A lender credit is not free money
A lender credit generally comes with a pricing tradeoff, often a higher rate or payment. It can still be useful when reducing cash due at closing is the consumer’s priority.
A lower rate may require more cash
Discount points and other lender-controlled costs can buy a lower rate. That choice needs enough time to recover the upfront difference.
Use the same loan and lock assumptions
Compare the same loan amount, program, term, property, credit profile, points, lock period, and estimated closing date before calculating break-even.
What could change the answer?
- Available cash and the consumer’s comfort with closing costs.
- The payment difference and exact lender credit.
- The expected time before sale or refinance.
- Final rate, points, fees, credits, and lock period.