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Buying a home to be built, financing


madcrapper
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Hello all. Ive been reading this board for a long time now and have gotten my credit almost back to 100%. I have another question now. I have a contract for a to be built home with Richmond American here in WV. The sales price is almost 340k. I am selling my current home and the time to build is about 6 months. I have about 30k in structural incentieves from the builder but must use thier "in-house" lender if I want to get the 10k in closing cost assistance. I have a current final approved loan with National City (whom my current mortgage is with) but the closing costs are up in the 3% range which I just cant afford that. Is there a risk of being shammed with a .50 % higher rate at the closing table if I go with the in-house lender. Would it be worth it to not have to pay 10-12k out of pocket now in closing costs? Are there any lenders with good no or low closing costs deals?

My earnest money is 15k, required, so I wont be walking away from the closing table becasue of a high rate. It seems like the in-house finance has you by the you know whats. Or am I just being paranoid. This is my second home purchase. Thanks alot.

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Hi,

I am not a mortgage person, but I was going thru the process and I have seen how other people have worked it to their advantage.

If you haven't put down the money yet. give them a call( no names) and ask them if they pay agent fees. If they do try to get them to move some of that money your way(that's if you didn't come with an agent). If they want budge tell them you are not sure and you want to come back with an agent so they can better explain it to you. They will most likely stop you at the door and cut you in rather than pay an agent for all his fees.

It's still a buyers market and I am pretty sure that if you tell the builder that you feel more comfortable working with your lender because you have a good relationship with them then he would give you those incentives anyway. Maybe he want budge at first, be he eventually would rather make a profit than not. (Be careful b/c his in house folks will most likely be pushy as all out doors). Just remember don't let it stress you its suppose to be good experience. There isn't a house that nice that is suppose to have you strapped for it. Those incentives are most likely built into the price anyway.

Hope alll works out!!!! Best wishes!!!:)

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What yboyd is describing is illegal in most states. Maybe not all. If it's not illegal, it's worth a shot, but I'd be suprised if you got anywhere.

Any builder will pay agent fees. Almost all will require the agent to be, at a minimum, declared on the first visit. That's how it was with my builder. They've since changed their rules and the agent must actually accompany any prospects to the very first visit.

FWIW, I got a discount agent. Never met her, but she gave me 2% back after closing (she got 1% for signing her name a few times) so it worked out well for both of us.

Are you sure the in-house lender will screw you on the rate? Tell the in-house lender you're shopping around. They want your business. If you have a legit GFE 1/2 point lower, they may very well match it, or perhaps come down a bit.

Although if you're 6 months out, it's still a tad early to worry about all of this unless you plan to lock your rate in now. It can be expensive to lock more than 60 days out.

The in-house lender may not match the best rate you find, and that's why you have to weigh the incentives carefully. My builder gave us very little incentives. If I recall, we were able to only put down $500 earnest if we went with the preferred lender. Any other lender, and we'd have to put down $1000. Not a big deal at all. But we went with the preferred because

a) they offered the best rate

B) we were going VA and we were worried about the appraisal. The lender's relationship with the builder guaranteed the smoothest opportunity for the lender to get property comps to get the appraisal # we were looking for.

As it turns out, we didn't get the number we wanted. We were hoping for 270 and had to settle for 269,100.

Turned out pretty well.

I think any other lender would have had a rougher time getting value with the VA. Wouldn't have been impossible, but would have made it a bit more difficult.

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I am kinda confused of how that's illegal,:confused: :confused: :confused: please,please break it down and I will take note. I've seen it done with the some of the builders in my area(my builder did this for me). If a builder will save money by giving you $3k instead of paying your agent $6k then they save money and you could apply it anywhere you want...Still confused.:shock:

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I know Texas real estate law doesn't allow builder kickbacks like this. The 'like this' portion refers to kickbacks to buyer "INSTEAD" of paying realtor fees.

Builders would be in the business of recommending buyers NOT bring agents.

Realtors would hate this because many buyers would opt not to use real estate agents. So the realtor lobby put the brakes on this.

Builders certainly prefer buyers not bring agents, but I've never heard of any builder refuse to pay buyer's agents (provided certain conditions are meant - primarily the first visit requirement).

What I did is also illegal in some states - buyers agents giving kickbacks to buyers. It's not illegal in texas though.

Note - I know some folks consider this practice immoral regardless of legalities. I'm not one of those folks. It's certainly worth asking (I did).

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ybrew..

That makes sense. Now I can understand that logic...

I still would take the 3k for not bringing an agent and applying it to the closing cost. I don't know the legaility in my state , I just know what was mentioned as a barter as I was walking out the door after stating I thought I needed an agent to represent me. But then again I can not stand to spend money.:-)

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ybrew..

That makes sense. Now I can understand that logic...

I still would take the 3k for not bringing an agent and applying it to the closing cost. I don't know the legaility in my state , I just know what was mentioned as a barter as I was walking out the door after stating I thought I needed an agent to represent me. But then again I can not stand to spend money.:-)

That's something I've always wondered...

here in texas, if you walk in without an agent on your first visit, they say you can't bring in an agent.

But I'm curious how much they really are able to enforce that. Suppose a buyer didn't realize the 'rule' ahead of time. But the buyer really likes the properties, but doesn't feel comfortable buying without an agent. Would the builder refuse to deal with the customer and risk losing a sale?

This is mostly rhetorical ramblings on my part.

1) the builder doesn't usually need to worry about losing a sale. There seem to be enough buyers for them to pick and choose (at least this is the way it currently seems)

2) At least in Texas, agents are pretty pointless in a new home sale. No negotiation room. nothing for them to do really (which is why I was happy to get a discount agent)

In fact, here in Texas, lawyers are very seldom involved in real estate transactions. I know in some parts of the country, lawyers are heavily involved. Here, anyways, there's really no need for them.

/end ramblings...

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  • 3 weeks later...
That's something I've always wondered...

here in texas, if you walk in without an agent on your first visit, they say you can't bring in an agent.

But I'm curious how much they really are able to enforce that. Suppose a buyer didn't realize the 'rule' ahead of time. But the buyer really likes the properties, but doesn't feel comfortable buying without an agent. Would the builder refuse to deal with the customer and risk losing a sale?

This is mostly rhetorical ramblings on my part.

1) the builder doesn't usually need to worry about losing a sale. There seem to be enough buyers for them to pick and choose (at least this is the way it currently seems)

2) At least in Texas, agents are pretty pointless in a new home sale. No negotiation room. nothing for them to do really (which is why I was happy to get a discount agent)

In fact, here in Texas, lawyers are very seldom involved in real estate transactions. I know in some parts of the country, lawyers are heavily involved. Here, anyways, there's really no need for them.

/end ramblings...

I started the negotiation process without an agent and realized I needed some professional input. When I signed the contract, I informed them of the agent and it was just fine. They had no problem with it at all.

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