I’m going to jump right to the point…I think buyers working the builder’s lender is generally not a good idea. Some might say, “But the builder offered us $10,000 towards closing cost, special mortgage interest rates, a new fridge or perhaps an air conditioner… if we worked with their lender! How can this be bad??”

Think about it… where does the $10,000 (or what ever the cost of the incentive is) come from? The builder doesn’t have a big piggy bank of extra cash to fork out just because someone is going to work with their lender. The price of the incentive is factored into the price of the home. Yep, you probably just paid $10,000 too much for the home. Builders have to make a profit – they are not in the business to be a charity.

In addition, if you REALLY want that incentive, whether it’s money towards closing cost or air conditioning in your new home, your Real Estate Agent can certainly try negotiating this for you continuing to work with your preferred lender. It certainly doesn’t hurt for your agent to try negotiating this for you…worst case, if you still really want that air conditioner, you can opt for working with the builder’s lender.

Last but not least, consider this…when you work with the builder’s lender, you are working with the seller’s lender. This lender is dependent on transactions from the builder – they are gravy fed and they’re not going to upset the gravy train. This lender does not truly look out for your best interest, they have more to gain by keeping the builder happy. If you have a challenge pop up, how do you know the loan officer won’t share your information with the builder?

When you are working with possibly the largest purchase and debt of your lifetime, why risk working with someone who is potentially compromised and not looking out for your best interest?