What Are Lender Credits?

So, you are looking to buy a house and you begin talking about locking your rate and your approximate closing costs, and the lender mentions Lender Credits.

When you go to lock your rate, there are typically 3 possibilities:
Cost Rate
PAR Rate
Credit Rate

Cost Rate means you are paying points to have a lower rate.

PAR Rate is essentially NET ZERO rate, not costing but not giving you anything.

Credit Rate is where you get a credit towards your closing costs.

When you look at Credit Rate, that typically means your rate is slightly higher than what may be available to you, however, the lender is giving you money back to cover some of your closing costs.

In this example, by choosing 3.5% over 3.25%, you will get a credit of $1,984. That is called a Lender Credit.

If you had to pay the $684 to take the 3.25% rate, that would be called discount points, or buying down the rate.

Have any additional Questions?

215-396-9370

[shellymcphatter]

do you always have the option to do a buy down or lender credit when closing a conventional mortgage?

[joebolo]

WHAT HAPPENS TO LENDERS CREDIT WHEN YOU REFINANCE?
for example i take a lenders credit of 10k when i get the loan and immediately refinance the next month at par rate?
what happens to the 10k then?