Should I use the builder's preferred lender?

Why the incentive exists

Builders often offer closing cost credits for using an affiliated lender. The incentive is real and can be worth thousands. It is also a marketing cost the builder has already priced into the business.

The credit is not automatically the better deal. Compare the total: rate, points, lender fees, and the credit together, over the years you expect to hold the loan.

How to compare fairly

Ask both lenders for a loan estimate on the same day, for the same loan amount, with the same lock period. Rates move daily, so a quote from last week is not a comparison.

Then look past page one. Compare the origination charges, the discount points, and the cash to close line. A lower rate with two points is not always the winner.

What you should not trade away

Responsiveness matters on a build. Ask who you will actually talk to when a draw is delayed or an appraisal comes in low. On a twelve month project, that answer is worth as much as an eighth of a point.