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Can A builder dictate what lender I use if the builder pays for all of the closing costs?

I want to buy a home from an investor group. They are agreeing to pay all of the mortgage loan closing costs but I can only apply foir my mortgage  with 3 companys on their list. If I pay for the closing costs I can do my loan with any company. The on site agent told my wife thats this is how its always been done. The agent said something about law of agency. Is this true?
  • February 21 2011 - US
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Answers (7)

Any lender can pay your closing costs.  Just a matter of which loan officer is charging the lower origination fee, what the note rate is, and which lender is paying the higher YSP at a given rate.  The higher the rate, the more YSP is available to pay closing costs.
  • February 25 2011
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Sometimes the builders like to select their own lenders so they know what if anything is falling out of escrow first
  • February 22 2011
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"not someone providing a legal or illegal kickback"

what's a legal kickback?
  • February 22 2011
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Find out what the builders are willing to pay for in closing costs from the lenders on the list and take that amount. Then state in your purchase offer for the "seller to pay $xxxx in closing costs and pre-paids" Choose who you want, not someone providing a legal or illegal kickback to the builder! While they would like you to choose there lender, I'm sure they will not pass on your deal if you choose someone else. I would be very concerned that I was getting the best rate when they tell me I have to choose from those lenders. Don't take that BS  Good Luck.
  • February 22 2011
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It depends on the verbiage of the contract so be sure to read the agreement.

Alot of builders have Affiliations that must be disclosed as mentioned previously. 

As a buyer in this market you should not have much trouble  negotiating the seller to pay CC, though.
  • February 21 2011
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yes, investors have (most likely)  agreement with lender and , perhaps, they will make few extra dollars as well.. It should be disclosed to you BEFORE. you sign any contract: Also; indpend. lender could provide better interest rate and closing cost could be very comp. with investors source. Get all info on writting.. Good luck 
  • February 21 2011
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They can but my experience is you almost always end up paying more for your mortgage when you go through their lender.  Talk to them and a lender you want to use and compare costs.  You will have to decide if they are really paying your closing costs.
  • February 21 2011
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