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Do I need to use a builder's lender?
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Often when you are looking at new construction real estate, you'll notice literature for a particular lender on site. You may even notice that if you use the lender, you'll get certain incentives. Are you required to use the builder's lender? Contrary to what some builder's may lead you to think, the answer is no.
There are occasions when they will strongly require that you at least get pre-approved by the lender. It is okay to see what they have to offer, but you should also compare their information to that of an independent loan officer of your choice. While you may get a particular incentive with the builder's lender, sometimes their rates may be higher or they may have higher closing fees, which a loan officer independent of the situation can beat and offset the incentive.
One of the reasons builders do this is to ensure that the people buying their homes have the appropriate credit and assets necessary, and by using their own person, they are able to do this. Lenders know that they have opportunities to get multiple loans out of the arrangement, so they are happy to provide the incentive, thus shining both parties in a positive light.
Occasionally there can be some sort of financial relationship between the two parties. If this is the case, they are legally required to give you a disclosure describing the relationship.
Besides any incentives you may receive from using the said lender, is that sometimes is it nice to work with someone who knows the building. They will know exactly how the loan needs to be written up for the type of structure that it is.
The best case scenario is to go ahead and get a quote from the builder's lender, then shop around. Make sure you tell anyone you talk to the offer that you already have on the table, and see if they can do anything to beat it. Then go with the person that you feel most comfortable with, in terms of both price and service.
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