I would be very leary of an online lender who is encouraging you to start the process now. Most mortgage companies offer rate locks, but only for a short period of time. Rates can change alot in 6 months, so i would sit tight and continue to shop lenders. From what you've written, it sounds like this lender is trying to pressure you into signing and taking advantage of your lack of knowledge about buying a home.

May I ask who this lender is?

Also, I wouldn't just use the builder's lender. They have deals to help each other and their first loyalty will be to the builder, not you.

Shop around, don't be pressured and find the rate you like best.

Get your builder's offer of matching in writing. Don't take his word for it.

You have more leverage if you have your own lender. As you get closer to the home being finished, that is when you lock in. It is too soon to lock in right now and you don't want all the enquiries on your credit report so early in the process.

The online lender is Quicken.

When the Loan Officer called with the offer he said he needed my CC# for a $400 deposit that would be refunded if things didnt work out. I then recieved a password so that I could view and sign the loan documents online, one of the documents clearly states that this is a non-refundable fee, the only way they would refund it is if my loan was denied.

On top of this the Loan officer called and stated he needed these signed and my financial information faxed in within 24 hrs, when I asked what the hurry was he said that its never to early to secure the loan and that he could keep me advised during the whole process. I havent signed or sent anything.

Im a little worried about my credit since I went through Lending Tree and received a bunch of offers. Am I going to go through this all over again a few months before the house is finished when I really need to get the mortgage?

I know that Wells Fargo will lock in a rate for 9 months for new construction. You might want to check out their rates.

Hi Fritz,

My builders lender did'nt offer a very good mortgage so I went online to get some quotes to use as leverage, an online lender offered a very good mortgage especially when compared to the builders offer. Now here's my problem.

1st problem #1; Believing that online 'quotes' have any valid shoppability in the first place. (They don't... they are merely 'hook-bait' to get leads coming in.)

The house is'nt going to be finished for another 6 months but the online lender wants me to start the loan process immediately,

That's because they know that nibbles on their hookbait go away quickly once it is discovered that it's all just hookbait.

I contacted the builders lender to see if they would match the online lenders offer and they tell me that they would match the offer but it is still too early to start the loan process and not to worry.
Who is right?

Well... the builder's lender is truthful in saying it's too early to begin the loan process. As to whether they honestly match the real best lockable rate/fee structure at the point of truth... I have yet to see a builder's affiliate actually keep that claim... but who knows, maybe your situation will be the first!

You've got plenty of time... I recommend using it to shop for the best professional advisory support on a qualitative basis first.

Here's my tag about all this;
Choose your provider according to preliminary "quotes,"
And you've simply chosen the most successful Liar.

Choose according to character quality, competitiveness,
honesty, and your personal assessment,
And you will set yourself up for the better Experience AND
the better bottom line pricing!©

Luck!
Dave Donhoff
Strategic Equity & Mortgage Planner

Thanks for the help!

Just to clarify, I wasnt basing any decisions on quotes I had seen online. I recieved GFEs from three lenders with Quickens being the best offer, I just wanted to make sure I could get a loan I could live with.

The Quicken guy did'nt sound too happy that I decided to wait a couple of months, he told me that my pre-approval would last until closing but now that I was cancelling I would have to go through credit checks again and that would end up hurting my credit score.

I'll keep shopping.

My builder had a very competitive rate. By using the builders lender, I did not have any closing cost, they even paid pre-paids (Taxes & Insurance).
Does the builder offer any incentives for using their lender? That can make using them more attractive.

I personally like doing business with a local bank. This bank been around my area for more than 50 years. They have lended to us and I have recommended them to my daughter and her fiance (first time buyers). They had several mortgage options for them to choose from and the best part is if they ever sell the mortgage they will always hold the servicing. Through past experiences I value this option.
Take some time to look around your area for lenders and see what they can offer you.