Developers lender (loan, escrow, preapproval, credit)

[caco54]

We are buying in a +55 community and the developer is pushing their preferred lender and title company. House will be around $550,000 and with mortgage rates so low I was going with a $250,000 30 year mortgage even though I could pay cash. I am unsure if the developers lender will have a competitive rate but other “costs” are dependent on our signing up with their lender. Thoughts?

[1ondoner]

Shop for lenders including the developer's lender and pick the one that gives you the best deal.

[adjusterjack]

I agree about shopping for rates and escrow fees. However, keep in mind that the developer is getting a kickback from the lender and escrow company. If not in money, then in some other advantage for using them.

If you find a better deal, bring it back to the developer and seek a rate match or other incentives.

Make sure you get the results in writing as an addendum to your contract.

[MikeJaquish]

Originally Posted by caco54

We are buying in a +55 community and the developer is pushing their preferred lender and title company. House will be around $550,000 and with mortgage rates so low I was going with a $250,000 30 year mortgage even though I could pay cash. I am unsure if the developers lender will have a competitive rate but other “costs” are dependent on our signing up with their lender. Thoughts?

I commonly find that builders' banks are very competitive.
Particularly if you are using a tract builder who owns their own bank.
Almost all lenders are going to sell your loan for a small profit. Builders are just looking for a slice of that to compensate for having the lending under control.
They find that closings go smoother, preapprovals are better and more thorough, and the bank is under pressure from the builder to perform.

But, shop it and compare. Not just rates, but APRs, for certain.
The last couple I have done, the buyers' other lenders haven't been able to touch the builders' banks deal when you figure in the closing costs paid by the builder.

And... This CC credit lets the builder keep prices fat, so people who buy later without the promotion pay similar prices without any CC credit.

[emm74]

Originally Posted by MikeJaquish

I commonly find that builders' banks are very competitive.
Particularly if you are using a tract builder who owns their own bank.
Almost all lenders are going to sell your loan for a small profit. Builders are just looking for a slice of that to compensate for having the lending under control.
They find that closings go smoother, preapprovals are better and more thorough, and the bank is under pressure from the builder to perform.

But, shop it and compare. Not just rates, but APRs, for certain.
The last couple I have done, the buyers' other lenders haven't been able to touch the builders' banks deal when you figure in the closing costs paid by the builder.

And... This CC credit lets the builder keep prices fat, so people who buy later without the promotion pay similar prices without any CC credit.

It wasn't a 55+ community but this was my experience when I built with a tract builder. I got other quotes to compare and the builder's preferred lender was competitive and they offered more incentive - the builder didn't take anything off the price of the house, but I got a lender's credit on the loan that was a lot more than any other lender offered.

And it also was convenient because when the builder failed to close on schedule (very common in new construction), the lender extended the rate lock at no charge and with no effort on my part.

I've since refinanced anyway, but have no regrets going this route because it was financially better and logistically easier.

[johngolf]

It is like buying money anywhere. Compare, compare, compare before deciding. Best deal for me wins my business.