Building a Home Buying and Selling Homes

Builder can get a loan on my behalf?

8 years ago

last modified: 8 years ago

NOTE: I am consulting with a real estate attorney prior to posting this. But sometimes these legal discussions go slowly.

There are a couple of things in this contract that I haven't seen in a builder contract before. This is a tract / production builder. I'm wondering if anyone else has seen these?

Broker or Seller shall have the right, but not the obligation to obtain said loan on the Purchaser's behalf.

And then a whole page trying to educate you on how to obtain a loan and giving the builder the right to manage your lending process with a HIPAA like clause—to the tune of keeping your deposits and $100 per diem if you don't. A portion of the page is attached as an image.

I would be building in a poorer area than I am living right now, but the size and price of houses in the community does not scream "move here first-time homebuyers." I have never seen a page like this in a building contract before. Has anyone else?

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Caroline Gerardo Home Mortgage

8 years ago

The builder cannot get a mortgage in your name. The builder can carry a first and charge you a high rate of interest and penalty until you find a loan. Do not do this.

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Comments (8)

B Carey
8 years ago
I'm sorry if I'm missing it, but please post where it says "Broker or Seller shall have the right, but not the obligation to obtain said loan on the Purchaser's behalf."
B Carey
8 years ago
The rest of this is actually all very good information for a buyer! They want you ready for the loan and not surprised. The information on sourcing funds is important. You have to have a paper trail for any deposits. Large cash deposits shortly before closing are going to get flagged by your lender.
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Jennifer Miyazaki
Original Author
8 years ago
last modified: 8 years ago

It's on an earlier part of the contract, separate from the other page. I'm trying not to blast the whole contract on here, but that clause is tacked on where most contracts tell you have X days to get a loan approved.
User
8 years ago
The builder can act as a bank and hold the note in house. He cant use your info and go out and actively apply for loans. You’re at his mercy for everything if he holds the note.
midcenturymodernlove
8 years ago
I would strike that provision (draw a line through it and initial). Builder should not have even the right to get a loan on your behalf. Heck, no.
lyfia
8 years ago
I'm guessing they have it there so there is no I can't get a loan so I can get out of the contract type thing.
robin0919
8 years ago
ditto....the builder is just trying to get as' MUCH' money as possible!!!!!! 'That's' their 'main' goal. It's sickening!!!!!