Builder’s preferred lender vs Bank

HPE
brbbrb

Go to company page HPE

brbbrb
Mar 7, 2021 7 Comments

Hi home owners,

I am stuck in choosing builder’s preferred lender vs a bank.. here are the evaluation points:

Builder’s lender:
1. Offering 3% with 3k credit
2. In house lender so I am not worried about the appraisal
3. Works closely with the builder on the delivery timeline

Bank:
1. Offering 2.875% with 1k credit
2. I am worried that appraisal might come low (can’t say for sure)
3. Worried about fees in case the bank delays or the builder delays

As per the contract, I cannot change lenders within 30 days of closing. So, I need to let the builder know in 1-2 days whom am I moving forward with.

In your experience, have you seen any issues with new construction condos being short on appraisal or banks not complying with the delivery timelines?

Estimated closing: April 1st week.
The condo is in Fremont, Bay Area.

Which one should I move forward with?

Any other factor I should consider for evaluating?

#mortgage #housing

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 TOP 7 Comments
  • Zoox
    mlHc87

    Go to company page Zoox

    mlHc87
    I don’t know your numbers but your payment will be approx $50/month cheaper with the bank but since you’re getting 2k more credit with the builder, it’ll take you 40 months to break even if you went with the bank.

    I’d recommend going with the builder’s lender and refinancing later as you can use these credits towards your closing costs and won’t have appraisal issues. However, since the interest rates are creeping up, don’t expect to get a lower rate with refinancing & that you also might incur closing costs again.
    Mar 7, 2021 0
  • HPE
    brbbrb

    Go to company page HPE

    brbbrb
    OP
    Monthly payment with the bank is $135 pm less but I’m losing about $11.5k by choosing the bank. Breaking even with the bank will take about 36 months. I think I’d need at least ~15 years to pay off the loan so choosing bank will save about 12years*12*135 Also I think I won’t get these rates on refinancing later and adding closing costs will further reduce profitability.
    Mar 8, 2021 4
    • HPE
      brbbrb

      Go to company page HPE

      brbbrb
      OP
      I’ll lose the builder’s credit of $10k plus buying points of ~3k
      Mar 8, 2021
    • Zoox
      mlHc87

      Go to company page Zoox

      mlHc87
      Got it. Don’t go the bank route unless this is going to be your forever home and you’re going to pay it off completely. You will need 6 years just to break even with the shavings the lender is giving you. And there’s a possibility you’ll sell the house/life will happen.
      Mar 8, 2021
  • Amazon
    MumbaiDe$i

    Go to company page Amazon

    MumbaiDe$i
    Go with the preferred lender. Then refinance later.
    Mar 7, 2021 0