The Pros and Cons of Using a Builder's Preferred Lender to Purchase a Brand New Granbury Home

The Pros and Cons of Using a Builder's Preferred Lender to Purchase a Brand New Granbury HomeIf you're purchasing a brand new construction home, never before lived in by anyone else, straight from the builder, you will be given the option to work with the preferred lender of the home building company. Some Granbury home buyers ask if this is the best option for purchasing a new construction home. The answer is that it depends upon the situation. Sometimes using the preferred lender is a great option and sometimes it isn't. The most important thing to note is that you are not required to take out a mortgage loan with the lender the builder would prefer. Let's look at the pros and cons of utilizing a mortgage loan through a builder's preferred lender.

What is a Preferred Lender?

If you are purchasing a brand new construction home from a homebuilder (and most often a home within a community that is already mapped out and planned) the building company will suggest that you use lenders they have a good relationship with. This is known as a builder's preferred lender or lenders. Often a builder will work with a preferred lender(s) as it can benefit them to steer some business in a lender's direction.

In some scenarios, a builder bringing business to a lender can benefit the lender, the builder, and the home buyer. There could be some true perks to working with a preferred lender that is suggested by the homebuilder. But before just signing on the recommended dotted line for a mortgage it is best to do some investigation and homework.

Pros of Working with a Preferred Lender

Working with a preferred lender who has formed a partnership with the homebuilder of a new construction community can sometimes save a home buyer a significant amount of money in their homebuying process. It can also help to lock in a mortgage rate for a longer period and to streamline the mortgage loan process.

Often buyers will walk into a model home in a community that is about to break ground on construction or is already building homes in a subdivision community to be offered incentives for working with specific mortgage lenders when purchasing a home in that community. These incentives can look like lower mortgage interest rates, a lower closing cost, a longer guaranteed time of a mortgage rate lock, and a streamlined underwriting process.

These incentives are offered because the bank has already gone through a lot of prequalification measures on homes and they only need to simply plug in the information about the home buyer for the property. In some cases, preferred lenders will have a higher likelihood of approving a borrower's loan application for purchasing a home in the housing community as compared to other lenders. There are higher approval rates when the lender has a good relationship with the homebuilder. This is because they know the quality of the product that they are lending money for.

Cons of Using a Builder-preferred Lender

Though there are some enticing incentives to work with a builder's preferred lender it is not always the best option for a home buyer. It is always good to be aware that the lender and builder already have a relationship and this means that the two will be working in the best interest of their already-formed partnership. This could but does not always create the potential for a conflict of interest between a borrower and a lender.

You want to make sure before stepping into a long commitment with the builder's preferred lender that they are taking on the mindset that they are entering a relationship with you as well and not just further solidifying a relationship with their builder. You want to make sure that the lender is working in your best interest to make a truly affordable home purchase. Even if you are 75% sure that you will go with the builder's preferred mortgage lender it is always best to shop around to ensure that you are getting the best offer possible for a mortgage loan product.

Get pre-approved by more than just the builder's lender to compare offers and make sure you are getting the best interest rate and service possible for your home purchase. This will take a little bit longer to go through the approval process of a mortgage but it is well worth making sure that you are making the best choice for the biggest purchase you will make in your lifetime.

For more information on purchasing a home in Granbury Texas, I am here to help. Contact me anytime with any buying or selling needs in Granbury. I am here to answer all of your Granbury real estate questions and help you to find the best home including new construction homes in and around Granbury.

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