Lender Credit

Lender credits are agreements in which a lender promises to reimburse a portion or all of a borrower's closing fees. In return, the borrower must pay a higher interest rate. Lender credits might be a sensible strategy to save the upfront costs of purchasing or refinancing a home. Having no closing costs allows you to put more of your funds toward a down payment – or, in the event of a refinancing, lock in a cheaper interest rate without paying any upfront fees. However, lender credits are not always the best option. It makes sense for specific borrowers to pay more upfront to obtain a lower interest rate.