Posted on: 13th Jul, 2011 12:26 am
Hello there… well… I was at my builder’s office. I’m purchasing a home. The broker there told me that I had to take my loan from him. Is that true? It is mandatory for me to take out a loan from him?
It is not mandatory for you to take out a mortgage from the builder's broker. You can contact other mortgage lenders in order to get a loan. No one can force you to take out a mortgage from a particular lender.
That would be a RESPA violation of steering. Frank Dodd reform act, prohibits steering to any particular lender that will benefit the originating party.
It is not mandatory. However, builders usually tie their incentives to their prefer lenders. For example, they would say they you welcome to use any lender but if you use their preferred lender, they can give you $5000 discount on the price or pay some of your closing costs.
In my experience, what I suggest home buyers to do is to get estimate from other lenders to compare. If the interest rate is drastically difference, don't use the preferred lender. A lot of time, preferred lenders can be competitive with slightly higher interest rate and closing cost but when considering the discount, it still makes sense to go with them.
Hope that help
Val
[External link deactivated as per forum rules. Thanks.]
In my experience, what I suggest home buyers to do is to get estimate from other lenders to compare. If the interest rate is drastically difference, don't use the preferred lender. A lot of time, preferred lenders can be competitive with slightly higher interest rate and closing cost but when considering the discount, it still makes sense to go with them.
Hope that help
Val
[External link deactivated as per forum rules. Thanks.]