Just Recieved my Conditions to close...What does this mean?

[MrChairman]

Premium rate credit to be applied to discount points on final HUD-1 in the amount of $6012.80

[JM-AM]

It means you will get a credit to pay towards fees.

[foofighter74]

It sounds to me like they're "giving him" credits, but using the credits to pay discount points to get his rate down?  In other words, to get the best interest rate, they're taking credits that could have been used elsewhere, and just "paying" discount points?

[MrChairman]

I found out money we will get back from closing will be used to pay off a an installment loan that I have. This is the only way the dti ratio would be 45% of lower I guess they "gave" us this money in order to get us approved? I am waiting for the GFE to see how they charged us somewhere in it for this "favor"

[StartingOver10]

"Premium Rate" does mean they increased your rate in order to get the additional funds. Ask her what your new rate and payment is going to be...hopefully they didn't increase it much

[MrChairman]

It states at the top of the conditions that its 3.75 which was the rate I have been quoted all along from NVR. Going rate from what I can tell is about 3.5. So a .25% premimum to pay off this loan. I am assuming other lenders can do the exact same thing?

[JM-AM]

Still should do the math.

How much is the loan being paid off compared to how much of additional cost in payment.

.25 in rate is not a major payment difference, but over 30 years it will add up quickly.

So as an example if .25 cost you $30 a month in payment, equals $360 a year multiplied by 30 equals $10,800.

So if your loan you are paying off is $5000, you are paying $5800 in interest as an example.

The entire process is a numbers game.