Home Buying in Atlanta>Question Details

Curtis Russe…, Home Buyer in Atlanta, GA

Preferred Lender

Asked by Curtis Russell-Kozik, Atlanta, GA Fri Sep 13, 2013

If a builder has a preferred lender, does the buyer have an obligation to use them for financing? The reason for the question is I've read reviews and have spoken directly with people who wouldn't recommend this builder's "preferred lender" to their worse enemy for an array of reasons. Would I be losing out on any major benefits by working with the lender of my choice? I'd like to believe that anyone can have a bad experience but when reviews are consistently horrible, I'm thinking there might be some truth to the story.

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Answers

10
Hi Curtiss,

The buyer is not obligated to use a builder's preferred lender. Typically, builders use preferred lenders because they have built relationships with lenders and can make direct contact with them, which helps them stay on top of the transaction from contract-to-close. The builder's main focus is getting to the closing table without a whole lot of hiccups and in a timely fashion. Consequently, it is easier for many builders to get answers from lenders that have a direct relationship and those lenders are typically willing to perform to maintain their builder relationships. As the buyer, you typically benefit from using the builder's preferred lender with incentives to help you purchase your new home. Many times if you have an outside lender that has a better rate, you can take it to the builder's preferred lender to see if they are able to beat the rate and take advantage of the incentives.
2 votes Thank Flag Link Fri Sep 13, 2013
Many new home subdivisions have preferred lenders along with closing cost contribution as an incentive. Your mortgage lender is your choice. Working with your choice of lender gives you a peace of mind and confidence. Also, some lenders can match the benefit offered from the preferred lender.
Call me at 404-358-4123 to discuss further. I would love to guide you through this process.
1 vote Thank Flag Link Fri Sep 13, 2013
Thanks to everyone for all of your insight! We closed on our first home a few weeks ago and couldn't be happier!
0 votes Thank Flag Link Wed Feb 19, 2014
Congratulations, it is great to know people are getting helped by the answers being posted.
Flag Thu Feb 20, 2014
A preferred lender is not someone your obliged to use. You can still use another lender if you wish. They usually do offer discounts though for using that lender. But just like any other product, you should shop around and see what lender will work best for you. Well I hope this helps! If you have any further questions or if you need a loan, feel free to contact me. Also, if you found this helpful please leave me a recommendation if you can! Good Luck! Brian Nguyen Sr. Mortgage Banker NMLS # 659743 Phone: 949.667.2887 brian.nguyen@nafinc.com
0 votes Thank Flag Link Wed Feb 19, 2014
Michael,

The relationship a builder has with a lender will ZERO impact on the appraisal outcome. Due to HVCC (Home Valuation Code of Conduct) all lenders have to use an independent 3rd party management company that acts as the liaison to the appraiser. Neither the lender or builder are allowed to have any say in the selection of the appraiser. Furthermore the lender is not even allowed to talk directly with the appraiser, all correspondence must go through the AMC (appraisal management company) as an intermediary to ensure compliance with HVCC. I work with several builders and unfortunately appraisal does not support the sales price on some occasions. What you are suggesting is appraisal fraud and no reputable lender will risk the penalties that come with this conviction, heavy fines, jail time, and barred from banking industry.

Sincerely,

Chris Irvin
Mortgage Banker
NMLS # 75615/465546
678.442.3963 Office
678.985.5913 Fax
678.251.7889 Cell
cirvin@brandmortgage.com
My Website: cirvin.brandmortgage.com
0 votes Thank Flag Link Mon Sep 23, 2013
Curtis,

You aren't obligated to go with your builder's lender. I would recommend you find your own lender. One reason being that your lender would require an appraisal be done from an outside appraiser. There are perks to going with the builder's lender. However, everything could be rubber stamped, and you wouldn't honestly know the true value of a home. The builder has a lender, and the lender probably has a set appraiser. It gets tricky when there are connections like that. I would recommend you be on the safe side and get your own lender. If you have any questions, you can always call me at (404) 955-9997. You can also check my profile for more information.

Good Luck!
0 votes Thank Flag Link Mon Sep 23, 2013
The buyer isn't obligated to use the preferred lender. However, some of the builders are offering incentives, such as $5,000 in closing costs if you use their preferred lender. It may be a tradeoff, you could lose out on some extra money but stick with your gut. If you have a great relationship with a lender already, sometimes peace of mind is worth way more than an incentive from a builder.

Siobhan Schaeffer
Realtor
Solid Source Realty Inc
premiermiltonrealty@gmail.com
0 votes Thank Flag Link Fri Sep 13, 2013
As someone who is the preferred lender for several builders around Atlanta I can tell you that there is a reason why that lender is preferred. Usually it’s due to service quality. Due to the amount of business the lender receives from the builder, that account tends to receive a priority treatment. Also the builder has more leverage to hold the lender accountable for the loan process which can help you. Do you have to use their lender? Absolutely not. However the seller concessions probably won't be honored with an outside lender. Most builders will have more than one preferred lender to choose from, if they don't provide you with at least 3 preferred lenders it can be considered steering which is illegal. Steering laws are incredibly ambiguous and probably non-enforceable in most cases but often if you talk to the sales agent and say that you feel like you’re being steered to use a lender that you don't want to use and who has very poor reviews, they may loosen up and still provide concessions with an outside lender. I know that some lenders actually pay for seller concessions through the builder in these cases you will not get the full seller concessions with an outside lender.

Good Luck,
Chris Irvin
Mortgage Banker
NMLS # 75615/465546
678.442.3963 Office
678.985.5913 Fax
678.251.7889 Cell
cirvin@brandmortgage.com
My Website: cirvin.brandmortgage.com
0 votes Thank Flag Link Fri Sep 13, 2013
You can use whomever you would like - the builder may offer incentives to use "their guy" so you can check that out. I'd be happy to review your situation and provide a quote. Let me know if I can help - call me anytime 678-644-9912.
0 votes Thank Flag Link Fri Sep 13, 2013
You are free to use whichever lender you are most comfortable with....
0 votes Thank Flag Link Fri Sep 13, 2013
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