Forgotten Your Password?

Need to Register?

Question Icon

What can I use the lender credits for?

What, exactly can I use the "lender credit" towards? I have a lender who says that he can give me a $5k credit, but since the cost is only $2,500 of the refi, he says I can use the remainder towards my principal. This seems fishy. Per his email...."The negative points are applied to your escrow deposits and prepaid interest, if there is still a remaining balance then it is a principle curtailment, meaning that you apply the remaining amount to the principle of the new loan after it has funded."Any thoughts??? by jongod_317_223 from Carbondale, Colorado. Feb 27th 2013 Reply


Kenneth Kopper (KenKopper)
#19 ranked lender in Maryland - 542 contributions

Thats sounds odd to me as well...If you only need LC of $2500, why not take a lower rate for the life of the loan with lower Lender Credit

Feb 27th 2013
1
0
Tom Butts (Anthem)
#63 ranked lender in Colorado - 4 contributions

Hi this is Tom from Anthemloans.com.I would ask the lender to use it to buy down the interest rate and have the rest be applied to closing costs. Depending on loan size I would think in this market you could get at least .125% lower.Regards,Tom303-549-6958

Feb 27th 2013
0
0
Corey Seitz (Corey_Seitz)
#35 ranked lender in Colorado - 24 contributions

Hi, Your current lender is correct in the fact that you can use excess lender credit to pay down your principal balance however we rarely do that as it usually makes more sense to reduce the interest rate which will reduce the lender credit. If you email me the following information I can do a full rate/lender credit analysis for you so that you have all the options. Thanks, Corey SeitzCorey_seitz@excelfg.comLoan amount, estimated property value, estimated credit score, type of loan, requested loan term.

Feb 27th 2013
0
0
Jacob Haddan (JacobColeHaddan)
#68 ranked lender in Colorado - 36 contributions

It applies to rate buy just elect a lower rate at lock in, mortgage credit certificates, principle pay down. Call with questions Jacob 720.210.7898

Feb 27th 2013
0
0
Peter Savino (855411LEND)
#99 ranked lender in New Jersey - 332 contributions

Use the lender credit to buy down the rate. You will get your best savings there

Feb 27th 2013
0
0
Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

NOT TRUE. THe lender credit can ONLY be used for closing costs and prepaids. It CAN NOT be use to reduce the balnce of your loan.

Feb 27th 2013
0
0
Charlie Sparks (CharlieSparks)
#8 ranked lender in New Mexico - 401 contributions

Good advice so far. Your best choice in my opinion is to take a slightly lower rate to eliminate the excess. This is equivalent to buying the rate down, but not with money out of your pocket.

Feb 27th 2013
0
0
Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Lender Credits cannot be used toward Principle, Period! It can be used to buy down your rate and pay for closing costs or prepaids. Good Luck!

Feb 27th 2013
0
0
Dave Metsker (DaveMetsker)
#35 ranked lender in Oregon - 2,318 contributions

Your lender is stating their policy correctly. It is not "fishy", even though it sounds strange. Lenders have to follow very exact guidelines in order to be able to sell their loans on the secondary market. Accept their offer, if the rest of the terms meet your needs.

Feb 27th 2013
0
0
Dave Metsker (DaveMetsker)
#35 ranked lender in Oregon - 2,318 contributions

Another reason that your lender offers special terms ($5000 credit), is that they make more profit on loans that fit an interest rate "window" that is more attractive to the secondary market.

Feb 27th 2013
0
0

I looked at buying down the rate, but $2,500 for .125% doesn't seem like a good deal to me. For my loan $332,000, that would be a payback period of around 8.5 years. That seems like a long time to recoup my money.

Feb 27th 2013
0
0
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions

All loans have closing costs. Period. The next items is interest rate. Based on the interest rate you pick, your closing costs may be higher, or the lender will give you "credit" to reduce your closing costs. What they are saying is confusing even to us. Why not simply take a lower interest rate? I suggest talking to a local mortgage broker for a second opinion. www.WI-MortgageBroker.com

Feb 28th 2013
0
0
Subscribe to our news feed.