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Preferred Lender Strategies Can Help Sell Homes
One proven option that can help sell homes in a slowing market is to partner with preferred lenders that provide affordability tools to buyers.
Many of these tools ― such as buydowns, forwards and construction-to-permanent (CTP) financing ― work well in the current economic environment and can help consumers qualify for the home of their dreams, according to Paul Fazzini, vice president of American Home Bank in Lancaster, Pa.
Howard Hirsch, of Keystone Custom Homes, worked with American Home Bank to design financing incentives that reduced the monthly payment for buyers from $1,643 using conventional financing to $1,124 using CTP financing and other affordability tools. Keystone sold 18 homes in one weekend.
Keystone Custom Homes is a three-time Best Builder award winning builder based in Willow Street, Pa.
“Qualifying for homes was made easier, and several buyers found they could buy a new home for less than the payment on their old home,” Hirsch said. With half of the customers providing construction-to-permanent financing, Keystone also reduced the risk of walk-aways.
Another builder designed a program using a special financing incentive that reduced the mortgage payment from $2,100 to $1,700 to sell spec homes in his inventory. Not only did the builder successfully sell many of his spec homes, he also generated enough traffic with his special financing offer to make several additional sales.
Other recent programs builders were able to offer with the help of preferred lenders included:
- 95% financing with no mortgage insurance payments to a borrower and without the hassle of a first and second piggyback mortgage
- Construction-to-permanent loans that required no payments during the construction period and that paid the builder directly within 48 hours of a draw request.
“These types of preferred lending arrangements are not usually found in a typical commercial banking environment,” Fazzini said, while noting that builders should consult with their preferred lenders to find out what incentives will give them the “most bang for the buck.”
To read more about buydowns, forwards and construction-to-permanent financing, visit www.nahb.org/pb (available in the members-only section of the NAHB Web site).
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