Today’s question is: Mike, I have been shopping lenders and only some lenders are willing to give me a lender credit at closing, and some lenders act like they don’t even know what I am talking about or are shocked I even know what that is. Don’t all lenders give a lender credit at closing?
Check it out in today’s video:
So before I answer this question, let’s briefly cover what a lender credit is again. A lender credit to the borrower is simply a credit of any overages that are available on your particular loan scenario after any risked based pricing or loan compensation is taken out. This credit is used to help reduce the total costs of your new loan.
OK – so now that you are clear on what a lender credit is – the answer – Hell no! I can tell you right now that it is more common for lenders to NOT give a lender credit at closing than to actually give one. The trick in your shopping efforts is to finding a lender who does it all the time which is very rare or just simply – asking for it. If you would say to your loan officer – “Hey, the rate looks great but another lender told me I would get a credit of $500 (or whatever it is) at closing. Can you match that? Some might and some won’t. The truth is some just can’t. But you will never know unless you ask.
If you are truly looking for the best deal, you need to find yourself with a lender with aggressive rates, costs, and that always, I mean always credits any overages that are available to you at closing.
This alone can be the difference between a good deal vs. the best possible deal. Crediting overages makes a huge difference – especially on an FHA, VA or USDA loan. There are big margins on those types of loans people.
So again – NO, most lenders do not credit overages. But the ones who do, always do. It really just depends on their business model.
Confusing stuff, isn’t it? Well, hopefully we cleared it up today. I will have to tell you most of my emails are related to this topic. Most of the time you guys can get the rates I tell you that you should be getting, but it’s the lender credit that throws you for a loop. Don’t be shy! Ask for it or keep shopping until you get it. It’s not a myth. I promise you. It’s out there.
If you thought this was good information or worth discussing, help me bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.
Let’s change the way people shop for a mortgage…forever!
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below.
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