Home > Blogs > Joan Cox > Denver Real Estate, Denver Relocation, Denver Homes for Sale, Denver Realtor

What Lender Should I Use - When Buying New Construction?

By Joan Cox

Real Estate Broker/Owner with House to Home, Inc. - Denver Real Estate - 720-231-6373 DRE# ER40011786

September 12, 2022 06:58 AM

Typically builders have a preferred lender, and if a Buyer uses this lender, you may have some of your closing costs paid. The most recent contract with a builder was giving $7500 towards closing costs.

Be sure to ask what their current interest rate is, and approximately what their fees will be. Also, call another lender (maybe the REALTOR's suggestion) and get another estimate to know whether you want to go with the Builder's lender or not.

I went over the LE (Loan Estimate) with my Buyers, and they sure add a bunch of what we (REALTORS) call junk fees. Most of my lenders do not charge an origination fee or processing fees.

Buying a brand new home from a Builder, you will be paying fees you normally would not pay if buying a resale home.

Re-Blog

Comments(18)

Comment

Show All Comments

Sort:

Jeffrey DiMuria 321.223.6253 Waves Realty

Waves Realty - Melbourne, FL

Florida Space Coast Homes

You must be very carful with the builders lender. They will try and gobble up as much of the dollars as they can.

Sep 12, 2022 07:02 AM

Michael Jacobs

Pasadena, CA

Pasadena And Southern California 818.516.4393

Hello Joan - homebuying decisions seem to be endless with so many choices available at every corner in real estate. And that doesn't include the nooks and crannies that are part of any construction project - new and otherwise. Choose representation wisely along the way to "happily ever after" moments. At least, realty-wise.

Sep 12, 2022 07:55 AM

Nina Hollander, Broker

Coldwell Banker Realty - Charlotte, NC

Your Greater Charlotte Realtor

Hi Joan... you really have to compare carefully... and whether a builder's lender should be used can also differ from builder to builder. As I always tell my clients, there is no free lunch... if you are getting thousands of "free" dollars, you are paying for it somewhere else.

Sep 12, 2022 08:03 AM

Grant Schneider

Performance Development Strategies - Armonk, NY

Your Coach Helping You Create Successful Outcomes

Hi Joan - I know it is very common to cover closing costs and some other fees in a new home.

Sep 12, 2022 08:55 AM

Norma J. Elkins

Elite Realty Group - Morristown, TN

Realtor - Elkins Home Selling Team

Great info! People don't realize that different lenders often specialize is certain areas. Knowing your lender and that they are experienced in what you need is a must. Thanks for sharing! Hope you have a fabulous Monday!

Sep 12, 2022 10:47 AM

Eric Bouler

Gardner Realtors, Licensed in La. - New Orleans, LA

Listening to your Needs

Happy Blog Today. Just saw it at 1253. Great blog and late reader...Go Now.

Sep 12, 2022 10:54 AM

Paul S. Henderson, REALTOR®, CRS

Fathom Realty Washington LLC - Tacoma, WA

South Puget Sound Washington Agent/Broker!

I think your right Joan. Do your homework and compare with other lenders 🙂

Sep 12, 2022 10:35 PM

Kat Palmiotti

eXp Commercial, Referral Divison - Kalispell, MT

Helping your Montana dreams take root

Comparing carefully is a must! The bottom line of one of them will be more favorable....

Enjoy your Tuesday!

Sep 13, 2022 05:07 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Jeff, I agree, they add so many junk fees, it is like the measly amount of closing costs paid is better to use another lender.

Sep 13, 2022 05:48 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Michael, you are so right - so many decisions when buying a brand new home, or resale.

Sep 13, 2022 05:49 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Nina Hollander, Broker I say the same thing - nothing is free. Usually they add fees so the incentive is usually wiped out.

Sep 13, 2022 05:50 AM

Nina Hollander, Broker

Charlotte, NC

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Grant, that is what the builder wants you to think, but the junk fees are doubled!

Sep 13, 2022 05:50 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Norma, sometimes they do.

Sep 13, 2022 05:51 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Thanks Eric.

Sep 13, 2022 05:51 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Exactly Paul!

Sep 13, 2022 05:51 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Best to compare for sure Kat!

Sep 13, 2022 05:52 AM

Adam Feinberg

Elegran - Manhattan, NY

NYC Condo, Co-op, and Townhouse Advisor

I love showing new construction condos (houses are virtually non-existent here). Though showing them is a lot easier than the buying process. Developers here have a procedure to purchase laying out what is needed to buy. Typically, the developer is seeking a financing non-contingent sale- though these deals can be financed. Some developers are ok with 10% down but many want 20% or more as a down payment. Also, the developer will typically have a preferred lender- meaning if your selected lender ultimately decides they won't underwrite the deal, then the buyer is required to go to the preferred lender...and only if the preferred lender won't underwrite the buyer- then the buyer can back out of the sale with their earnest money (typically at least 10%).

Once you get past the financing issues- then there are closing costs unique to new construction. The developer will ask the buyer to pay the NY State and NY City Transfer taxes. While some developers will negotiate on who pays these transfer taxes - the seller will pay for these in a resale. Also there are other closing costs unique to new construction here such as the buyers contribution toward purchasing the resident managers apartment or other fees which can add thousands or tens of thousands of dollars to the final sale. But on the flip side, it might be possible to negotiate some of these things in unique ways such as using a purchase CEMA so that the buyer and seller both win.

Sep 16, 2022 08:58 AM

Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

Adam Feinberg THAT is a process, and here a builder/developer cannot REQUIRE a buyer to go with their preferred lender, and hence the incentives given.

Sep 16, 2022 09:18 AM

Adam Feinberg

Just to be sure I was clear- the developer would only require that a buyer use the preferred lender is when the buyers first choice lender declines to underwrite. Underwriting in a 100+ unit building can be a complex process of evaluating the project- so not every underwriting team is going to have the same comfort level. The preferred lender would have thoroughly evaluated the project and is deeply informed of every step in the construction and sales process- so they would have committed to the project whereas an individual buyers bank might not have that same commitment. Because of these points- the buyer is not entitled to their earnest money back just because their lender failed to underwrite. This is the reason why the buyer would be required to apply for a mortgage with the preferred lender (after a turn down by their own bank) before they can qualify to get their earnest money back.

Sep 16, 2022 09:28 AM