Lender Paid Closing costs or Lender credit??

Question

My mortgage officer at US Bank says they don't have an option where closing costs are paid as a credit or added to the loan.

US bank covering all the bank fees. Title and Escrow charges are coming in around 5000. I am lookihg at ways to not pay them upfront.

Any ideas will be appreciated.

Prashanth Prash · Answer

thanks. Will check again. FICO is 790

Stephanie Medellin · Answer

So without seeing your specific scenario, very generally speaking I would say you can expect an interest rate about 0.25% - 0.375% higher to get a rebate of a little over $5000.  I am basing this on looking at US Bank's rate sheets for a 5/1 ARM.  Now depending on your credit score, after a certain point there is no option to raise the rate anymore.  No matter how high you go with the interest rate, your rebate will be the same.

On Friday, 2.375% is the lowest rate listed on their rate sheet, so I don't see how there is no room to go up on the rate.

As always, if you are going to be comparing rates, it's best to do it on the same exact day with each lender knowing your full scenario.  Otherwise, comparing rates is essentially worthless, since rates fluctuate on a daily basis and you'll never get a true comparison.

Prashanth Prash · Answer

700k is the loan amount

Stephanie Medellin · Answer

@Prashanth Prash  It's hard to say what the lender credit would be without knowing the whole scenario.  Loan amount is obviously going to make a huge difference how much you will get as a credit.  Half a point on $200,000 and half a point on $800,000 are not the same thing.  The larger the loan amount the easier it would be to get a $5000 credit.

Prashanth Prash · Answer

@Chris Mason sent a message

Chris Mason · Answer

What are the loan amounts? Occupancy? Unit count? Why are title/escrow $5k?

Prashanth Prash · Answer

@Chris Mason Can others beat this? Need your input. PM me if you want to talk.

I'm getting 2.375% 5/1 ARM on first loan with no bank fees (1000 rebate). Second loan is 30 year amortized at 4.375%. No PMI.

Most other lenders like union bank are giving me first at 2.75% First loan and HELOC at 5.5% on second loan which is interest only.

Also, what would be the bump typically for a lender credit? 25 or 50 bps?

Chris Mason · Answer

@Prashanth Prash, this really shouldn't be a big deal.

US Bank is not the only game in town doing 80/10/10, so it's not like this is a monopoly situation.

Prashanth Prash · Answer

@David Dye 80-10-10 loan. 89.9% LTV. $5k includes Owner's and lender's title insurance and the escrow fees of 1200 as well. SFR as a primary.

@Stephanie Irto Already in a contract. I'm trying to see how I should ask or approach my loan officer from US bank or do other banks do a lender credit for closing costs? if the interest rate hike is a 25 or 50 bps high with a lender credit of $5k, I think its worth it, since my plan is to do a 6 month cash out refi.

I plan to remodel and add about 250 Sft to the property. It should appraise much higher after its done.

Stephanie Medellin · Answer

Is this a purchase?  Other than a lender credit you could try negotiating with the seller for a seller credit, but if you're already under contract this might not be an option.