How Do I Know If Builder Loans Are The Best Deal?

Basics

Builders usually have the advantage on their competition to provide you a mortgage for their newly built property.

Nearly all builders require a borrower to be "pre-qualified" which is when a mortgage lender finds you qualified for the mortgage amount and rates you are looking for. The builder will frequently have a financial company of their own that will propose to do this for you.

It is expedient, but you are not required to use their lender to purchase the property. You are free to use any lender you desire.

Even if you are pre-qualified by the builder you may still work with other parties.

Incentives

Many lenders stress that their lending process works effortlessly with the builder to make sure the loan process works and things go smoothly.

This may be significant when a lender has the right to cancel your purchase if your loan documents do not arrive in time. This can and does happen, and buyers may lose out on buying a property they really desire and it may have risen in value. This is one situation you do not want to happen to you.

Builders also tender financial incentives if you use their lender. They can offer free upgrades, appliances, or other incentives.

This may be an attractive offer for many buyers who want to stretch their dollars.

If you look at your purchase from a strictly financial sense you may desire to compare several offers with the lenders offer.

Some lenders have a limited selection of loans they can offer.

Outside lenders and brokers may have a much wider range of loans available to you. This may include minimum payment option loans.