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Lennar Offers a Deal

National homebuilder Lennar is offering a deal: a 30 year fixed rate mortgage at 4.875% if you purchase one of their homes using their preferred lender. Plus, they are paying up to 6% towards closing costs. An interest rate this low is worth a serious look, as it will boost buying power significantly.
There is, of course voluminous fine print attached to the deal - read carefully and review with your real estate agent. Another note of warning: Lennar is on the Ailing/Watch list over at Builder-Implode.com. DO YOUR RESEARCH on any Lennar neighborhood you are considering. I've read some horror stories about people contracting for new homes, and the builder going out of business mid-construction, leaving unfinished homes and neighborhoods with half-built streets, pools, and clubhouses.

Posted by Tamara Heyward on 02/09/2008 07:11 AM

Comments (10)

lennar, new construction, lenders, loans, deals

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10 Comments on Lennar Offers a Deal

FEB

2008

I would love to know how many points they are not telling you they will add to the loan ...if they do ...it doesn't come in with those rates.

There are a lot of great deals from builders out there these days. Spec homes are loosing value every day.

Definitely have to read the fine print on that deal. I'm sure there is some catch on that rate.

I read the fine print they provided in the email I received. Looks like Lennar has set aside a budget to pay for the incentive. Buyers have to have a credit score of at least 680. No investors, and of course they are reserving the right to change the rate, guidelines, etc. They say the "rate may change or not be available at time of loan commitment, lock-in or closing if funds are exhausted". What? That doesn't give me a good feeling - sounds like they're reserving the right to do some bait and switch with your loan.

Hi Tamara: What has happened is that Lennar has bought a loan commitment of so many millions of dollars at 4.875 percent interest. When this is done, the rate is fixed for the committed amount of money. Now, if that amount of money is used up by higher than expected demand, it is gone. Unless they can purchase another amount of funds to keep the program going.

Also, as far as I know, the points are already taken into consideration, so the prices should probably stay as advertised. In Fort Worth?Dallas Lennar has held to their commitments, and to my knowledge has not messed up anyone. Their mortgage group is reputable, and delivers on it's promises.

Builders in my area are offering discounts up to 40% of appraised value (I did a mortgage on one in December). Rates and everything else advertised does not surprise me in our current market of new/unocc homes. More oppurtunity for all of us

Happy Selling!
Tony Grego - Indiana Mortgage Broker

Karen, thanks for the additional information about Lennar. It is good to know they have kept their promises so far.

Be very careful of deals offered with the use of a preferred lender. This particular deal may be fine, but it is not unusual to read where a buyer is stuck in a bad deal because the preferred lender deal also came with a magical preferred appraiser. Sounds to good to be true? Usually that is because it isn't the whole truth.

Greg, and Tamara: If it makes sense for the buyer to use the builder's "preferred" lender, do it. And... the appraisers are under such a powerful magnifying glass these days, all they need to do is lean an appraisal to the builder's favor, they may not only be out of a job, charges of mortgage fraud may be brought. Besides, if a buyer is using a good Realtor, one with much experience with builders, their interests are being looked after.

FEB

2008

Karen, I agree that if the buyer has a good agent they will be fine, but there are so few good agents. On a basic level such financing specials are used to move product that will not sell without the incentive. If an incentive is required to sell the product, the market is saying it is not worth the actual price. It is the same method used regularly by car salespeople and should be viewed with the same skepticism. It may well be the best deal for some. I am not saying run away from such offers, but I do think buyers need to be made aware such purchase agreements should be viewed as contracts with no contingencies and buyers ought to be aware of their agent's financial incentive.

I like Lennar. My experience with them has been that they build a good product at a fair price. It's just that now more than ever a strong sense of skepticism is needed when buying a new house.

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