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When lenders say that you can "buy down" the interest rate, is the fee the same for all lenders? Or do they determine the pricing individually??

by lisa.brooks615 from Ocean View, Delaware. Feb 24th 2016 Reply


Edward Fallon (edfallon)
#93 ranked lender in Pennsylvania - 143 contributions

Each lender determines their own pricing, and therefore it is set by the lender.

Feb 24th 2016
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Larry Gray (lgray_312_247)
#595 ranked lender in California - 1,139 contributions

Just to add to Edward Fallon's good answer, there is a simple method you or yourmortgage broker can assist you in comparing various rates you buy down with a "no points charged" loan. In refinancing you might include a "no closing costs loan" in which the lender credits $$ to cover lender, escrow, title, & miscellaneous fees for a higher rate. You can use simple division to compare long term costs of buying down the rate. If you save $50 and divide that savings into the extra cost and it leaves you with 24...that would mean you recoup the extra cost by that many months. Then, the extra $50 would be purely a monthly savings from then on. Often if it takes 5 years or more to recoup the cost for buying down a rate, few want to include the cost in their loan just for the additional monthly savings.

Feb 24th 2016
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,550 contributions

The fee will vary.. but in most all scenarios, the only time it's beneficial to do a rate buy down is when you are purchasing a home and the seller is giving you concessions towards your closing costs, buy you have more funds than you need.. under this scenario, you use the extra funds to buy down the rate, since if you don't use it, you lose it.. But if you are having to pay to buy down the rate, then most likely, the pay back period is too long to make it worth doing.. 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 NMLS# 226347

Feb 24th 2016
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Derick Condron (rightstartoregon)
#32 ranked lender in Oregon - 598 contributions

The buydown will vary lender to lender

Feb 24th 2016
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Justin Murray (JustinMurray)
#102 ranked lender in Illinois - 172 contributions

It varies from lender to lender - shop around! Justin Murray / JMurray@WintrustMortgage.com (312) 256-4065

Feb 24th 2016
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Jesse Stroup (jessestroup)
#4 ranked lender in Idaho - 592 contributions

The lender credit and the buy down are the same with all lenders. If your raise the interest rate your get a lender credit and if your lower the interest rate below par it becomes a buy down (extra fees to the borrower). Now every lenders amount for the lender credit / buy down will be different. Just like all the gas stations around town.

Feb 25th 2016
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Lorne Harvey (lorneharvey)
#81 ranked lender in Washington - 431 contributions

Yes, each lenders buy down cost (discount points) will vary from lender to lender, but should be in the same ball park.

Feb 25th 2016
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