Our lender is offering a "lender credit" should we take it?

[ccubedzx3]

I am not sure I fully understand, but from what our Lender told us is that a "lender credit" would be available up to $7000 if rates stay this low.   We are about 90 days from closing, and we were originally quoted approximately $8000 in closing costs.  If this "lender credit" offers $7000, does that mean I only need to come up with $1000 at closing?  If so, that would leave us a lot more cash to buy window treatments, sod and sprinklers, and more. 

Thanks in advance for your thoughts/advice!

[Mike_B03]

That is correct, if they are giving you a credit, then you would owe the difference. 

A lot of people say that there is a always a "catch" and they somewhere somehow they are gatting that money from you but in our situation for example, it sure doesn't seem that way. Our builder offered 3% toward closing costs if we use their prefered lender and sure enough looking over the paperwork, they are giving us almost $7,700 and all we have to do is come up with another $1500 or so. Seems legit to me.

[tooleman694]

There are 2 catches with a lender credit

1. Rate goes up for each credit you take

2. It can only be used for closing costs

Taking 2 negative points to get the closing costs covered to free up cash may not be a bad idea.

[Mike_B03]

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@tooleman694 wrote:

There are 2 catches with a lender credit

1. Rate goes up for each credit you take

2. It can only be used for closing costs

Taking 2 negative points to get the closing costs covered to free up cash may not be a bad idea.

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We are not paying any points and our quoted rate is 3.375% which seems pretty good to me.

[ccubedzx3]

Thanks for the info guys!

I am purchasing a a home for 308,000, and already put down my 3.5%.   I am trying to keep as much cash in my pocket as possible for all the items we will need to purchase since this is a new construction home.

The other houses in the same neighborhood are appraising for more than what my purchase price was.  There is also a phase 2 to our development coming this spring, and word is that the houses will be going for $30K higher than what I purchased at.   I am hoping to refinance in a year to get rid of PMI if the market continues the upswing.

I just needed clarification on the "Lender Credit" since it seemed too good to be true.  I was locked in a 6.75% rate on our condo that we just sold, so any rate under 4% will seem like a dream to me!  I would gladly pay some additional interest now, to keep my cash for later.

This is good news!! Thank you!

[MovingForward_2012]

We are purchasing a new construction too at $334,000. They have already started raising prices in this area too. We were told interest would be around 3.125%. We are in the same boat as you as we need to keep as much cash on hand to get new furniture. New house = new furniture! Congrats!

[tooleman694]

Prices are rising here too, our price is 300k with a bunch of options. Right now if we wanted to build the same house with no options it would be 30k higher and we would be priced out.

I was told its gonna go up another 20k by summer.

[Mike_B03]

Wow those prices are really rising quickly! Our home has only gone up $3,000 since we signed the contract 2 months ago. It had gone up $2,000 from the first time we looked at it about a month before making the decision to buy, so $5,000 total so far. Not sure what the starting prices were when the development opened.

Speaking of money to spend on stuff for the house, one of us is a realtor so we will get $9,000 back at closing. That will be very nice to get for window coverings, landscpaing, etc.