For some reason, many home consumers see shopping for a newly constructed home as an entirely separate kind of property deal, where the normal rules don’t apply and everything is as simple as buying a loaf of bread at the store. Sadly, that is not the case and more buyers are finding out that a brand new construction home is equally involved as a resale.
Builders have quickly become some of the largest firms within the United States and they have done so on the backs of rapid growth in several areas of the country as well as the increasingly common practice of constructing entire communities rather than simply a row or 2 of homes.
This rise in popularity has given builders an oversized amount of clout and additional complicated financial situations, as many are now publically listed corporations with shareholders, public perception and workers to keep happy all at the same time. To beef up the bottom line, that typically solves all 3 of these issues, many have turned to partnering with lenders they are either closely allied with or own outright.
Simply put, selling homes is simply one part of of the business model of today’s builder and while part could also be used to building business infrastructure into those communities to reap larger profits, part is definitely dedicated to getting increasingly involved within the loan you are taking out to buy their new home.
Many home builders can provide you with an attractive set of perks to go with their finance options and every one of these perks depend on the condition that you use a particular lender outlined by the builder beforehand to handle all of your financial dealings. When it involves home ownership, that can amount to a fairly sizable amount in interest payments and closing fees, giving those lenders plenty of flexibility to use to provide incentives for builders to recommend their specific lending agency.
Of course, when there is no competition for business and new builders are funneling buyers to a specific lending agency, there is little incentive for that lending agency to offer rates less than their competitor’s. In fact, as is usually the case, by limiting yourself to one lending choice, you’ll end up seeing a higher rate of interest and you won’t have any recourse in the market.
While these financial agreements support the bottom line of many mainstream home builders, they’re not the core business aim and if you threaten to take your business away, you’ll be successful in removing restrictions on what lender you’ll be able to use. Remember, you have the final decision to say yes or no to purchasing a home, which is very powerful.
If the final hurdle between getting you to buy a $300,000 home and you walking away is being able to use your own lender, 9 times out of 10 the builder will allow you to use your own lender instead of losing the sale all together. The ability of walking away is extremely potent when it comes down to these situations, however you have got to stand your ground well before signing on the dotted line. Once the contract is signed, your options diminish greatly.
A real estate agent will typically be your best ally in these situations as they’ll have seen numerous new home builders attempt similar tricks of the trade. Don’t be intimidated by the fact that you are dealing with a large corporation and don’t assume for a second that there’s just one home out there. Look around, do your due diligence and before you ever place pen to paper, get your own lender on the deal. You will thank yourself later.