Casa Realty Group LLC

Lennar Mortgage Review: Should You Use the Home Builder’s Own Lender?

October 16, 2023

Today we’ll check out “Lennar Mortgage,” which is the financing division of parent company Lennar Corp.

If you weren’t aware, Lennar is one of the nation’s largest home builders, and is also nearly 70-years old.

Like many large builders, they have an in-house mortgage company that facilitates their new home sales.

Instead of outsourcing home loan lending to a third-party company, they’re able to provide the customer with a streamlined process from end to end.

Read on to learn more about their history and what types of loan offerings they have available, including special incentives you won’t find elsewhere.

Lennar Mortgage Fast Facts

  • The home loan division of parent company Lennar Corp.
  • Lennar is the nation’s second largest home builder, founded in 1954
  • Formerly known as Eagle Home Mortgage before a name change in 2020
  • Headquartered in Miami, FL, founded in 1981
  • Currently have building operations in 26 states nationally
  • Primarily utilized by home buyers who purchase a Lennar property
  • Funded over $14 billion in home loans in 2022
  • Known for offering big mortgage rate buydowns

As noted, Lennar Mortgage is the financing unit of its parent company, Lennar Corp.

While the parent company is nearly 70 years old, Lennar Mortgage is a lot younger.

In fact, they were acquired by Lennar back in 1999, at the time known as “Eagle Home Mortgage.” That company had been around since 1981.

As of December 5th, 2020, they were renamed Lennar Mortgage to make it clearer to customers that the company was part of the Lennar family.

At the moment, they have building operations in 26 states, meaning Lennar Mortgage is essentially available to customers in roughly half the country.

They primarily operate in the states of California, Florida, and Texas, along with the Mountain West and Mid-Atlantic states.

Last year, the company funded over $14 billion in home loans, with about 75% being conventional loans, 15% FHA loans, and 12% VA loans, per HMDA data.

While their website indicates that they offer refinance loans, they primarily serve their own home buyer customers with purchase loans.

Aside from operating a mortgage unit, Lennar also has Lennar Title and Lennar Insurance Agency, which allows them to streamline the home buying process.

They have physical branches throughout the country (where new home communities exist) and roughly 1,200 lending associates.

How to Apply with Lennar Mortgage

To get started, you can visit their website and get pre-qualified for a mortgage, or simply coordinate with your home buying rep after visiting a new home community.

They’ve got local loan officers throughout the country and physical branches in the states where they build homes.

Their new home communities may also have sales offices with lending representatives present.

Like other mortgage lenders, Lennar Mortgage offers a digital home loan experience that is mostly paperless.

It appears to be backed by ICE Mortgage Technology, one of the leading fintech companies in the mortgage space.

Customers can apply from any device and auto-save their loan application to pick up where they left off.

And automatically connect bank statements, tax returns, and income documentation within minutes, with bank-level encryption to provide peace of mind.

On-demand digital mortgage support is also available for those who need help along the way, though most tasks can be completed without the need for human interaction if that’s a preference.

All in all, it appears they offer a good combination of human support, if needed, along with the latest technology for convenience.

Loan Options Available at Lennar Mortgage

  • Home purchase loans (and mortgage refinances)
  • Conforming and jumbo loans
  • FHA/VA/USDA loan options
  • Fixed-rate and adjustable-rate loans available
  • They lend on single-family homes and townhomes

As noted, most Lennar Mortgage customers will use the company for a home purchase mortgage.

While they do offer refinance loans, their primary objective is getting their parent company’s home buyers a mortgage.

The good news is they offer all the major home loan types a home buyer would need, whether it’s a conforming loan or a jumbo loan.

Or a fixed-rate mortgage or adjustable-rate mortgage, including the popular 7/1 ARM.

They also offer the complete suite of government-back loans, including FHA, VA, and USDA loans.

Down payments can be as low as zero on the government loan options, or just 3% for the conventional loan options.

They offer financing on primary residences, second homes, and investment properties.

Lennar Mortgage Rates

Once huge advantage to using Lennar Mortgage is their mortgage rate buydowns, which are pretty hard to beat.

Since mortgage rates surged higher, from around 3% in early 2022 to nearly 8%, companies like Lennar Mortgage have been offering large rate buydowns to their own customers.

So those who use the company to purchase a Lennar home can take advantage of big interest rate reductions they likely won’t find elsewhere.

For example, you might see an advertised mortgage rate special of 4.99%, despite the 30-year fixed currently averaging 7.50% or higher.

Or a big dollar amount in incentives, which can be used like a lender credit to cover closing costs or apply toward a rate buydown.

This is their big advantage as a home builder’s captive financing unit. They’re able to offer special deals that can boost affordability, even if market rates are high.

In terms of advertising their rates, you won’t find a page dedicated to mortgage rates on their website.

And these rate specials will vary from community to community nationwide, depending on supply and demand of newly-built homes.

Is Lennar Mortgage Legit?

Yes, they are the official financing division of Lennar, one of the largest home builders in the United States.

In fact, Lennar Corp. was reportedly the second largest home builder in the nation as of 2023, trailing only D.R. Horton.

The company is also publicly traded on the New York Stock Exchange (NYSE: LEN) and is valued at over $34 billion at last glance.

They are a Fortune 500 company as well and date back to the 1950s, which is older than most mortgage companies in existence today.

Lennar Mortgage also has a 4.89/5 star rating on Zillow from over 2,100 customer reviews and holds an ‘A+’ Better Business Bureau (BBB) rating.

Keep in mind that you don’t need to use Lennar Mortgage just because you’re purchasing a Lennar home.

It’s perfectly acceptable to use a third-party lender, though it may be difficult for them to match the pricing incentives offered.

At the end of the day, Lennar Mortgage will likely have a huge leg up compared to other lenders thanks to their ability to structure pricing and rates in-house to boost affordability.

And because they offer a wide range of loan options and a digital mortgage experience, it’ll likely be a challenge for outside lenders to compete.

That being said, always take the time to gather other mortgage quotes and be sure to negotiate with the company.

Simply letting them know you are looking into other financing alternatives could result in more leverage and/or a better deal.

But when it comes time to refinance your loan, they likely won’t be nearly as competitive on pricing. At that stage, you’d probably be better off finding a new mortgage company to work with.

Lennar Mortgage Pros and Cons

The Good

  • Can apply for a home loan online or at a physical branch
  • Offer a paperless digital mortgage experience
  • Integrated title and homeowners insurance companies
  • Lots of loan options including fixed rates and ARMs
  • Offer big incentive to home buyers including rate buydown and lender credits
  • Free credit guidance to those who need to boost their FICO scores
  • Access to mortgage calculators and learning center online
  • Excellent reviews from past customers

The Maybe Not

  • Do not advertise their daily mortgage rates online
  • Not available in all states
  • Primarily offer home purchase loans
  • No home equity or second mortgage options

Source link

Posted in Real Estate
Write a comment