Rebates
Everybody is familiar with the concept of buying a loan down. If you want a lower interest rate, you can pay points to "buy" a lower interest rate. The opposite is also true. But instead of paying money to the lender, the lender gives money. This money comes in the form of a rebate.
This is an example of how loan pricing (locks) work. As the loan lock for a particular interest rate increase in days, the more points the lender charges. Conversely, the higher the interest rate you pay, the more the lender will give back in rebates. Most loan brokers charge the borrowers the cost, but pocket the rebates for themselves.
| Interest Rate |
12 Day Pricing |
21 Day Pricing |
30 Day Pricing |
45 Day Pricing |
60 Day Pricing |
|---|---|---|---|---|---|
| 7.375% | 2.000 | 2.375 | 2.625 | 3.250 | 3.375 |
| 7.500% | 1.375 | 1.750 | 2.000 | 2.625 | 2.750 |
| 7.625% | 0.875 | 1.250 | 1.500 | 2.125 | 2.250 |
| 7.750% | 0.250 | 0.625 | 0.875 | 1.500 | 1.625 |
| 7.875% | -0.250 | 0.125 | 0.375 | 1.000 | 1.125 |
| 8.000% | -0.875 | -0.500 | -0.250 | 0.375 | 0.500 |
| 8.125% | -1.250 | -0.875 | -0.625 | 0.000 | 0.125 |
| 8.250% | -1.750 | -1.375 | -1.125 | -0.500 | -0.375 |
| 8.375% | -2.250 | -1.875 | -1.625 | -1.000 | -0.875 |
| 8.500% | -2.750 | -2.375 | -2.125 | -1.500 | -1.375 |
| 8.625% | -3.125 | -2.750 | -2.500 | -1.875 | -1.750 |
Using a $100,000 loan amount with 30 day pricing and an interest rate of 7.625%, the cost would be $1,500.00 (100,000 x .01500)
Using a $100,000 loan amount with 30 day pricing and an interestrate of 8.375%, the rebate would be $1,625.00 (100,000 x .01625)