this just incentive to get it closed? I prefer to just get it closed but not my problem he cant get it done by Monday. Dealing with a small local bank on this....Any advice??? thanks

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dave_donhoff

Hi Cherstaf,
Are you locked at a LENDER, or BROKER?

If you're at a lender, you are likely SOL in terms of getting relocked at a lower rate. Usually there is a significant period of time (60-90 days) that has to pass after an expired lock at any specific lender before you can go back in & lock lower.

How much upfront cash (if any) have you paid for this round of financing? If "nothing," then I'd suggest quickly getting busy to find a suitable BROKER who can pick up the ball quickly (as quickly as this choked industry can rpesently move) and get your deal far enough along to get a rate lock at the lowest possible coupon.

We are advising all clients to refinance using your equity to buydown to the lowest available permanent interest rate (currently we can secure as low as 4.25%.) The buydown costs to secure 4.25% shift daily, and have been ranging in a cost-to-savings breakeven period from 2 to 3.5 years forward.

Is that what you want to do too? I'd definitely recommend it.

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   April 20, 2009 at 12:34PM
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