Are They Your Builder or Your Lender?

Does it make sense to get your mortgage from the person who builds your house? There's no easy answer. But the best advice, as always, is “shop around” because the most convenient lender isn't always the best.

It's just like buying a car: If you get caught up in the thrill of buying the vehicle and fail to analyze the dealer's financing offer, you can end up paying too much. It can be the same with your mortgage. The builder may tell you that you'll benefit from financing with them because it's convenient, and they can offer you incentives because they want to qualify and close your loan as quickly as possible. After all, the home sale may depend on it.

For example, they may offer a few thousand dollars to be applied toward closing costs and points. In some cases, however, the lender just charges more points or higher rates than competitors, which is illegal.

Your home mortgage is too big of a decision to accept the first option presented to you, whether it's from a builder or a financial institution. Comparison shopping will ensure that you end up with the home financing that's best in the long run.