DR Horton /Lennar Homes - Using their lenders Pros/Cons?

Question

I am looking at buying a new build for a long term rental property. Does anyone have any experience with DR Horton (DHI) or Lennar Mortgage? They are offering some great incentives, lower rates and closing costs. I am reading horror stories online from buyers who used their lenders. I am curious if any investors have any input/experiences?

Nick Belsky · Answer

@Michelle BrastAs a broker, I can honestly tell you that the builder's lenders are tough to beat. They can throw in things like upgraded countertops or longer life shingles that other lenders simply cannot do. The only time I've heard of bad experiences or beat them is if the borrower cannot qualify for conventional/agency financing and needs a non-QM solution such as Bank Statement or an Asset Depletion based loan. Most builder's lenders cannot do these and mostly effect self-employed folks who can't show adequate income on their tax returns. I've met a few who said their builder's lender could do it but at the end could not qualify them due their income and DTI. I was able to help with Non-QM solutions and not at as good of a rate. Other than these type of instances, I've not heard anything majorly negative in terms of their loan processes. Cheers!

Dave Skow · Answer

@Michelle Brast- these lenders are owned by the builders ..these preferred lenders should be able to offer a deal that will not be able to be touched by all other lenders as the builder is subsidizing the transaction deeply in order to lock in the sale ...Ask lender for their initial package ...compare the details with other lenders ...then go back to the builder lender and ask for them to improve their offer ..they will likely do it if you can provide details on their competition . the other thing to address is the length of the lcok period needed .....if it will be many months before the home is built - ask any lender you talk to with regards to a long term rate lock ( if you want to lock ). These lenders are not known for their great cutomer service

Jared Rine · Answer

@Michelle Brast..while I don't have firsthand experience, I'm usually the first line of defense when it comes to anything mortgage/re finance related in my family. My brother just purchased a DH home in NC back a few months and used DHI (incentives were too good not to) and it seemed like the process and loan officer made everything smooth, even when my brother realized they wanted to change from FHA to conventional almost 2 weeks before closing to not have the additional FHA MI. And it was no sweat. Some of the underwriting seemed more tedious than I'm used to at Rocket or one of my wholesale lenders but process was good and he said he'd buy using them again. House is very nice too. Just my $0.02

Andrew Postell · Answer

@Michelle Brast online is made for horror stories...terrible things get more clicks. There are lots of great experiences here...some moderate experiences...and some not so good. Go talk to them. Trust your instincts. If you feel comfortable with one, then execute. If you don't feel comfortable, then go with the other. Usually they don't have "top-notch, white glove" type of service. But it's usually good enough. They close hundreds of homes a month...they couldn't do that if they were wasting everyone's time.

Bradley Buxton · Answer

@Michelle Brast I had a client that bought a DR Horton using their financing and it's been smooth. He also read the reviews and was hesitant. They are offering some of the lowest interest rates we've seen for a while. Our client here in Reno, NV pick one up discounted because they are trying to hit sales numbers and locked a 5.75% rate. They still have to abide by lending standards. Most of the reviews I read are from people that had bad loan officers or didn't do their due diligence with inspections. If you can get a deal it could be a good opportunity.

Bill B. · Answer

I had an almost perfect experience in September with DR Horton builder/mortgage company. They gave me $5k toward closing and a 6% 30 year fixed investment loan when owner occupants were paying 6.5 - 7%. My only negative experience was I also used their title company and I got hit by the city with a late fee on property taxes due 2 days after I closed. But after I brought it to their attention DR Horton reimbursed me. I did stop by 2 days ago looking to buy more and they said a lot of incentives were going away and prices were rising. They said it was based on end of year and news the fed was planning to lower rates. Ps. They built and sold all 6o units in less than 3 months from sept to Dec. These properties were in the $580-$630k range. They plan to build another identical community about 3 blocks away at the higher prices using the same models. Pps. Find a friend who’s a realtor as it will be the easiest $15-$20k they’ll ever make. I did see some realtors in Florida offering kickbacks of some of the commission. They do have to come in the first time you visit the community and sign a “give me the money” postcard.