What is a builder forward commitment?
Sometimes builders have either a special relationship with a lender or they own the lending company. They can purchase large "chunks" of money at lower interest rates and then offer those interest rates to their buyers–usually those who use government loans. This is usually not for investors.
These forward commitments can also sometimes be tied to the builder's incentives, so in order to get the builder's incentives you must use the builder's lender.
This can be a great incentive for first time home buyers seeking a lower payment in a high interest rate environment.
It is important when shopping new construction homes to closely evaluate: upfront costs as well as the monthly cost.
Example:
Disclaimer: This is not financial advice. Always review any loan information with a licensed mortgage professional and REALTORS® prior to making a decision. The terms and conditions of these promotions change with the market and are subject to expire.
