Simply put - A Freebate™ provides you with cash for your closing costs.

The Freebate™ is based upon what is called the Yield Spread Premium (YSP) or Service Release Premium (SRP). When mortgage professionals get interest rates from the mortgage companies, they list all of the available rates. "Yield Spread" is the difference between the rate at which the lender provides money to the mortgage professional ("par rate") and the rate at which the mortgage professional provides the money to the borrower. The "Premium" is the money the lender pays for a borrower accepting a mortgage rate that is above "par". In the past borrowers were often unaware of this "Premium" being paid by the lender and therefore it was paid to the mortgage professional.

It is now being made available to consumers who engage mortgage professionals that use RateWindow™ to provide total transparency to their borrowers. In attempting to get the lowest monthly payment possible a borrower may be attracted to a rate that is below the "par rate". This will usually require the borrower to pay an amount equal to a certain percentage of their loan amount and is referred to as "buying the rate down". For example, a person who chooses a lower than "par rate" may be required to pay 1% of their $250,000 home loan, or $2,500, in addition to the other standard fees and costs.

However, if that borrower opts to take a higher than "par rate", they may actually be eligible to receive a pricing credit to be used to offset some of their loan costs. For example, he may receive a 1 percent credit - again, $2,500 - which could then be used to pay title fees or other costs. And that credit is what RateWindow™ calls a Freebate™. This slightly higher rate which can provide significant cash for closing costs often will increase the monthly payment by only a few dollars. This process can allow the borrower to keep money that they have in savings or may allow them to make the purchase without having to bring money to closing that they need for something else.

*It is important to note that all terms of a loan, including the amount of the Freebate™, are subject to underwriter approval. These numbers are used as an example only, and actual amounts will differ based on available rates, loan amount, and other factors. Contact a RateWindow™ affiliated mortgage professional for more information about your Freebate™.