A builder is offering a large incentive toward closing costs, but the lender's closing costs are nearly as much — is the lender taking advantage?

Not necessarily, and the Loan Estimate will tell you. Look at Section A. People often lump true closing costs (title, escrow, prepaid taxes, and your escrow impounds) together with lender charges, and those are different buckets. Section A of the Loan Estimate, labeled Origination Charges, itemizes what you're paying the lender and loan originator for originating the loan: any discount points, origination, underwriting, processing, and similar fees. That's the figure to compare against the builder's incentive. In some cases a builder-affiliated lender offsets a large incentive by charging more in Section A, so a big credit toward closing costs gets partly taken back through higher lender charges. The move: get a competing Loan Estimate from an outside lender and compare Section A side by side. One catch is that a builder incentive is often tied to using the in-house lender, and it's hard to know whether the builder would extend the same credit if you financed elsewhere. Ask that question directly. Send us your Loan Estimate and we'll show you exactly where each dollar is going and whether the in-house deal holds up once you account for the lender charges.