SMART RATE

Homeowners will refinance several times over the lifespan of their loan.  With that in mind, it's important to keep loan costs as low as possible when refinancing.

Rich Bustillo is a licensed mortgage originator who specializes in refinancing owner-occupied homes in Los Angeles county.  He created SMART RATE to maximize lender credits for his clients. 

If every lender is offering similar rates on a conforming refinance in LA county, would you rather pay $2,000 or $1 in Box A?

Here are 3 key points to keep in mind:

• Due to Fannie Mae, Freddie Mac, and FHA Guidelines, lender credits to offset loan fees in Box A to just $1, only become available when they are owner-occupied homes in Los Angeles County, with conforming loan limits between $300,000-$800,000, and with FICO scores above 700. 
• If you qualify, we'd propose a loan with a lender credit that covers our loan origination charges in Box A of the Loan Estimate.  So if our hard costs are typically $1,995, we'd issue you a lender credit for $1,994 in Box J.  That's how you get Smart Rate, a refinance for just $1 in origination fees. 
• If you qualify for an FHA Streamline, we'd like to propose offering a lender credit to cover ALL of your non-recurring closing costs (Boxes A-C).  

Frequently asked questions:

• Don't you just increase the rate a little higher to receive a lender credit?  Yes of course.  Every bank, credit union, mortgage banker and broker marks up the rates they offer to cover business costs and profit.  The goal of Smart Rate is if you qualify, offering you a lender credit at the same interest rate other lenders make you pay origination fees in Box A.  If every lender is offering the same rate, would you rather pay $2,000 or $1?
• Is Smart Rate available on purchase loans, investment property loans, 2nd mortgages, or Non-QM loans?  Unfortunately not, lender credits for these types of transactions are more difficult to obtain due to increased risk.  We do offer these types of loans as well, and still focus on offering home loans with lower costs in Box A than other lenders.
• Do you ever recommend paying large origination fees in Box A to get a lower rate on a conforming refinance?  Yes, in some cases that does make sense.  When fixed rates were below 3% several years ago, it made perfect sense.  In some cases to qualify due to a debt ratio issue, it makes sense as well.  Big picture, Smart Rate is still about you getting the lowest rate while keeping the loan costs in Box A as low as possible.  

When searching for a lender, the best way to control the process is by asking what they charge in Box A of the Loan Estimate.  If the lender gets defensive, be wary.  Many lenders have their rates marked up so high, that they can't even offer lender credits on conforming loans. We are here to guide you through this process, ensuring you get the best rate possible with the lowest fees in Box A. If you have any questions or need assistance, feel free to reach out to us at or rich@rateonefinancial.com . We are here to help you on your journey.