Jan
14
How can I backed out from builder’s lender and still avail of the closing cost?
Filed Under Renting & Real Estate
RE-AGENT asked:
I have a contract to buy a new constructed house with a base price of $560K. Add the options and cost end up $582K. Builder to pay $11K towards closing if their own lender, closing, and insurance company will be used. If not, overall cost will be $593K. The lender, during the preliminary pre-qual, had tacked junk fees which I expressed my unwillingness to pay, followed by letter stating the same. She said that it will be visited again when the final settlement date is confirm. Their rate is also a half percent higher compared with others locally. Our credit score is on the 800+. Is it worth to go with this builder lender or find another lender with lower rate and forfeit the builder’s closing assistance? Or does anyone know if this practice (tie-in) is legal in the state of Maryland?
Ivory
I have a contract to buy a new constructed house with a base price of $560K. Add the options and cost end up $582K. Builder to pay $11K towards closing if their own lender, closing, and insurance company will be used. If not, overall cost will be $593K. The lender, during the preliminary pre-qual, had tacked junk fees which I expressed my unwillingness to pay, followed by letter stating the same. She said that it will be visited again when the final settlement date is confirm. Their rate is also a half percent higher compared with others locally. Our credit score is on the 800+. Is it worth to go with this builder lender or find another lender with lower rate and forfeit the builder’s closing assistance? Or does anyone know if this practice (tie-in) is legal in the state of Maryland?
Ivory
Comments
3 Responses to “How can I backed out from builder’s lender and still avail of the closing cost?”
Birdie
can’t follow that sort of thing, sorry
I’m crazy
I would do or supervise my own building.
Frederica
Take a look at your contract with the builder and see if the contribution is contingent upon obtaining your financing with their lender. If it is, get a rate quote and Good Faith Estimate (for the fees) from another lender and put them side by side and see which works out the best.
I would also be sure to talk to your builder and let him know the details of your situation.
Good luck!
Hobert
Here’s your problem. Builders do this stuff all of the time. They make you use their sub companies for this reason.They make the money back offering secondary services. Your best option is this. Look at the 11k you are saing. Then look at the difference in payment if you could get a lower rate with a different lender. If it takes you less than 4 years to make up that 11k (divide the 11k by the monthly savings, then divide by 12 for yearly figure), then it is worth to go with a different lender.
Unfortunately, no states have any governing over this sort of practice. It lets builders do what they want, and it puts buyers in sticky situations. Since you are under contract, there isn’t much more you can do. But in the future, if you build again, add provsisions to your contract. I had a friend who just put a contract down on a house. We added a provision that said if the builders bank could not match an offer given by one of our banks, they must still offer the builder discount and allow us to go outside for lending. Of course, they matched any deal we showed them. hope this helped!