Monday, June 07, 2010

What You Need to Know Before You Use Builders Mortgage Company

Brand new construction is a very attractive option for many buyers and pricing has become more affordable. RESPA, part of HUD that regulates part of home buying transactions and consumer watch dog has been going back and forth about whether builders incentives are a violation of RESPA as it steers customers to use their title and mortgage companies.

If you use the builders title company and mortgage companies, they will pay thousand of dollars toward your closing costs, toward upgrades, or future HOA expenses.  If you do not know use, them you can lose out significantly, and most buyers end up using the services. 

Builders offer these incentives, because they own the title company and mortgage company and make money off the buyers with these services, but are you getting the best service and lowest mortgage rates.   Many times buyers do not have a enough time before going to contract on a home to shop around.  To make sure you are getting a the most competitive interest from the builder, shop around before you go to contract.  If there is better outside deal, ask builders mortgage company to match it. 

We believe buyers should have choices with no strings attached, and RESPA is currently evaluating this.