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Using Lender Credits

We have a quick money saving tip today that could save you thousands on your mortgage in this rate environment. Rates are at their highest since 2009, However, the key to winning right now is using lender credits to save on closing costs. Why is that? You buy a house to buy a home. You refinance to get cash out to pay off debts. You are getting a loan to achieve something else, you’re not buying a loan and you probably wouldn’t buy it when it’s the most expensive in 10 years. So the trick is this, lenders have access to a whole rate sheet. You can choose a lower rate but you have to pay additional upfront costs, or “points” for it. Or, this is key, you can take a higher rate and the lender will actually give you credits that pay for your closing costs. You may pay an extra $30-$40 per month but the intention is to refinance when rates come back down. Given the economic uncertainty right now, you can bet that will happen in the next 12-18 months. So $30 over 12 months is $360 but if you save 2, 3, 4 thousand dollars on costs, that’s ROI!