Ryan Homes & Using a Outside Lender: Some Advice

I know others have used outside lenders when choosing to build with Ryan Homes.  From other various blogs I have read, typically there is an issue with financing that forces the buyer to go to what appears to be a lender that works with subprime mortgages.  I've tried to search for those that opted out of NVR for other reasons and I can't say I found any.

Quick recap.  We are corporate relocation and moved back to our hometown.  We looked into the preexisting home market and found that Ryan Homes could deliver a home with more of what we wanted and still be in the home in a reasonable time frame and within our budget.  So we made the decision.

If you have followed my blog, you will understand that our relocation company also serves as our mortgage provider.  We have perks to stay with the relocation company, this is why we chose to stay with them and didn't opt for NVR.  Part of me wonders what perks and incentives we could have had if we did go with NVR, but one of the problems was that if we did go with NVR, we would have then had to go through the entire approval process with NVR all over again.  This would have delayed our move in, I am sure about it.

But I do have some advice and thoughts for you to consider if you are curious about choosing a lender other than NVR.

  • Get a Realtor!  All you need to do is scour the internet and you will find blogs where buyers GFE (Good Faith Estimate - this gives an estimate of what you will need to pay at closing) increases thousands and thousands.  A good realtor will help you avoid possible issues and should have a firm grasp on what to expect for closing costs.  
  • Make sure your lender has worked with Ryan Homes & NVR in the past.  This is important as Ryan Homes does not require a traditional "new construction" loan.  
  • Make sure your lender, the Ryan Homes Sales Rep, and all responsible parties communicate what is expected for each step that they are involved.  Make sure in this discussion that potential roadblocks are discovered, discussed, and resolved BEFORE they become a roadblock.  This includes loan, appraisals, inspections, down payment, closing costs/GFE, etc.,
  • Educate yourself on Ryan Homes build process and timeline (available on RH website)
  • If this is your first home buying experience, educate yourself on the loan process.  Too many people are surprised by the potential amount of paperwork, documents, letters that are needed, etc., etc., in the home buying process.  
  • As a home buyer, set expectations with your lender about communication and that it needs to be proactive, verses reactive.  In other words, your lender should communicate to you first without you needing to reach out to them.  
  • If you use an outside lender, Ryan Homes & NVR will want confidence that you are a strong buyer and that there is very little chance that the mortgage will fall through.  Your lender will need to put your application through underwriting first and provide to Ryan Homes a letter indicating what many would call a "Clear to Close" letter.  Ryan Homes will NOT start construction until this letter is provided.  Do not confuse this with a "Pre-Approval" letter that many buyers get in the initial phase of buying a home.  Your loan will need to be almost completely underwritten and verified for Ryan Homes.  That is why NVR takes 30 - 45 days to approve people as they are verifying and underwriting the loan before hand.  
  • If I would have thought about this before hand I would have a contingency based on the appraisal that said that if the appraisal comes back lower than the sell price of the house, than the buyer can withdraw from the contract and receive 100% of the down payment back.  Why?  NVR, more than likely has a list of appraisers in their little black book that has no problem appraising a house for the contracted sell price.  However, when you finance outside of NVR, your mortgage company will order an appraisal and more than likely source an appraiser outside of the ones that NVR normally uses.  This could potentially cause an issue if the appraisal comes back LOWER than the contracted price.  When this happens you will have to negotiate with Ryan Homes to lower the sell price, or come up with the difference out of your pocket.  Good luck with that.  This doesn't happen often, but when it does, most of the time the buyer is having to come up with extra cash at closing.  Why would you do this?  Why buy a house that is not worth what you are paying.  Again, another reason to have a realtor help with negotiating a buying price, especially if you add-on upgrades.  An appraisal contingency will be a must the next time around.  
  • Get a quote from NVR.  Compare it with the outside lender.  I think we should have done this.  Would have been interesting to see what would have happened. 
  • Don't be afraid to be a bother.  There are "Those People", you know, the ones that constantly have to be asking this or that, demanding this or that, changing this or that, or the ones that are never satisfied. I never want to come across that way, but we should also understand that building a home is a big investment and with that is what I would call the "buyer privilege".  This privilege affords you the right to ask questions, even maybe dumb ones.  This privilege allows you to go to the home, see it, ask questions that come up about issues, or something that you don't like.  However, this does not allow you to talk to someone like an entitled douche bag either.  Be sure to choose your words wisely, spoken with grace and mercy.  It will go a long way.  

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