Deborah Garvin (loanmonarch)
#449 ranked lender in California - 53 contributions
A Lender Credit is derived from raising the interest rate from "par" pricing (zero point) to include "rebate pricing" in order to assist with the closing costs or prepaids on a loan. For instance, if a 100K loan had a "par" price at 4.25% and the client did not have adequate funds for closing costs, the mortgage professional may suggest taking a slightly higher interest rate of 4.75% with a (3.00) point rebate pricing...which would then allow the client to receive 3K of lender credit for their closing costs.There is nothing inherently good or bad with using lender credit; however, every situation should be review and analyzed independently so the consumer understand the benefits and the consequences over time (higher rate equates to higher payment and more interest paid over time.All things being equal, lender credit makes more sense for shorter term goals than for long term strategy. If you would like speciific answers to your situation please feel free to contact me.