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How to Help Your Clients Get a Lower Rate with No Additional Money at Closing

July 20, 2022

Homebuyers are being squeezed by the unfortunate combination of record-high home prices and mortgage rates that have trended sharply higher recently.

Rate-sensitive borrowers always have had the option of paying discount points to buy down the mortgage rate. But that tactic usually carries a downside – the borrower has to pay the points up front.

To help you offer more attractive borrowing options to your clients, LendSure has a workaround: We offer borrowers the additional flexibility to buy down their rate and finance the points. It’s a feature that gives homebuyers the best of both worlds. They get a lower rate without coming up with more money at closing.

Here are the features of LendSure’s Financed Rate Buy Down:

  • Lender and broker points can be financed into the loan (up to 2% additional LTV).
  • Financed points do not raise the LTV pricing bucket.
  • Borrowers can take up to 87% LTV when financing points (at the 85% max pricing tier).
  • The borrower does NOT have to bring additional cash to close.
  • The lower rate significantly reduces the borrowers’ monthly payment.

Here’s an example of how the program might work for a typical borrower.

Purchase Price $700.000
Loan Amount $560,000
LTV 80%
Par Interest Rate 7.5%
Rate Buy-Down (2.25% Lender Points) $12,600
New Rate (reduced by .75%) 6.75%

 

Other Lenders LendSure
Additional Cash Needed to Close $12,600 $0
Total Amount Financed $560,000 $572,600
Loan-to-Value 80% 81.8%
Monthly Payment $3,916 $3,714

In this scenario, the borrower saves $202 a month, or $2,424 a year, with no additional money out of pocket. For affordability-challenged buyers, this is a compelling offer.

Other lenders would let the borrower buy down the rate, but the $12,600 buy-down cost would be due at closing.

Here’s how it works:

  • Interest rates may be reduced by up to 1% by paying 2% Lender Points (1 to 2 ratio) when the reduced rate remains above 7.375%.
  • If the reduced rate is at, or below, 7.375%, the interest rate may be reduced by up to 1% by paying 3% Lender Points.
  • Minimum rate of 6.500%.
  • Lender & Broker Points can be financed up to 2% of loan LTV and maintain lower LTV pricing – max LTV when financing points is 87%.

At LendSure, we understand that these are tough times for borrowers and for loan officers alike. Contact one of our skilled account executives to learn more about LendSure’s Financed Rate Buy Down, and how this unique program can help you say yes to deals.

 

Contact Us: (888) 707-7811