Technically you could refinance within 30 days of the purchase, thus keeping the credit of $5k and still being in the market for a much better rate.
Your alternative is doing the better rate now to eliminate risk, and if we pre suppose you do not refinance anytime in the next couple of years you get a better deal this way long term.
It is a question of how long will you keep the loan, since the longer you retain the lower rate the higher your savings are.
You could also shop with a mortgage broker to see what the market is today, and if there are any additional credits available.
Best of luck!
Eric Olfred Nelson, III
Sr. Mortgage Planner
CA Bureau of Real Estate #01258488
NMLS # 120412
You did not provide a loan amount so here's a rough calc to use in making your decision:
If you choose the 4.625% option over the 5% option; per each $100k of loan amount, you would save a total of $8,164.80 over the life of a 30-year fixed loan.
So, if your loan amount was hypothetically $700K, your total savings would be $57,153.60.
I suppose you could take the 5% to get the $5k credit and then refi; however, you take on the risk of increasing mortgage rates and the escrow costs of doing so.
If you end up refinancing, the closing costs will equal at least $5,000. I don't think this will be worth it.
you may want to considerate few thing before accepting $5000 a bait.
depending on your closing time preferred lender is going to give you a free extension on your rate lock?
how dependable and your communication with preferred lender's loan officer?
calculate mortgage payment from 4.625% rate and 5%. and divided Number of month if you can not refinance? and just prepared your or go outside
I am pretty sure preferred lender will have agreement from you once you get the loan you can not refinance or sell for 6 month.
if you have any question feel free to call me
Mortgage Loan Manager
quality-expertise-service-Mortgage lending solutions
Basically that $5000 that is being offered to you is resulting in a higher interest rate.
You do need to do the math.
I have had clients who are trying to get the best rate, but are focused on the credit from the lender. As you shop, you will see that any lender can give you a credit for $5000 (depending on loan amount( and probably match the rate of the 'preferred' lender.
Work it to your advantage.
Get the quotes both ways from the outside lending sources.
Remember to let the agent know, your middle credit score, the type of property (condo v. noncondo) and loan to value. These factors all effect your pricing.
What size loan are you looking at?
What are your credit scores?
Is it a condo?
Let us know!