Las Vegas area is just like the rest of the country and we are seeing major challenges to financing a home purchase.
One of the best ways to gain entrance into your first home, right now, is to use FHA or VA financing. Before you are go out searching for that home, New Construction or Resale you should get approved with a lender. Your lender will help you determine your buying power. Really good lenders will let you know what needs to be done to position yourself to buy a home.
There are several types of lenders for residential purchases, just to name a few: direct lender, mortgage broker and hard money broker.
There is always ongoing debate on whether you should use a direct lender (mortgage banker such as Wells, BofA, Countrywide) or a Mortgage Broker (someone who can shop all wholesale mortgage products to find you the best rate or product to suit your needs.) Who should you use? Well it depends on your situation. Sometimes builder's lenders want to throw you in one of their products so they don't want to go the extra mile to get you approved for a VA or FHA loan. Sometimes REO (bank owned) sellers want you approved on their letterhead or any major bank letterhead, but it doesn't matter who closes the loan, just as long as it closes!
Buyer Beware! Make sure you "shop" a broker if a builder is pushing you to use a direct lender or vice versa. I have had two major transactions crash and burn in the last month because a builder's direct lender didn't want to go that extra mile to get an FHA AND VA transaction rolling. They wanted to stick both buyers in one of their programs which would have resulted in higher PMI and interest rates. Both of these buyers could easily get what they wanted if they used a mortgage broker who specializes in those types of loans.
If something smells funny or doesn't add up, always ask questions and get a second opinion. It never hurts. Sometimes, even if you lose incentives (like closing costs) from a builder, you can end up paying less in the long run.
Renee
Is it me or has Las Vegas just grown by leaps and bounds in the last couple years?
Sincerely
Tom Braatz
Renee
Your clients are not alone with this in Las Vegas. The situation is a nationwide issue with builders. I should know; all I did was builder financing for years until they came up with the RESPA changes in 96 where they could create their own mortgage companies.
Most of the time they are looking to line their pockets from compensation from placing their clients in higher rates or less favorable programs.
You sound pretty savy and should continue to encourage your clients to search out other options, regardless of whether it be an outside broker or another direct lender.
Merry Christmas
Tom: It isn't just you..LOL! It still is also!
Rey: YES IT IS!! Thank you for everything!
Wayne: You are right about checking out your options regardless if it is a direct lender or a broker. Thank you for stopping by and adding your way cool insight to this trend that needs to end!
Bravo! Good for you, in this environment, experience and education counts. There are still countless ways to finance buyers....regardless of the source of the money, though I have to say moving forward, it is getting more and more difficult for the broker side as they're losing control of the money. Our circle of friends constantly refer business back and forth between brokers and bankers as everyone has a niche of their own.
Great post!
Hi Renee,
I have a few lenders I work with instead of just one. Being that not all buyer situations are the same, I have them get in touch with a lender (usually one that I work with) that has the best loan program for them. However, since many of the builders have their own lenders and are offering deep discounts if they use their lender, usually I will get my clients qualified with a lender I know and then bring that up with the onsite sales agent. In current market conditions, I have been able to "write an offer" to the builder with using our lender. This of course doesn't ALWAYS work, but in most cases we can find a happy medium.
With current market conditions...I'm surprised that the builder didn't out-source the loan to someone that could close it.
Roberta: It's frustrating! I almost lost a buyer because of a builder that said they don't qualify for a program they do qualify for!
Heather: I am surprised they didn't do that either. They wanted it for their direct lender no matter the interest rate first. They would rather kill the deal over sending it to their broker.