In a builder-buyer agreement where the builder uses their own funds, what might the buyer seek from a mortgage lender?

In a builder-buyer agreement where the builder is using their own funds, the buyer may seek a standby commitment from a mortgage lender. A standby commitment is essentially a promise from the lender to provide a loan in the future under certain conditions, often when the buyer has finished making additional payments or once the property is completed. This type of commitment can give the buyer assurance that financing will be available when needed, particularly if they intend to move into the home or if they want to refinance once construction is complete.

In this scenario, since the builder is using their own funds, the immediate need for the buyer to secure a conventional mortgage loan may not be present. However, obtaining a standby commitment would be prudent for the buyer to safeguard against unexpected changes in financing needs or market conditions.

Other options, such as a mortgage insurance policy, may not be relevant in this context because they typically apply when a buyer is making a down payment that is less than 20% on a mortgage. A construction loan, which provides funds specifically for building a home, might not be necessary if the builder is already financing the construction. A loan commitment usually indicates strong intent from a lender to provide a loan for a specific purpose, which again may not apply given the builder's current