You're all excited and for good reason. You are about to buy your first home, or at least your first brand-new home. You have checked out all the local builders, examined all your options and you have found the home of your dreams. The price even seems right and now all you have to do is secure the financing.
Naturally, the builder wants to make it easy for you and so they offer their own financing. Either they have in-house lender, or an arrangement with an outside lender, but either way they make it easy for you. You can apply for your loan at the same time that you put in your bid on the house. One-stop shopping makes it easy.
There is no need for you talk to your own banker or mortgage broker.
The builder has already made all the financing arrangements, so why not take advantage of that? Why shop around for a loan, when there's one already being offered?
Naturally, you assume that you are going to get good terms and a good interest rate. After all, the builder is selling dozens, possibly hundreds of houses, so obviously they can get financing at better rates that you can get on your own and there main interest is in getting the houses sold, so they are sure to give you a good deal on the financing.
This is the way things would work if we lived in a perfect world. Unfortunately, we do not live in a perfect world and many builders treat homebuyers as a captive audience. Instead of giving the homebuyers a break on the financing, they actually charge higher fees and sometimes higher interest rates than an outside lender would charge. They treat the financing the same way car dealerships do, as a prime source of extra revenue, rather than just a service for the customer.
Obviously not all builders do this. Some builders do try to obtain favorable financing at low interest rates in order to make their homes more attractive to prospective buyers, but don't just assume this is the case. Always shop the financing, just the same way you shopped for the house. If the builder's financing offer turns out to be the best, then go for it. But, you'll never know that unless you try other lenders to compare their rates and terms
