The Builder's Lender Is Probably a Mortgage Broker.
That's not a bad thing by any means; it's just that this is a common arrangement. It also means that the builder's mortgage company gets its mortgage pricing from the exact same places that other mortgage brokers in your area get them, and this is an easy way to determine whether you're getting a competitive quote or not.
If one broker is offering you 6.00 percent and no points, but the builder is offering you either 6.25 percent and no points or 6.00 percent with 1 point, but is also paying 1 point toward your closing costs, you can see where these various builder incentives sometimes originate.
If you're being quoted higher, then simply ask the broker, "Why are you higher than the other mortgage brokers I've gotten quotes from?" and then show her the GFEs and rate quotes you've received from her competitors.
Also remember that if you want a government-backed mortgage loan such as a VA, FHA, or US DA loan, it's possible that the broker isn't qualified to offer the program you want. You'll need to perform your own due diligence and simply ask the broker if those loans are available from her.
Developers Don't Get Paid Until the Very End of a Project.
Why is that important? Because at the end of a project, when the builder starts making a profit, it's possible that better deals can be struck.
When a builder builds out a development, he borrows some money, lots of it, and uses it to draw plans, buy hammers and nails, and pay for construction crews. Let's say a builder borrows $10 million to build 50 homes and will make a profit of $2 million.
As each home is sold, the money goes to pay for the overhead, the hammers and nails, the salaries, and, most of all, interest to the lender who doled out the $10 million. As each day passes, the builder is accruing interest that is owed to the construction lender. If there are delays in construction for any reason, from lack of skilled labor to simply bad weather, the builder has to pay more money.
So the builder wants to sell his homes as fast as he can to pay off the $10 million loan. It's not until the note is paid off that the builder gets to make his real profits. That's why, at the last stage of a development, the builder might be more inclined to cut some deals in order to get his profit into his bank account sooner rather than later.
You can feel more confident in bargaining with your builder's mortgage company when you're buying one of the few houses that have yet to be sold and closed.