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URL:  https://boards.fool.com/himjhamb74-i-am-well-past-this-stage-i-had-got-a-17367545.aspx

Subject:  Re: Help on new construction? Date:  6/15/2002  9:46 AM
Author:  PosFCF Number:  43544 of 129163

himjhamb74

I am well past this stage. I had got a pre-approval letter from a company before I started looking for a home.

Is the company you got pre-approved with the same Federal Savings bank you are referring to, or is this a third lending source?

I am still a bit leary of applying for the credit card as I don't know how much it affects the loan application.
If its just a meagre credit check, then I don't think its much of a concern but if it denotes something major, then I would prefer waiting on it. Pls. advise.


Without knowing your scores, it is difficult for me to answer with any specific recommendation for your file.

Generally, even though inquiries tend to cause a slight reduction in credit scores, the impact of the lower scores becomes critical only when they move the borrower from one broad credit level to another. Those levels are: 740, 700, 640, 620, 580.

In my area the 740 level is only important to banks for their very best rate. Also in my area banks won't lend at all if the score is below 640. In between, they have different rates for different credit score levels (this is called risk-based pricing).

So....from what I know of your case....it does seem as though you might have a lot of inquiries (pre-approval, bank, credit card, builder) within a short period of time your credit would have to be very good it seems for this not to have a measurable impact. Do you know what your scores are?

But, the builder specifically states in his contract that they need the buyer to get a mortgage application done through their lender.........I even tried to strike out the clause from the builder's contract about applying with their lender, but they didn't let me.

Why are you using this builder? If they are this inflexible about the financing, what are they going to be like during construction? When I hire a contractor, I want to know that they believe flexibility is a two-way street. Unless there is just an overwhelming reason for using this particular builder, I would find another, it just doesn't "smell" right to me.

If, during the course of the construction, there are disagreements between you and the builder about how you thought something was going to be and how the builder is going to make it, you will lose the argument every time with this builder. It doesn't take very many of these lost arguments to have you start looking for how to get out of the contract. When you can't get out, it doesn't take long for that feeling to turn into dislike for the house.

I understand that you have incurred some expense in this process so far, but how would that money stack up against finally moving into a house that you don't like?

I'm guessing that other people have faced similar issues with this builder during construction and that they, too, tried to get out of the contract when he disregarded their concerns. This would be a reason why he would insist on using a lender that backs him up rather than a disinterested third party lender like the bank.

Maybe I'm all wet here and just being paranoid. But the issue struck me forcefully enough that I wanted to give my opinion. Please remeber that it just that, an opinion over the internet.

PosFCF


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