You need to compare rates. Sit down and spend a couple of hours to contacting various mortgage companies for their rates and fees.

Builders usually offer incentives in the form of upgrades to use their lender. However, their charge for these upgrades is often much higher than you would pay a private contractor afterwards. As an example, a builder may quote an upgrade price of $2500 for a sprinkler system, but a landscaping company may only charge $1600 for it after your house is completed. So, look at these incentives realisticaly. It is only a benefit if you truly want or need those upgrades. And, the actual value of those upgrades is probably much less.

Often times a builder will offer free upgrades in exchange for use of their preferred lender. BEWARE of this as they tend to increase closing costs to cover the "free" upgrades or give you a higher interest rate.

Many new homebuyers are subtly coerced into believing that they must use the builders lenders or risk losing the home. Smart homebuyers should make sure they use the lender that will get them the loan that suits their best interest, not necessarily the builders best interest.

Always make sure you shop for the very best situation. Finding a trusted mortgage professional is key to a successful home loan and going with a lender because of an upgrade or a freebie is not always the healthiest way to chose a mortgage.

We advise most of our clients who are considering a builder loan to negotiate for the property, time and materials just as if they were negotiating a car lease, e.g. negotiate the lowest possible cash price (which may mean opening negotations stating a large downpayment or outright cash purchase is possible) and get the final negotiated price in writing including the upgrades which you want and need, especially those which are most valuable for resale value. Then contact us for the best possible program in the market, and compare that with the builder loan. Hundreds of customers have done exactly comparison, between our best in market rate and the builder loan with all its markups and profit built in, and every single one has found that the best place to get a mortgage is with us, their friendly neighborhood mortgage company.