Guaranteed Rate, a mortgage lender and digital financial services company, said this week it has rolled out two new programs intended to help builders sell their houses faster.
Builders can now take advantage of forward commitments and the Lock 'N' Sell rate-lock program on both conventional and government loans, the company said.
With the Lock ‘N’ Sell program, builders can lock in a current rate for up to 120 days on individual homes in advance of having a buyer. It allows a builder to lock in a rate on a home that has been completed but not sold, or a home that someone bought but then canceled the contract on, Guaranteed Rate said.
With Lock ‘N’ Sell, builders can protect payments from going up in the current rate environment until they find a buyer for the home.
"We know a lot can happen in a year," said Jim Colella, national builder program manager of Guaranteed Rate. "We also understand how important it is for customers not to have to worry about changes in the market affecting their ability to afford a home before it's even finished being built. Lock 'N' Sell is our safeguard to take the guesswork out of the equation for them, so they can rest knowing they've made the right decision."
Alternatively, builders with a larger number of houses available can take advantage of forward commitments, which allow builders to reserve between $3 million and $20 million in blocks of mortgage loans at lower-than-market interest rates for up to 150 days.
By lowering the interest rate, instead of reducing the price of the house, borrowers can end up with a lower monthly payment, Guaranteed Rate said. A variance of just a few tenths of a percentage point can greatly affect the affordability for many homebuyers, so the program helps both builders and their customers.
By maintaining initial asking prices, builders can help keep current values in a neighborhood and ensure appraised values for buyers, the company said.
"Forward commitments are a win-win scenario for the builder and the buyer," said John Carroll, president of Providence Real Estate Development. "For builders, it gives us a new level of flexibility to roll out the red carpet for buyers. In turn, buyers can enjoy a lower mortgage rate and the resultant lower payments. Everyone wins, and everyone walks away happy, which is always our goal."
"In the end, it's all about confidence," Colella said. "Confidence in being able to afford their homes; confidence that Guaranteed Rate will fully deliver on our value proposition; and finally, confidence that they will soon be able to make their dreams of homeownership a reality.”
