Question about negotiating with new home builder's approved lender.

Asked by SanFran, Broomfield, CO Mon Jan 19, 2009

A new home builder's approved lender offers incentives, for ex: so much $ off towards closing costs, etc... But when I looked at the preferred lender's GFE, I saw they were charging stupid 800 fees and int rate was also high for 0 pts, 0 origination fee. I can get lower interest from my bank with 1/2 pt and 0 orig fee.
I definitely want to get the incentives because they beat my bank, but how do I negotiate with the preferred lender to knock off some of those "junk" fees and give me lower rate?
Should I offer to pay an origination fee ? - I think the loan officer/broker gets to keep that right?

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, ,
Wed Aug 19, 2009
This is a subject that RESPA and HUD has been looking into for some time. Depending on the builder, you can sometimes get out of this arrangement and still get the incentives. The key is to prove to the builder that you are well qualified and the financing is secure. The builders should be in the business of building and leave the lending out of the picture to keep an arms length transaction. At a minimum the preferred lender should be able to match another lenders GFE to keep your business.

Your question about should you pay origination, etc depends on the rate which it's accociated with and your long term plans for the mtg and property. Rule of thumb is if you would sell or refi in 5 years, take the No point loan.

hope this helps!

Chad Bergman, e-PRO, CML

Apollo Financial
Office 303-733-5950 x248
Cell 303-875-2240
e-fax 303-484-7922

Keller Williams Realty
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Leslie Monaco, Agent, Greenwood Village, CO
Tue Jan 20, 2009
I agree that you should get as many second opinions that you can. Some lenders will offer to meet or beat another lenders offer. You may be able to negotiate with the builder's lender if you have other GFEs which show a significant difference in costs to you. If you would like a few of my approved lenders, I would be happy to send them over to you.

Leslie Heldenbrand
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The Kinslow…, Agent, Centennial, CO
Mon Jan 19, 2009
You should definitely do your homework on this one. I usually suggest getting good faith estimates from the builder, your bank or credit union and one other. The lenders usually can't compete with the builders incentives though. I agree with the other answers, doing the spread sheet will really help you determine what's best for your situation.
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Chuck Strau…, Agent, Denver, CO
Mon Jan 19, 2009
The GFE will give you your actual costs and you are right that you might get a lower rate for paying a 1/2 point. In the long run, it depends on a variety of factors including how long you plan on staying in the home you are purchasing. I would suggest, as the last answer suggested, that you do a spreadsheet to see, over the course of years, how much you would end up paying/saving using one lender vs. the other.
Good luck.

Chuck Strauss
Keller Williams DTC
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Dallas Texas, Agent, Dallas, TN
Mon Jan 19, 2009
Take what you had offered from your bank disclose to builder lender request what can they do on your behalf. Place on an excel spread sheet compare apples to apples WOW, sometimes long run for years on mortgage appear cheaper till realize it more expensive.
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