Should you use home builder’s preferred lender?
According to a report from the National Association of Home Builders, it seems that the home builders are very confident about the rest of the year. The reason is simple, houses are in very high demand, and the buyers are indeed paying lots of money to get a new home built.
What about using the preferred lender of your home builder?
Obviously, you will need to get a loan in order to build a new home. Many times, there are home builders that have good relationships with lenders. So, you may end up getting a pretty good deal this way. With that in mind, this sounds like a very good idea. That doesn’t mean it’s perfect though!
The idea that you use a single recommended lender sounds nice until you see the price. Since there is no competition, the lender will have a pretty high rate. So, it may cost you quite a bit to get the deal, and in the end, it may not be entirely worth it. This is why you need to take your time as you find the right approach and results can indeed be very interesting.
And even if you get the free upgrades, you still get a high loan rate, which in the end will neutralize the benefit. Yes, even if it sounds like a very good idea, that doesn’t mean it is a good thing, to be honest.
Plus, the builder is going to receive some benefits from setting up the deal. Obviously, this means the builder will persuade you to go for that particular lender. Most of the time, the lender will require you to be pre-approved, but the reality is that it can be illegal to use a particular lending institution without competition. So, try to take the rates and shop around to see the difference.
Can I bring the price down?
Just because you want to use the preferred lender of your home builder, you are bound to get a better deal at times. You will need to have an independent representation and then ask to negotiate the upgrades and the cost assistance. You will also want to make sure that your builder doesn’t increase the overall price if you don’t go with his lender.
This particular strategy works in those markets that are buyer oriented, and they will enable you to lower the home price and even get a very good deal for your mortgage as well.
So, should you use the home builder’s lender?
Even if it sounds like a good idea, most of the time you will end up with some high rates. And even if it sounds fine in the beginning, it’s not exactly the best option. You need to shop around and see what rates are there. This is the best way you can get a much better rate as a whole, and results can be very good in the end. So, try to take your time and study all the options before you take advantage of your builder’s offer. At the end of the day, that offer may not be advantageous for you!