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Hey guys,
so my husband and I are now ready to buy our house and we found a subdivision offering 45k in incentives IF you go through their preffered lender. I'm just wondering, what kind of deal is the builder and the lender
getting out of this? In otherwords, why are they able to offer great incentives ONLY if you go through their preferred lender verses going through the lender of your choice? We went ahead and got approved through their preferred lender but we decided not to get the house in that subdivision due to the lack of yard space. We are going to still use the lender but I was just wondering. Did the lender lose out on something by us not buying the house in that particular subdivision? Hopes this makes sense.
I recommend you get at least two quotes (one of them from the builder's lender) and three quotes are even better (builder's lender, mortgage broker, and your favorite bank or credit union) and compare the Good Faith Estimates side by side. Only then can you see which loan is best for you and you should ask questions of each lender. So far in every case I've seen, the other lenders have been unable to beat or even match the loans from the builder's lender when financing the builder's new home. I don't really know how they do it. I have some ideas, but better I not speculate. If you're not buying the new home, see previous suggestion.
Last edited by TampaKaren; 02-17-2008 at 05:51 PM..
Location: central, between Pepe's Tacos and Roberto's
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From my experience in some cases the preferred lender is actually a subsidiary of the builder themselves or in some cases the builders lender actually helps finance the development and construction, and cuts the builder a deal in return for preferred lender status. I agree with Karen about the 3 quotes, and depending on your market they may still offer the incentives even if you don't go with the preferred lender, just to get the inventory off of their books.
In my area, the builders incentives go with the purchase of the house, regardless of who you finance through...it's part of the building package. The financing costs are covered by the builder only if you finance through them, but I haven't seen a builder yet that won't pick up those costs also even if you do finance through someone else. As said above, get quotes from different sources. If you find one better than what the builder is offering, let them know.
I am an Agent for a Builder. Yes, it does always state that you have to use the Builders Lender for any incentives. However, when customers ask me about this, I always tell them to do their homework and let out Lender know what other deals they are getting. If they are not happy with our Lender, I have yet to see Management turn away from a sale. And at the end of the day, it makes no difference to me who my buyers use.
However, we do ask that you get a preapproval and okay from our Lender first.
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