photo courtesy of Great Valley Center Image Bank
The Department Of Housing and Urban Development makes more changes.
I reported back on November 25, 2008 on the REPSA changes coming from The Department Of Housing and Urban Development involving builder incentives and the use of "preferred" lenders. This morning, in my inbox, I discovered that although the change was scheduled to take effect on January 16, 2009, it will now be pushed back 90 days.
HUD's stance has been that home buyers are being penalized if they choose not to use the builder's "preferred" lenders. The National Association Of Home Builders (NAHB) feels that these incentive programs boost competition, reduce costs and give consumers a "full range of options to explore the best possible deal to purchase a home." I have to say, I feel like I'm missing something there, as I don't see where this would boost competition, as they are reducing competition from lenders by getting people to use one lender instead of letting them choose from multiple lenders in a free market. What frustrates me is that those incentives are built into the pricing of the house, allowing them to shave it off the price when they want, but in this case, only if you use their lender.
If you're thinking of buying a new house.
Apply for the builder's "preferred" lender's loan as you would normally. In the meantime, shop the loan around and see what other lenders will give you. Sometimes the rate may be better on one or the other, but the upfront costs will be more. You really need to weigh the differences between the loans and a good agent should be able to assist you if you find it all confusing (loans can be, you're not alone). You need to know what matters to you more. Do you have cash upfront or little cash and know you could afford a slightly higher monthly payement? Does the incentive balance out in the long term with the costs associated with the loan? These are all things you need to consider before signing on the dotted line and I encourage you to speak with an agent who can be objective (and knows their way around a loan) and/or your financial advisor.