Home Buying Experts Warn - Builder Loan Fine Print Could Cost You Thousands

AVONDALE, Ariz., May 19 /PRNewswire/ -- The home loan packages offered by
builders are often touted as being very convenient. But when it comes to
evaluating the true benefits the picture is often quite different, according
to the home buying specialists at the National Association of Exclusive Buyer
Agents, (NAEBA). Recent difficulties in the mortgage marketplace bear this
out.
"Mortgage shopping can take a significant level of sophistication. In
addition, negotiations with a builder's mortgage company can sometimes be
stressful and costly," stated Barry Nystedt President of NAEBA. "Home buyers
still need to compare the builder's loan offerings to what is available on the
open market. Complications arise when the buyer becomes obligated to the
builder's lender without being able to compare the rates and fees other
lenders may offer months later when the home is complete. Sometimes the
builder's lender takes advantage of a buyer by providing an overpriced loan,
which the buyer accepts, not wanting to risk losing the builder's incentives."
Builders often offer cash or equivalent incentives to buyers for using a
builder's preferred lender. Often the builders' lenders are related companies
that are making a significant profit on this business. The builders'
incentives for the buyer can be in the form of additional landscaping options
at no charge, cash credits to closing costs, or adding options to the home at
a discounted price.
This is when the buyer needs his own advocate. "Ask your buyer's agent to
obtain for you all the incentives the builder is offering along with the right
for you to choose your own lender when your agent negotiates your
offer-to-purchase contract with the builder," recommends Barry Nystedt of
NAEBA. "The first person you speak to normally says no, but often when you ask
further up the management ladder you will get a decision maker to agree with
letting you use your own lender."
"If that is not successful, once you are close enough to completion to
lock in your rate, you should compare at least 3 other Good Faith Estimates
for the same loan type from three credible lenders in your market. To make an
accurate comparison, you need to make sure the other Good Faith Estimates are
for the same loan type, the same rate lock period, and are good for the same
day. Decide objectively if the cash value of the incentives from the builder
make up for the cost of any higher rates and fees the builder's lender is
charging. By law, RESPA regulations require that builders allow you to change
lenders, but the builder would no longer be obligated to give you the
incentives," and, says Nystedt, "that may have been the reason you decided to
purchase a home from this builder in the first place."
The National Association of Exclusive Buyer Agents was founded in 1995 to
help consumers become educated home buyers. NAEBA is a nonprofit organization
whose purpose is to be the "champions of real estate buyers' rights and
representation." NAEBA offers industry standard certifications, ongoing
education, client referral services, technology, and information sharing. The
NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only. For
the name of an exclusive buyer's agent in your area, visit www.naeba.org .
SOURCE National Association of Exclusive Buyer Agents

Kim Kahl, Executive Director, National Association of Exclusive Buyer Agents,
+1-888-623-2299, kkahl@naeba.info