In-House Mortgage Lender or Finding your Own Financing?

Finding a mortgage now-a-days is the most important task you face and I would contend it is even harder to find the loan program than finding your dream home. If you're buying a new home, your builder may offer you an incentive to use their preferred lenders. Being the cynical "Gen X'r" I have to always ask myself why would the builder not just come off the price if there are more incentives to be had? What is in his/her interests for me to use their lender?

True, this can possibly reduce closing costs or get you upgrades but what is the cost of these upgrades versus positioning yourself in a possible 20 or 30 year loan that may or may not be competitive compared to what you can find from a "non-inhouse" lender of your choosing?

Also, in this day of a Buyer's Market, builders should and generally will pay closing costs, not to mention provide a buyer, any buyer who happens to come along to take the debt off their hands, with upgrades from appliances, to carpet, to a free Honda Van like I saw one builder giving away in the Atlanta area a few weeks ago.

Dena Kouremetis of Realty Times rights, "So is it worth it to take the incentive and go with the preferred lender? First, builders cannot prevent you from using any lender you choose, be it your credit union or lender-cousin. But if you do they simply are not bound to offer any of their own dollars in the form of incentive monies." In the highest most lofty way a Mensan can answer this comment, I have to say "Hogwash." This is a Buyer's market. Builders are taking ridiculous offers right now and hoping they get to closing. Ms. Kouremetis argues that the builder will not have an incentive to offer their own dollars. I contend that with foreclosure rates up 276% in Florida last month compared to a year ago and foreclosure rates are higher in other states, the incentive for the builder to come out of pocket to give away their hard earned money is there. It is going to go to you the buyer or to the bank when they take the house back or to some other buyer down the road in six months when they get have to give it away.

Ms. Kouremetis continues, "An in-house lender, whose first priority is its builder accounts, must make it their business to get buyers pre-approved in a timely fashion, educating the builder on whether it is prudent for them to take a particular home or home site off the market. " I think most consumers would see that the issue in this statement is that the in-house lender has, as Ms. Kouremetis puts it as their "first priority its builder accounts." Not your interests Mr. and Mrs. Buyer. The builder's priorities are their priorities.

For most builders, offering incentives in the worst recessionary and deflationary market since the late 1980's are enough to get builders to come out of their pockets. Don't give up your right or assume you can't negotiate for better incentives, pricing, and terms just because you choose to get financing elsewhere.

If you would like to read Ms. Kouremetis' column please note link below;
http://realtytimes.com/rtpages/20080605_inhouselender.htm