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Closing Cost Credits Never Too Big – “Fake Points”

We have a $500,000 FHA Purchase with a 3% Seller Credit for Closing Costs. The borrower wants a “No Points” loan, so the Realtor was rightfully concerned that the closing cost credit is too large. The credit is technically too large b/c the total closing costs (recurring and non-recurring) will be less than $10,000 b/c of the time of year we are closing (the Impound Account only requires a few months of property taxes).

But, we will “Use Up” the entire credit by charging $5,000 in “Fake Points”. We then rebate those Points back to the buyer immediately after close. We do this often, and it is a very effective tool to get cash back in the hands of buyers who need money after close for improvements or move-in costs.

We can charge “Fake Points” to ensure closing cost credits are used up, and rebate them after close.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167