Is the Builder’s Preferred Lender Actually Your Best Deal?

When you are shopping for a new construction home, it is easy to get swept up in the exciting incentives builders throw your way. Right now, builders are absolutely ready to deal, and their offers can look incredibly attractive on paper. But before you sign on the dotted line with a builder’s preferred lender, you need to make sure you are actually getting the best bang for your buck.

A Real-Life Example: The "Preferred" Illusion

Just last week, I put a young couple under contract on a brand-new construction townhouse. The builder came to the table with what sounded like a fantastic deal:

• The Builder's Offer: A 4.99% fixed interest rate (a great deal considering market rates have been hovering around 6.5%) and up to $10,000 in closing costs if they used the preferred lender.
   

It sounded like a no-brainer. But instead of just accepting it, we decided to do some homework and called the buyers' personal bank to see if they could match or beat it.

The Power of Shopping Around

The results surprised us all. The couple's own bank stepped up with an even better counteroffer:

• The Bank's Offer: A 4.75% interest rate and a guaranteed, full $10,000 toward closing costs (not just "up to" $10,000).
   

By taking the time to compare, this young couple saved $670 upfront in closing costs and cut their monthly mortgage payment by about $40 a month. Over the life of a loan, those "small" monthly savings add up significantly.

Don't Leave Money on the Table

The takeaway here is simple: Builders are ready to deal, but local banks and independent lenders are hungry for your business, too. You should never assume the builder’s package is automatically your best option.

If you are looking at new construction homes and want to make sure you are maximizing your savings, let's chat. I can help you compare your financing options and connect you with lenders who are ready to compete for your loan. Reach out today, and let's find your best deal!