Do You Have to Use the Builder's Lender in San Tan Valley?
Quick answer:
No, you don't have to use the builder's lender in San Tan Valley. Federal rules say a builder can't require you to use its lender to buy the home. But the builder can offer incentives that only come with its preferred lender, so the real question is which total deal costs you less.
If you've toured a model home in San Tan Valley lately, you've probably heard the pitch. "Use our lender and we'll help with your closing costs." It sounds great, and sometimes it is.
I'm Andria Townsend, a loan officer based right here in San Tan Valley. I've lived in Arizona for over 15 years, and new build buyers often wonder about this. Here's how to figure out which deal actually works for you.
Why do San Tan Valley builders push their own lender?
San Tan Valley has a lot of new home communities, and builders compete for the same buyers.
So incentives are a big part of the sales pitch. You'll see things like closing cost credits, rate buydowns, and design center credits.
Many of the biggest offers are tied to the builder's preferred or affiliated lender. Builders also say these offers are limited and can end without notice. So what you see in the sales office this month may not be there next month.
What do federal rules say about the builder's lender?
The federal rule here is called RESPA, and the CFPB enforces it. Here's what matters for you:
- A builder can't require you to use its lender as a condition of buying the home.
- If the builder refers you to a company it's connected to, it has to give you a written Affiliated Business Arrangement disclosure. That form explains the relationship.
- A builder can offer a discount or package for using certain services. But it has to be optional, a real discount, and not made up by higher costs somewhere else in your closing.
That last point is the big one. An incentive is only a deal if you're not paying for it in other ways.
I'm not an attorney, and this isn't legal advice. If you have questions about your builder contract, talk to an Arizona real estate attorney.
Is the builder's lender incentive really a better deal?
Sometimes, yes. I'll be honest with you. A strong builder package can be hard to beat.
But you won't know until you compare. Here's what to look at:
- What kind of incentive is it? A closing cost credit, a rate buydown, or a design credit all work differently.
- Is the buydown temporary or permanent? A temporary buydown lowers your payment for the first year or two, then it goes up. A permanent buydown lasts for the life of the loan.
- What's the lender charging before the incentive? Look at the origination charges, points, and fees.
- What stays if you use your own lender? Some incentives, like a price reduction or design credit, may not depend on the lender at all. Ask.
How do you compare the builder's lender with your own lender?
Every lender has to give you the same form, called a Loan Estimate. It's built so you can compare offers side by side. The CFPB suggests getting Loan Estimates from at least three lenders.
Here's the simple way to do it:
- Get the builder's offer in writing. Ask for the amount, which lender it's tied to, and the deadline.
- Get a Loan Estimate from the builder's lender.
- Get a Loan Estimate from your own lender. Use the same loan type, loan amount, and lock period so it's a fair match.
- Compare the right numbers. Look at origination charges, points, lender credits, cash to close, and the 5-year cost on page 3.
- Ask about the rate lock. New builds can take months to finish. Ask how long the lock lasts and what an extension would cost.
- Pick the total winner. Cost matters, and so does service. You want a lender who answers the phone.
Credit and cash to close still matter with any lender. If you're working on your score, read my post on whether you still need a 620 credit score to buy in Arizona.
What does this mean for San Tan Valley buyers?
Get pre-approved before you walk into a sales office. It gives you a baseline, so you know what a fair offer looks like.
Then compare, don't guess. And watch your contract dates. Builder contracts often have deadlines for choosing a lender or submitting a loan application.
Also, run the full monthly cost before you commit. That means taxes, insurance, and HOA dues, not just the loan. Here's how HOA dues affect your pre-approval, and what you'll actually pay at closing in Arizona. For more on new builds, see my San Tan Valley mortgage page.
What does this mean for homeowners and sellers?
If you already own in San Tan Valley, you're competing with those builder offers when you sell.
Resale sellers can compete too. Many offer to help with a buyer's closing costs. I explain how that works in Can the Seller Pay Your Closing Costs in Pinal County?
And if you're selling to move up into a new build, talk to a lender early. Timing your sale with a build date takes planning.
Frequently asked questions
Can a builder make me use its lender?
No. Under RESPA, a builder can't require you to use a certain lender to buy the home. It can offer optional incentives for using its lender, though.
Will I lose the builder's incentives if I use my own lender?
You might lose the part tied to the lender. Other parts, like a price cut or design credit, may stay. Ask the builder to put it in writing.
Is a temporary buydown the same as a lower rate?
No. A temporary buydown lowers your payment for a short time, then it goes up to the full note rate. Make sure you can afford the payment after the buydown ends.
Should I get pre-approved before visiting a builder?
Yes. A pre-approval from your own lender gives you a baseline. If the builder asks you to talk to its lender too, that's fine. It doesn't lock you in.
When should I compare lenders on a new build?
Before you sign the purchase contract, or as soon as you can after. Check your contract for any lender deadlines.
What's the Affiliated Business Arrangement disclosure?
It's a written form that explains how the builder is connected to a lender or title company it refers you to. Read it before you decide.
Want a second opinion on your builder's offer?
Bring me the builder's incentive sheet and their Loan Estimate. I'll walk you through it and show you how my offer compares, side by side. No pressure either way.
Get pre-approved or ask Andria a question at andriatownsend.com. You can also call me at 480-487-9166 or email [email protected].
Subject to eligibility, credit approval, and program guidelines. Programs can change.
Andria Townsend, Mortgage Loan Originator, NMLS #2154631. NEXA Mortgage, LLC, NMLS #1660690. Equal Housing Opportunity. This is not a commitment to lend. All loans subject to credit approval, underwriting, and program guidelines.
