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buying, Buying A New Home, Closing Costs, home, homes, Incentives, lender, Loan Application, New Homes, Should, works, Yearly Income
when buying a new home, should we go with the lender that works with the co. of the homes or our own lender ?
by Wade Morris Dunwoody Realtor on June 10th, 2011
I think the lender that works with the new homes is trying to screw us. $15,000 in incentives is what he says we’re getting but closing costs will cost est. $12,900. Also on loan application no mention of incentives or amount of my yearly income and he wants me to sign loan app.
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I’m part owner of Home Source Group of REMAX Greater Atlanta Realtors® specializing in Atlanta Homes in Brookhaven, Chamblee, Dunwoody, and Sandy Springs. Whether you are buying or selling your home we work with resale’s, first-time home buyers, companies relocating people to Atlanta, and most home sellers in northern part of the Greater Atlanta area.
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wade@wademorris.net
7 Comments
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Don’t sign it. Do they know you have money? Closing costs should not be any more than 5 to 10% of purchase price. Is there 2 lenders trying to get you the same loan? Thats good you are reading the fine lines. Plus how many realtors are involved? I’ve never heard anyone getting incentives other than lowering your points (interest rate). But after you sign it they jack up the interest rate up. Is this an interest only loan? Forget it, you’ll be in debt for the rest of your life. Is it a credit card loan? Find your own in every circumstance, never hire one that the seller or realtor suggests. The younger you are the more they see you coming and going. Especially if this is you first home purchase. Talk to a financial consultant. Don’t hire a lawyer, they won’t do a thing. Tell the crows to go away and burn the ink pen.
Choose your own lender – if the seller insists that the deal on offer is only available if you take a loan with their company then walk away. You can always ask whether the agen is getting commission on the loan too as seems quite likely.
the lender only guarantees you the rates (interest)..usually lenders working with “new homes” (usually) gives a better rate than you would get elsewhere. the lender is on the site only for the loan and money approval and the interest rate for this developement is only available there.
if the lender is also writing the contract, that is when you get your incentives in writing.
now your closing costs….ask if that is the tax? you may be paying a tax..and that is part of the closing.. and if it isn’t taxes than ask if you can shop around for a better rate..
they will go over in details the closing costs..and i am sure it is a tax..
i have heard of closing costs of $12,000, but that’s usually with more expensive homes, or borrowers that were tougher to qualify. but get a good faith estimate to detail the costs. and you can usually negotiate them lower. builders across the country are desperate to sell their properties.
the $15,000 incentive will be detailed on your purchase contract, the incentive should go on your loan app page 4 – a very short line though, you could have missed it.
sounds like you don’t have a real estate agent? you should get one. also, get an independent mortgage broker to help you too. getting you to sign a loan app with no income disclosed? that’s not a good sign.
oh, and you probably won’t get all $15,000 in incentive either… lenders usually don’t allow seller incentives/credit more than what the closing costs are. so negotiate to have your purchase price lowered instead.
Good luck!
Shop around. You should contact at least five lenders/brokers/credit unions and let them each know you’re shopping. Include the company working with your builder.
Get your own lender. Just to be safe. And congrats for actually reading the fine print. I bet there is something else for the broker hidden on the back end of the loan.
In today’s market almost every medium to large builder has at least ONE approved lender or they have an affiliate lender (they own the mortgage company)
Builders offer closing cost incentives almost always here in FL. Keep in mind, all companies are in business to make a profit. IF the builder is giving a large credit for closing costs (more than 3% of the sales price) ask if you are PAYING ALL of the closing costs. That is critical.
Also, ask if you can beat or mathc the lenders offer (rate and fees) ask the builder to extend the same closing cost credit to your LENDER of choice.
Know your credit report and scores and know the loan program you are being quoted form the builders lender. Shop around be sure you are getting a competitive rate and fees. You should be provided a Good Faith Estimate (GFE) 3 days after application – it is required, along with 3-5 other disclosures (depending on your state).
Don;t feel pressured to use their lender or LOSE the incentives. MOST builders have a surplus of inventory at this time and aside form sales price, there are other items to negotiate.
Good Luck, hope this helps