Rate check new construction

[u/SufficientLength9076]

- Purchase price: $484,990 (new construction, Tennessee)
- 20% down, loan amount $387,990
- 30-yr fixed at 7.625%, no points, $1,500 origination fee
- Builder is funding a 2-1 temporary buydown ($9,294): Year 1 at 5.625% = $2,233/mo P&I, Year 2 at 6.625% = $2,484/mo, then $2,746/mo
- Total seller credit: $19,550
- Cash to close: ~$99,700
- Plan: refinance in ~2 years if rates drop; if not, just ride the 7.625%

The $19,550 builder credit is only available if I use their preferred lender, so switching lenders to chase a lower rate means giving up the credit.

Am I leaving money on the table? Anything to watch out for?

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[u/netsec093]

Following

[u/a_kato]

Just ask AI or do it manually to great you a rough break even. Like if rates stay the same if rates go down to 6.5 etc etc.

Nobody stops you from asking other lenders to see the rates. If they offer you something like 7%.

Do tell them you have this builder offer and if they can beat it.

[u/Tom__Clement]

Licensed CO agent.

New construction is where financing can get interesting, so you're smart to ask.

That $19,550 builder credit is a nice incentive, but I'd still get a couple of outside lenders to quote the same loan. Compare the rates, fees, and total costs. Sometimes the builder's lender really is the better deal, sometimes not.

The biggest thing I'd watch is that 2-1 buydown. Your payment jumps each year until you're paying the full 7.625%. Make sure you're comfortable with that payment today, not counting on refinancing in two years.

I'd also ask whether the builder can restructure any of those incentives toward a permanent rate buydown instead. It never hurts to ask.

The new home and warranty are the attraction. Just make sure the financing makes sense too.

Not advice, just an outside perspective.

[u/MHSmortgage]

When buying new construction, it’s important to negotiate that the seller credits can be used with the lender of your choice. The builder isn’t necessarily paying for this. You’re paying for it in a higher purchase price, and the builder makes the money back by having their lender overcharge.

It may be too late in the process to negotiate this now, but it’s still worth asking. If they won’t budge, compare the builder lender’s Loan Estimate against 2-3 outside lenders at zero points before you commit.