Get Credits Toward your Closing Costs

What are Lender Credits?

The FHA and VA loan credits are a great asset for borrowers because these lender credits can help offset closing costs. Lender credits are generated by the lenders when they borrow money from federal progams for next to zero. In order to attract customers, they offer lender credits as incentives.  Higher rates equal higher credits.

For example, the lender credits generated on a FHA or VA 30 year fixed rate of 3.25% today will pay a lender credit of 1% towards the borrower’s closing costs. A rate of 3.375% will give the borrower a 1.5% credit. So if, a FHA or VA loan amount is $200,000, the 1% credit puts $2000.000 towards their closing costs, while a 1.5% credit would contribute $3000.00.

Credits allow borrowers to pay fewer closing costs on a refinance loan or a purchase loan. It is important to understand who offers these credits because not all lenders will. Often times, big banks and most big national lenders do not offer these lender credits. Instead of rolling them over to the borrower, they keep them. So when a borrower is shopping for a loan lender, they should consider not only who has the best interest rates but also whether there are any credits to the borrower.

Indigo Mortgage is one of the lenders that offer lender credits for our VA and FHA borrowers in the Albuquerque area.

What about regular conventional loans and lender credits?

The credits on government VA and FHA loans are much larger than those for conventional loans, and the rates are lower. Lender credits from conventional loans are typically smaller and have a less dramatic impact on closing costs.

If you are interested in lender credits or have any other mortgage related questions, please contact Indigo Mortgage at 505-836-5700.