Discount points, lender credits and buydowns, weighed on your own numbers
Lender credits
Point made
A lender credit is money from the lender toward your closing costs, paid for through a higher interest rate. It can help when cash is tight or when you expect to refinance or sell within a few years, but it raises the monthly payment for as long as you keep the loan.
Last reviewed against the primary sources listed below.
Check the fine print
- A credit can only cover closing costs; it is not cash back.
- If the credit exceeds costs, ask how the excess is handled.
- Make sure the credit still appears on the Closing Disclosure.
Points and credits, answered
Is a lender credit free money?
No. You pay for it through a higher rate over the life of the loan.