Planners Mortgage

California Home Loans

How Rebates Work

To contact us:

phone  (800) 733-2965     ·     e-mail: tom@plannersmortgage.com

Planners Mortgage, a subsidiary of Planners Financial Services, Inc.

Real Estate Broker, California Department of Real Estate #01047196

Mortgage brokers, like other retailers, earn a living by the difference between the wholesale price of our inventory and the retail price we charge a customer. Our inventory consists of mortgage programs instead of shoes, tires, or jet skis, but the principle is exactly the same. For example, on a given day, one of our wholesale lenders might offer us the following choices for a $250,000, 30-year term fixed rate loan:

Since our markup for a loan like this is about one point, we would offer the following retail quotes:

Since non-recurring closing costs on a $250,000 loan  total approximately $2,500, a one point rebate in this example is essentially a “no closing cost” loan. Of course there is no such thing as a true “no-cost” loan, since things like appraisal fees and title insurance do need to be paid, but in many cases it can be an advantage to pay these fees by taking a higher rate rather than by increasing the loan amount or paying out of pocket.

Clients often ask our advice about which rate and fee combination to select. Is it better to pay points and costs, or keep both as low as possible and accept a higher rate? Of course, there is no single answer. Our advice depends on the specific rate and fee combinations we have available on that given day, and how long that individual borrower expects to keep their mortgage.

Assuming that a loan is open for around five years, 1/8 of a percent in rate is roughly equal to a half point in loan fee. Therefore, if we can buy the rate down 1/8 of a percent for less than half a point in loan fee, we would usually advise you to do so. If the cost is more than a half point to buy the rate down 1/8%, we will generally advise you instead to take the higher rate, lower up front cost combination.

It’s important to note that we disclose to you in writing both the total rebate we are receiving and the amount that goes to you. Our compensation is the same no matter which rate and fee combination you choose, so we are able to offer objective advice about all of your pricing options. Our rebates are a direct dollar credit in escrow, so there is never any doubt or delay in receiving the funds.