Couple of questions I'd love you guys expertise one:

1) We are looking at buying a new build and the builder made us get pre-qualified through their preferred lender. They are incentivizing us to use them by giving a $10K sellers credit towards closing costs. I've seen mortgage brokers in the past that can match...but how often will they beat a new home builders incentive structure? Is it worth poking around with a few brokers in the next 30 days to see?

2) I'm looking at an 80/10/10 split so we don't have to make our house purchase contingent on the sale of our house. We currently have like 15% saved up before closing costs - but will have way over the required 20% once our house sells. Do you guys know of any alternatives re: financing that are better than an 80/10/10? I know people can get creative. I just don't want to pay PMI and / or deal with having to refinance right after we close...especially given rates are rising.

Thanks in advance for any thoughts / insight.

It's been a few years, but in my mind, it's worth it to shop around. You might be able to get the builder's preferred lender to match a lower interest rate. That's what I was able to do when I purchased my current home. By the time it was all said and done "incentives" and "closing costs" were pretty much a wash between the two lenders. But what I really wanted was the lower rate, and the builder's lender matched it.

On #2, we put only a few percent down, bought the house, sold our old house and had PMI removed after we paid a principal payment of about $50,000. We also paid to recast the loan at that time. Overall that was cheaper then a bridge loan. We had 180 days to do it and not have to pay for a new appraisal.

jopatura said:

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On #2, we put only a few percent down, bought the house, sold our old house and had PMI removed after we paid a principal payment of about $50,000. We also paid to recast the loan at that time. Overall that was cheaper then a bridge loan. We had 180 days to do it and not have to pay for a new appraisal.

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Yea - I think recasting might be the better option as you don't have to pay closing costs twice since the fee is much cheaper. Been noodling on that one.

1. Does it seem reasonable that two for profit businesses are teaming up to give you something? My experience is that somewhere in the budget or financing the cost of the incentive is charged back to you. That isn't always the case but be sure to have someone you trust review that with you.

2. Do you have sufficient equity in your existing home to take out a HELOC to fund the down payment at 20% or more? If so consider that option. With an 80/10/10 your 1st lien will have a higher rate that will last the life of the loan due to the pricing adjustment Freddie and Fannie for subordinate financing.

1. Definitely get other quotes. Worst thing it could cost you is the time to fill out the applications. There are several great lenders on this board who can help.

2a. Do a recast.
https://www.bankrate.com/mortgages/what-is-mortgage-recasting-and-why-do-it/

2b. Let us help you save a bunch of money buying and selling.

Make sure your servicer allows recasting.

Have the lender confirm if there is a minimum required period for whichever mortgage insurance company they place you with if that's your choice.

5 years ago, I re-financed to a really good rate. 15 year.

1. Def shop around. I did and had a couple good Ags on this bird help me and came to the conclusion the preferred lender was more or less in line and also offered a gift card that we wanted so we went with the preferred lender.

2. Builders these days won't allow contingencies anyway so you're doing the right thing

As a previous post noted, the costs of the incentives are included in the price of the home or in the loan. To determine who is footing the bill, ask the builder if he/she is willing to give you the same incentives without using the preferred lender ( often times owned by the builder who also owns the title company). Do you really want everyone involved in the transaction being owned by the seller? My advice is to shop around and compare both rates and the lender fees.