Yes, mortgage lenders in the US will pay rebates to borrowers. This is a potentially
valuable option which, to my knowledge, is not offered anywhere else in the
world. But having options means having to make choices, and this is a difficult
one that borrowers often get wrong.
Rebates Defined:
A rebate is a credit granted to a borrower by a lender that can be used to pay
third party settlement charges and/or to fund the borrower's escrow account.
Rebates are the opposite of points, which are payments made by the borrower to
the lender, and are sometimes referred to as "negative points." Borrowers pay
for rebates by accepting a higher interest rate.
Combinations of Interest Rate and Points/Rebates:
The price sheets lenders distribute to their loan officers, showing multiple combinations if interest rate and
points/rebates, may or may not be shown to borrowers. However, borrowers have
access to such data on various web sites. As an example, if on July 11, 2014 you had called me to price a fixed-rate
mortgage, you would have seen many combinations of interest rate and points. If
the loan was for $300,000 on a single-family home valued at $400,000 and the
borrower's credit was excellent, the lowest rate of 3.5% was available with
points of $13,134, at 4%, the points were $344, and above 4% the lender offered
rebates: $10,499 at 4.5%, $17,731 at 5%, and $26,032 at 5.5%.