Get the best financing for your dream New Construction Home

Builders love it when buyers use the builder's preferred lender. This is because when you use their lender, they have a higher level of confidence that you can afford to buy the house they are building. The worst case scenario for them is to build a custom home only to have the original buyer, and the buyer's unique taste, back out of the deal. Then they have to sell a home that may not appeal to other buyers.

When a buyer uses the builder's preferred lender, the builder is reassured that the buyer is a good credit risk. Thus, the builder often offers incentives to buyers to use the builder's lender. Even so, buyers should not just automatically use this lender. Buyers should shop around and find the best loan for them, not the best loan for the builder.

Buyers should carefully evaluate the builder's incentives before accepting incentives offered by a builder’s lender. The incentives do not always save the buyer money. For example, if a builder offers the buyer $20,000 in incentives or closing cost help to choose the builder's lender, be sure that the builder's lender does not charge "points" or a higher interest rate that would cost you more than the $20,000 "incentive."

It's always a good idea to shop for financing to get the best overall deal. The builder's lender may offer the best deal because they have two assets at stake--the house and the loan. Even if you do not ultimately use the builder's lender, the builder may require you to obtain pre-approval through the builder's lender using their lending criteria. And you may still be able to keep that builder's incentive! Work with a real estate agent who knows which builders will pull the incentive and which ones will leave the incentive, even if the buyer uses an outside lender.

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