View Single Post
Old 11-13-2011, 07:26 AM
Mike Boehler
Senior MemberCaptains Club Member
Join Date: Jan 2004
Location: Sharon Springs, NY
Posts: 4,515

Originally Posted by OldPete View Post
15 Year Fixed right now can be had around 3.075. There is more to it that you/we're missing.

I'm not sure why the local Brick and Mortar bank is so high, the only variables that I'm certain of is my cash available, my new home price and my credit score.

Originally Posted by franklinscar View Post
Construction loans are at higher rates and are generally short term notes (12 months) that the bank will hold and not resell. They are loaning you "house money". The rate is generally higher and there is more work for the bank than a conventional mortgage. When you receive a construction loan for example of $500,000, the bank does not write you a $500,000 check at closing. You submit draws based on work completed. The bank will come an inspect to make sure all work is in place and then release your draw. Most construction notes have a fixed time period like 12 months and then you need to find permanent financing. This will be your standard 15-30 year fixed mortgage with a lower rate.

I am not a mortgage guy but I have taken out quite a few construction loans and this is how it works in GA. Of course we also have the highest bank failure rate so what do we know.
I wonder if the construction loan produces a higher mortgage in the end? I can see the construction loan being a good tool, but if I'm going to pay for it for the full term of my loan, I'm going in a different direction

Originally Posted by twobyfour View Post
Not sure why you wouldn't shop around for the best deal for a mortgage. But as stated above, const loans are generally higher for the reasons stated above. If you did the $500k const loan, you pay interest only on the amount you have withdrawn. In other words, if your first draw is $50k, that is what you pay the interest on. By the time you get to the end, you interest payments will be higher. Many banks offer const-perm loans. In other words, they will give you the const loan only if they get the perm loan. These are normally your best deals. With your credit score and finacial situation as you described, you should be getting the best rates available.. Remember, when banks compete, you win.
I'm not sure where else to look. I get emails daily from mortgage companies, also see them on every internet banner on every web page I visit, but I seriously don't trust most people, let alone, most banks. I would need a recommendation from someone to pursue a bank.

I suppose, a question would be, do I need a mortgage broker to sort this stuff out for me?
Mike Boehler is offline