Working with Builders while using your Realtor and Mortgage Loan Originator

So you want to purchase a brand new home. The home you want is going to be built in a brand new subdivision. You sit down with the salesperson and you go over the floor plans. He takes you and your fiance to see the model homes and you walk through the showroom. The room looks amazing and you are overwhelmed by the new home smell and the thought of you and your family having your very own new home. Now, it’s time to discuss price. You have already done your homework and you’ve been pre-approved by your Mortgage Loan Originator. You already know what you are looking for. The salesperson tells you that you’re going to get $15,000.00 in upgrades for free or he tells you that you’re going to get $8,000.00 towards your closing costs. You leave, you think about it, and you go over your finances. You and your significant other decide on it and go back to agree on the price and you now want to sign the contract and move forward, but when you go to sign, the salesperson says “Oh, but that incentive is only if you use our preferred lender.”

Now What?

There are two scenarios that come out from this situation and most of the time, the buyer caves in and just goes with the “preferred lender.” What would you do if I told you that this is something the same thing as negotiating with a car salesman? Would you just use the in-house lender at the car dealership because the “sales price” is only available for customers who use their lender? No. That actually sounds ridiculous when you think about it. So why do buyers cave in when going to a builder? The other outcome is that you stick to your plan and negotiate the price, closing costs, and tell them that you’re using your own lender.

Recently, I have seen three builders and three different outcomes. I don’t know if I should call out the builder, because we are actually doing business with them now. Here are the three different outcomes:

The Builder works with the lender without hesitation:
“ABC” Homes worked with my buyer without hesitation. The salesperson did offer their in-house lender, but when the buyer said that they have their own lender and that they are not going to use anyone else, she (the salesperson) did not give my buyer any grief and she still gave my buyer the entire $15,000.00 in upgrades. I commend this builder for their actions. This is how you expect to be treated.

The Builder doesn’t give the buyer an option:
One of my buyers went to a builder and wanted to use their own lender and they were told that they have to use their in-house lender or they will not get the $15,000.00 towards their closing costs. The buyer did not want to fight for their right to use their own lender. They basically took the builders word as gospel and went along with it. This seems to be the most common outcome and that’s why the builders still use this approach with working with their customers.

The Builder negotiates with the buyer:
I had a buyer go into “XYZ” Homes with a realtor and with my pre-approval letter to negotiate a new Town Home. The builder told the buyer that they would give her $8,000.00 towards closing costs and gave her a price on the home. This particular day, the buyer and the realtor had been home shopping that day and they saw several homes. The price and the closing costs were compared to the other homes they saw that day. She decided that the best value was to use the builder, but when they went back to sign the contract, the salesperson said: “that’s only if you use our lender.” He did not disclose to the buyer that using the in-house lender was the reason for getting $8,000.00 in closing costs. The buyer was young, but not a pushover. Her, her Mom and the Realtor negotiated for several hours with this salesperson. He tried to strong-arm the buyer, but the final outcome was $3000.00 towards closing costs and several thousand dollars off the purchase price. Most buyers would’ve caved in and just used the in-house lender.

The CFPB has cracked down on Mortgage Brokers, Processing companies and Realtors. I think the next wave of crackdowns may be on Title Companies and the cozy relationships between Builders and “Preferred Lenders.” The buying experience shouldn’t be horrible for the buyer and they should be able to use the finance lender of their choice, just like when you go to the car dealership.

Pro Tip #1: A builder who says that they’re giving you “free” money, but then adds the money to the purchase price is NOT giving you “free” money.

Pro Tip #2: A realtor has an incentive to make sure you get the best deal from the builder over the salesperson who works for the builder. So, make sure you have that representation on your side.

Pro Tip #3: Some builders own their own mortgage company, so they have total control over the entire process. Do your homework. Make sure you know about the builder you’re about to do business with.

Finally,

Pro Tip #4: If you’re not ready to get pre-approved today, don’t sign a “cash contract” on a home just to lock in that lot and home purchase in. If you sign a “cash contract” and don’t have the cash to pay for that home when it’s complete, you will lose your deposit. And the deposit on a new construction build is not $1000. It’s a lot more than that.

Thank you for reading. Tell us about your experience with builders.

To get started, click here: https://bit.ly/33mc7gM

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Has your FHA, VA, or Conventional loan been turned down?

What do you do now? Should I give up on my dream of homeownership or try again with someone else?

There are many lenders out there. So, what are the differences? Why did your loan get turned down? Why should I try anyone else? I’m going to address these questions that you have been forced to ask yourself.

There are many differences between lenders. That’s why we have 17 lenders under our roof at Bliss Mortgage. Every lender has overlays whether they tell you or not. Without getting too technical, an overlay is a rule or condition that the lender may have in place in order to strengthen the loans they underwrite and service and to reduce the risk of default by their borrowers. Some lenders may want credit cards paid off and closed in certain situations. Some lenders may require certain judgments or derogatory accounts to be paid off. These items may be required by the lender, but may not be required by FHA or Fannie Mae are called overlays. Some lenders may require higher minimum credit scores. FHA guidelines state that in order to qualify for a 3.5% down payment for FHA, the minimum credit score is 580. Lenders will impose a 600, 620 or 640 minimum credit score in order to reduce the risk of a loan going into default. The credit score is not the only factor when underwriting a loan, but the fewer overlays you have, the better chance you have to close your loan and get the keys to your new home. According to investopedia.com, overlays prevent mortgages. Click here to read the article. These rules or conditions may cause your loan to be turned down-and at times, just a few days before closing. This can be devastating for someone who’s already been emotionally attached or committed to purchasing a home and may feel that there’s nowhere to turn to once they’ve received this news.

Don’t worry – there’s still hope. What you need to do is find a lender who has no overlays. I mean absolutely NO OVERLAYS. A lender with no overlays will go by FHA, VA, or Fannie Mae underwriting guidelines only, and will not have added conditions for your loan. Luckily, you’ve come to the right place. We’re experienced in closing loans others can’t. We’ve helped many families reach their goals.

If you or your buyer (if you’re a realtor) have had an FHA, VA or Conventional loan turned down, contact us to get a second opinion. You may still be in the market of purchasing or refinancing your home. Don’t let another lender kill your dream of homeownership. Let us help #FundYourBliss.

#FundYourBliss #Mortgage #Florida #RealEstate #Tampa

Bliss Mortgage LLC
5331 Primrose Lake Cir Ste 244
Tampa, Fl 33647
Toll-Free 1-888-30-BLISS (1-888-302-5477)
BlissMortgage.com
NMLS# 1564092
Get Started:
For Purchases https://bit.ly/33mc7gM
For Refinances https://bit.ly/2KDbTtf

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