AgentMortgage

Don’t rush decision to use builder’s lender

Financing issues with new homes
Published on Jan 29, 2007

Finding the right home mortgage loan provider is complicated enough, but when you buy a house from a builder who has an in-house lender, the complications multiply. The builder wants you to use his lender, and will offer significant inducements to do so. This puts many buyers in a quandary as they realize that the inducements must be weighed against the likelihood that the builder's lender will overcharge them. Offering inducements is legal if it is done properly. A builder cannot post a sale price of $290,000 and raise the price to $300,000 if a buyer insists on using his/her own lender. But a builder can post a price of $300,000 and reduce it to $290,000 for borrowers who use the in-house lender -- as if there was a difference! In developing a strategy for dealing with a builder pushing an in-house loan provider, it is useful to know where the builder is coming from. He expects to make money on the lending operation, but the main reason for having a preferred lender is to provide a...

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