The Builder's Lender
66If trying to decide whether to use the builder’s preferred lender or stick to your own, here are a few things to consider:
• The builder’s lender representative devotes a huge chunk or his or her time in assisting buyers for that builder’s homes. They usually don’t do a lot of outside business. But this is also the reason you should shop around to make sure that their rates are competitive, get any rates in writing and make them compete if they want your business.
• The builder’s relationship to its own preferred lenders gives it a certain degree of control as well as lessened risk. Why? Because most in-house or preferred lender representatives must attend regular builder meetings, holding themselves accountable for the status of each buyer’s loan. The builder bases its decision to permit a house to go forward with the various phases of construction on what the lender says about the buyer’s ability to get final loan approval. In other words, there is more buck-stopping with the preferred lender. They are also held accountable for knowing precisely when to lock your interest rate so that your rate lock does not expire before the home is ready to occupy.
• Another aspect of the preferred lender situation is that the lender is usually in possession of important documents that other lenders must request, such as the homeowner association by-laws and budgets, a master appraisal of the community, etc., special tax assessment figures – all of which are required to be supplied to the lender. They have a handle on the precise timeline for a buyer’s formal, final loan approval without having to call the builder.
In these homebuyers-rule days of real estate, any incentives offered by builders supposedly linked to using their in-house lender are fair game in negotiations. Builders these days are so eager to sell homes, they may offer the same monies to anyone holding a pre-approval for a mortgage loan, so don't hesitate to ask.
And if you're finding other lenders' rates more competitive. take that program to the preferred lender in writing and tell them to compete in no uncertain terms. If, as they say, their rates are just as good as anyone else's, they shouldn't shrink from the challenge.
If you decide to stick with your own lender, it will be incumbent upon you to become the director of the escrow-closing orchestra. Make sure your rate lock does not expire before the completion of the home. If it does, you may incur daily penalties by the builder until the new loan is in place and closing occurs. Stay on top of your lender AND your homebuilder, even when everyone says no news is good news and things seem to be on autopilot.
After all, the builder may have dozens of homes in escrow and your lender may have dozens of loans to deal with -- but you have one important escrow to close. Keeping everyone focused on your loan status by frequently checking in will hopefully result in a serenditipitous , less-stressed escrow experience.
