Should I Use the Builder's Preferred Lender?

Why builders push their own lender

Builders want predictable closings: a lender they work with daily knows their paperwork, timelines and appraisers. Many builders also own or partner with a mortgage company. Offering an incentive for using it is common.

How to compare the offers

• Get Loan Estimates from the builder's lender and at least one outside lender for the same loan amount, program and lock length.
• Compare Section A (origination charges), discount points and the interest rate — not just the monthly payment.
• Add the incentive value back: e.g. a $10,000 credit that requires a rate 0.375% higher may or may not win, depending on how long you'll keep the loan.
• Check whether the incentive is a temporary buydown (payment rises later) or a permanent rate reduction.

What does the law say?

RESPA (Regulation X) requires disclosure of affiliated business arrangements and says you can't be required to use an affiliated provider, with limited exceptions. The CFPB also requires every lender to give you a standardized Loan Estimate within three business days of application, which makes comparisons easier.