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Questions about frist time home loan

15 years ago

We will begin building October '08. I have been looking around for loans and I am not sure what is considered a good loan. Any help would be so great.

I called one place and he gave me a quoate of 8.125% rate during the build and 3 months before completion I need to reapply for a new rate. That will be my FRM. He stated the company as having 1 single closing with 1 set of loans.

He also said that we can chose to not pay mortgage during the construction and start paying after when we apply for our rate. Is this normal for all loans?

This was the first person I spoke to so I am not really sure of what else he said.

Last but not least how do you feel about companies that take your information and shop around for the best rates? There is a company in my town that does all the work for you and I know that Lending Tree also does this type of work.

Thank you,

Becky

Comment (1)

dave_donhoff
15 years ago
Hi Becky,

Lending Tree does NOT take your info and shop for best rates... they take your info and sell it to the next 4 companies in line to buy it from them, regardless of those company's rates or service specialties. Avoid Lending Tree... they are bad news for the majority of consumers.

What you are referring to is known as a "Mortgage Broker." Brokers build a full credit file with you, and then run it (shop it) among a portfolio of different banks that may have the ability to do the type of financing you need.

According to your descriptions, you are needing the financing for a new custom home construction project. This is actually 3 different sets of loan transactions; The acquisition of the land, the construction process of the home itself, and the final permanent longterm financing. On smaller projects its frequently best to use a specialty loan program known as a "One-Time-Close" (also known as a "Construction-To-Permanent") program.

Your best bet is to ask your builder for referrals to 2 or 3 of his favorite brokers who he's worked with before who specialize in CTP loan programs. If your builder has any experience at all he knows several... but if he'll only REFER one that definitely says something about his experiences with the others.

Luck!
Dave Donhoff
Leverage Planner
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