Lender credit exceeds closing costs? Do I lose the credit? is it applied to the loan balance. Do I get cash back at closing?

Lender credits are applied to closing costs and pre-paids. It should be carefully calculated to avoid a left over after paying closing cost and pre-paids.

Lender credits can be applied to closing costs and prepaid items, so you will likely be able to use up the $6,000 one way or another. Some lenders (we are one of them) will allow a princpial reduction if you do not use all of your lender credit with closing costs. Assuming you were given loan choices and this is the one you selected, it is pointless to argue whether the term lender credit is accurate. It is the official term for the items and this is the lona you have chosen. It is likely you could choose a lower rate if you want, but your lender credits would decrease. It is a tradeoff scenario that most homebuyers wrestle with and you are the only one who can truly deterimne what best fits you.

on a refi a good bank will allow for the excess to be used for principle reduction and reduce your loan balance, if there is any it should be applied that way, keep in mind the actual taxes and insurance for your escrows will need to be accurately calculated to know if and how much is remaining....... you can get some cash back at closing, how much will depend on the loan program you selected FHA, VA, conventional/conforming or if its a portfolio product that the bank has to offer..... utilizing a lender credit is going to almost always have a higher rate than if not, however if you have a competent lender who understands finance it is a very powerful tool for money management again there must be a comparison done for the lender credit program and the non lender credit program then those results are looked at comparing to your short and long term financial goals, anyone doing less than that is doing you an injustice, which means more than likely it may be in their best interest for you to do the refinance not yours.... believe it or not a competent loan officer will advise against a refi depending on your goals..... good luck and reach out directly if I can be of further assistance

Lender credits will be applied to both closing costs and any pre-paid items (taxes and insurance). There should never be anything left over. I hate the term "lender credits" because it appears to be some sort of free item. the reality is the lender is increasing your interest rate to offset your closing costs.

I so agree with Joe, "lender credit" is non-sense. You are not getting anything for free, there is no way to give anything away in this industry. The only difference in closing cost in my opinion is the lenders actually processing and underwriting, app fee, what ever you want to call it and the rate. Taxes, insurance and title fees are never inflated fees.

Unless your refinancing, you will not get cash back.. and each lender deals with the excess differently.. with some lenders, they don't allow excess credit, so you have to choose a lower interest rate, and possible bring more cash to the table since the credit will be less.. other lenders might allow the excess to lower the loan balance, however fewer and fewer lenders are doing that.. and some lenders will say if you don't use the credit, you lose it..so to answer your question.. every one will deal with the excess differently.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Each lender deals with this differently depending on how the read the rule. My old lender would keep the excess credit. My current lender will always give a principal reduction. However, cash back will never happen. Best wishes, Sean

Your question demonstrates great insight. A lender credit can not be used to apply money toward your loan amount or come back to you in cash. Talk to your lender about this, he/she can possibly reduce your interest rate and thus reduce the amount of money he/she is giving you in a lender credit. The other option is, to reduce Seller Concessions if there are any and in turn reduce your purchase price by the same amount. Both of these options will push back your closing date, so if it is a small amount, you may be best served by letting it go and losing the money.

The lender credit can be applied to closing costs and pre-paids. anything left over will either be lost or applied as a principal reduction on first statement - just depends on the underwriter and servicer. The lender credit is created by increasing the interest rate. higher the rate - higher the credit. the idea is to match the credit to actual costs - this way you are able to achieve the best rate. local Atlanta lender - would be happy top help you navigate your options. Briggs Cline. Buckhead Home Loans. 678-578-0600

Yes it should be able to go toward the $5000 is your simple answer. The 6 months is probably an estimate as that's what LO's usually put when they don't want to figure out what the actual amount will be based on the next due date for your taxes and insurance. (Of course, in some cases, it does happen to be 6 months). I'm happy to help with the financing or just give you advice. If you need more information, or a competing rate quote call, email or use my live support button to discuss or get in touch with me. Web Address for live chat or quote is: http://www.loansfromrob.com/quote/ Email is robertlh66@verizon.net and direct phone is 240-752-7549. Good Luck -- Rob Hanson