Getting a loan from the builder due to their incentives program?

Builders are becoming more dominating than ever. They almost always require the buyers to go thru their own lender. Here is why I feel that builder incentives are not beneficial for the homebuyers.

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• The builders control the prices of homes and could offer any amount as an incentive for homebuyers to go thru their own lenders.


• Home prices of newly constructed homes are at times inflated due to the differences in upgrades between similar homes. This tells me that your neighbor might have paid more for their house only because of the improvements that are added to the sales prices. Is the amount they claim the true value of those improvements?


• Builders offer closing costs paid if you choose to go with their own lenders. Is that included in your sales price or your interest rates? Most of the time yes. Still, compare them with your conventional lenders or brokers and you will be surprised at the better services you will get from conventional lenders and brokers.


• They forced you to use their own lender in order to start the purchase transaction and reserve you a home, sort of like twisting your arm until you give up.

Now a major home mortgage industry group wants the federal government to take a closer look at these deals, calling some of them clever violations of real estate settlement and antitrust regulations. The National Association of Mortgage Brokers, the principal trade group for the country's more than 40,000 independent home loan brokers, says builder financing incentives frequently steer buyers to mortgage deals more costly than those competing, nonaffiliated brokers could provide. A delegation of mortgage brokers recently complained to the government's real estate settlement rules officials, asking for a nationwide investigation of builder incentive financing programs.

For Example, if you are offered carpet incentives, get the exact dollar amount that is being credited and get a detailed report on the cost of your rates and fees. Shop around and compare. Show your lenders these incentives. If they offered you an amount that might exceed a normal closing cost, find out where the difference is going to be applied to.
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