How to get a loan with a New Home Builder part 1 of 2

For those of you who know me, I’m not normally known for being a complainer or having many pet peeves. However, there is one thing that many new home builders do that really irritate me: Tying in incentives to using their lender.

These builders should be concerned about selling their home more than how you’re going to pay for it. It’s one thing if the financing terms they offer are unbeatable, then I would happily use them. However, often times they are offering terms that are thousands of dollars more than a comparable outside lender.

autofinance_small.jpg The auto industry and furniture industry are good examples of how to do it right. These days you can buy a car or a set of leather furniture and pay ZERO INTEREST for years! This is head and shoulders above any other financing terms you can obtain on your own…unless those terms involve gift money from the parents. The auto and furniture industry is willing to take a “hit” on the financing side to serve their overall purpose of moving product.

The more I think about it, it seems as though the builders are trying to sell their financing over moving their product. Is this backwards or what?

What should you do?

1. Most of my clients don’t want to deal with the hassle of “fighting the builder” for the best financing terms. However, I would always recommend getting at least one other Good Faith Estimate from an outside lender. When you do, compare only the closing costs associated with the loan (not the fees from title co, prepaids, etc.) and make sure you have given both lenders the same loan amount, percent down, tax/insurance estimates and loan product so you’re comparing apples to apples. I used Tracey Day with Home Source Mortgage and he beat the pants.jpgPANTS off of UAMC, Lennar’s in-house lender, by .60% and over $1300! (6.15% versus 6.75%).

2. Take your GFE from the outside lender and have your real estate agent forward it to the new home sales counselor and the in-house lender. Request that they either match those terms or allow you to use your own lender and keep the incentives.

3. If they don’t match the terms, they’ll lower theirs “as best they could.” The lender from UAMC gave me the “best possible GFE”…which narrowed the gap .25% and now just $725.

4. I then sent another email to the new home sales counselor and asked her to forward it to her supervisor explaining that they were STILL LESS COMPETITIVE and that I requested they make up the difference.

5. After doing that, I got another email from UAMC and then they gave me the “ABSOLUTE best possible GFE”…saving me another $250.

Did I take it? Stay tuned for part 2 of 2 and I’ll share the rest of the story after I close on Nov. 28th.

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