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Friday, May 26, 2006

Builder Loan Incentives - Who Really Benefits?

I meant to post this article yesterday, but it was a crazy day!  Better late than never...

As inventories go up and homes stay on the market longer, sellers are finding it harder to attract buyers.  As a result, sellers are offering various incentives.  Builders are also offering incentives to buyers, including the incentive to use the builder's preferred lender or financing.  Should you use it?

It depends.  You should still investigate other lenders and go with whoever will give you the best overall deal.  I know it's tempting to take the builder's incentives, such as $5000 off, if you use their financing.  And all other things equal, it would be a great deal.  But not if the builder's financing has a higher interest rate and/or higher closing costs than your own lender.  So while I would definitely recommend looking into the builder's financing, I would also recommend checking with your own mortgage company, and comparing the two.

You may even be able to negotiate the builder discount AND use your own lender, especially if you are pre-approved (not to be confused with 'pre-qualified' - pre-approved means you have already been through underwriting and your loan is actually approved).  The builder's representative will tell you "no" at first.  But if you are pre-approved and insistent on using your own lender, they will usually give in rather than lose the sale.  So don't just go with the builder's financing because they offer you a discount.  As always, you need to look at the overall cost of the loan.

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard
Realtor®-Investor

Great American Realty, Inc.

Cell: (480) 695-6672
Email me

Posted by Shannon Hubbard, AZ Realtor & Computer Guru on May 26, 2006 | Permalink

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