An article in the Washington Post explains how consumers shopping for mortgages may be offered “substantial credits” from mortgage brokers. Lenders, the article explains, may be able to offer similar help with closing costs, but do not always advertise the fact.
This is because the mortgage brokerages, unlike lenders, are required by law to pass certain monies back to their clients, according to the Post. They are trying to use this fact as a tool to attract customers, it says.
As the article explains:
[Mortgage brokers] are not permitted to earn any more than the disclosed amounts even if the funding source they choose for a buyer at a specific interest rate will pay them a premium for the loan. When brokers do receive premiums, the extra money must be credited to the borrower. […] Banks that lend their own money, by contrast, are under no such requirements on premiums. They have the option to offer an applicant a credit — or not — in connection with a given interest rate.
The article suggests that mortgage shoppers “shouldn’t focus solely on interest rate.” Is suggests that they “Ask about the possibility of credits toward closing costs.”