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Question on lender's credits

Regular Contributor

Question on lender's credits

Took a look at our most recent GFE last night and I saw the following:

 

Origination Charges - $9520

Lender Credit given for 3.375% rate - ($8100)

Adjusted Origination Charges - $1420.

 

Our builder gives us 3% towards closing costs if we use their lender. Is our 3% credit being masked by us taking a higher rate? To me, the lender isn't "giving" us anything as we are taking a higher rate. So shouldn't we get 3% on top of this?

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Starting Score - 575 (4/10)
Current Score - EQ - 750, TU - 752, EX - 728 11/4/12

Current Cards:
AMEX SPG ($7.5k), Amazon.com Visa ($3k), Discover More ($2k) all since 11/4/12

Fighting the good fight!
5 REPLIES
Senior Contributor

Re: Question on lender's credits

We took the credit and went up .25 of a percent in 2011.
STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Regular Contributor

Re: Question on lender's credits

Thanks, Booner. I edited the OP in hopes to get my point across a bit better. I don't want to pay an arm and a leg at closing when I shouldn't have to.

-------------------------------------------------------------------------------------------------
Starting Score - 575 (4/10)
Current Score - EQ - 750, TU - 752, EX - 728 11/4/12

Current Cards:
AMEX SPG ($7.5k), Amazon.com Visa ($3k), Discover More ($2k) all since 11/4/12

Fighting the good fight!
Moderator

Re: Question on lender's credits

You are right in that the lender credit is created by increasing your interest rate.

That is how all lender credits work.

 

If you are getting a fixed rate 3.375% interest for 30 years AND a credit of over $8000 at closing, then you are doing great. In fact, it looks like you were charged very little in your rate if anything at all.

Normally the lender credits are for much smaller amounts with a larger interest rate bump.

 

How much would your interest rate be if you didn't get the credit?

Regular Contributor

Re: Question on lender's credits

That's the thing. We were only quoted the 3.375%. We weren't offered anything below that, nor did we ask to take negative points, but the middle check box on #2 (Section A) of the GFE was checked along with an $8100 credit. 

-------------------------------------------------------------------------------------------------
Starting Score - 575 (4/10)
Current Score - EQ - 750, TU - 752, EX - 728 11/4/12

Current Cards:
AMEX SPG ($7.5k), Amazon.com Visa ($3k), Discover More ($2k) all since 11/4/12

Fighting the good fight!
Contributor

Re: Question on lender's credits

i was quoted 3.375% without any credit taken yet. It can go up to 3.775% if i choose for $4k back in credit. Wish i had your scores and credit to work with....

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Starting Score: EQ 542, TU 503, EX 580 (all lender pulled 06/07/11)
Current Score: EQ 649, TU 722, EX 654 (pulled Dec 2013)
Goal Score: 700 club for all 3 agencies!

CapOne$750/FP$400/Matrix$300/VS$500/Walmart$500/BestBuy$1K/KayJeweler$2K (last app 12/16/13)