Neither a borrower, nor a lender be…
Congratulations, you have decided to buy a home. Not just any home. You have decided to buy new. You have decided that you don’t want to deal
with re-painting, replacing floors and appliances and you have just fallen in
love with that new model by the big national builder in your neighborhood.
You also feel good because you have a decent deposit you
can put towards the purchase. However,
you do still need a mortgage and are a bit worried about where to turn. In fact, your builder has been pressing to
convince you to use their own mortgage company.
They may have even provided some incentive for you to use them. But you are concerned. You are looking forward to them building your
house, but they are builders, not lenders.
Banks are typically lenders. You
know banks and have been dealing with them for years. Also, it feels like something may not be
right when the builder is trying to give you something extra just to use their
own lender. You are also probably wondering
if they are giving you a competitive rate.
If you are reading this and slowly nodding your head, hopefully in
agreement, not because you are falling asleep, then read on!
Your first inclination may be to say thanks but no thanks. You are comfortable with your local banker or
your financial planner. You have had a
strong relationship with them since well before you considered buying a new home.
You feel confident they can get you a
great loan. Also, if you shop around,
you are convinced that you can absolutely find a lender that will save you that
extra .125% on your rate.
However, there is another factor for you to consider when
choosing your lender. You need to
understand who has the greatest motivation to get your loan financed. In truth, it is not your banker or financial
planner or local mortgage broker. It is
really your builder. Think about
it. If a third party makes a good faith
effort to get you a loan and fails, they probably lose nothing. You will probably not change your bank or
financial planner if your mortgage does not pan out. You may be told that there was an issue with
the appraisal, or that the underwriters found some hair in your credit
history. These third parties are not
incentivized to push for loans that may prove to be a bit difficult. They will give you a warm smile, tell you
they did all they could and then move on.
That is not the case with the builder. Remember, if the builder can’t finance your home,
then they can’t close on your home.
Trust me. There is no builder
that will put a positive spin on a home that did not close due to financing
issues. You see, if the lender is
in-house to the builder, the first thing the builder will do is discover salty sailor
language that they did not know they possessed when having a discussion with
their mortgage team to find out what is going wrong. Then, after cooler heads prevail, they will
work with the in-house lender to leave no stone unturned to figure out what
needs to be done to close your loan.
Every day that a builder home does not close past the scheduled close
date will cost the builder money. They have
to pay the carry cost on the home. This
is not an expense that your bank, financial planner or local mortgage broker
will have to deal with. And builders do
not want to carry homes any longer than they have to.
So, next time you are feeling nervous about working
through your builder for your mortgage, remember, you are both in the same
boat. Even if the builder needs to use
some salty language to help navigate the sometimes choppy mortgage waters to
help you get your loan.
Until next time…
Keep kicking the dirt!
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