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They say that it is a cost [$350 application fee] that their lender incurs and has to be paid by the buyer.

The builder's lender does not incur this cost. The "builder's lender" likely is a loan officer (who's damn grateful to have leads spoon-fed to him by the builder and shows his gratefulness with a referral fee paid to the builder, but which you pay, of course, through the price of the loan) who gives his personal blessing to your loan application. At this point, it's highly unlikely that lender processing labor has actually been spent on your loan application. The $350 is designed solely to bind you to the builder's lender's loan officer.

Oh that I could charge an "application fee" but, alas, the marketplace doesn't generally support it unless, of course, you're a builder in the driver's seat (at least for now) and are counting on the additional revenue generated by muscling buyers into using the "builder's lender."

Catherine Coy
Mortgage Broker
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