Choosing between two 30 yr fixed mortgage products - help?I'm a 1st time buyer and new to this stuff. Suppose bank 1 is offering 5.0% with 0.5% discount pts. Bank 2 really seems to want my business and states they'll match that. But when I saw their GFE they apply a kind of tricky math (common in mortgage business?) where they charge me 5.0% and 2% discount pts BUT give me a "lender's credit" at closing in the amount of $3900 (which turns out to be the equivalent of 1.5% pts). So, my out of pocket expenses seem to be identical but is there a catch? For instance, is that $3900 "gift" taxable (I have to count it as income)? If there's no catch I'm currently leaning toward the second bank as their lender's fees differ by about $500 in favor of the 2nd bank. But I'm unfamilar with this process of charging more pts while simultaneously giving a credit. Why not charge lower pts to begin with? I get the feeling my loan officer's doing this b/c an application with 5.0%, 1/2 pt might not get accepted by this bank, but one that reads 5.0%, 2 pts will.February 05 2009 - Los Angeles00YesReport a ProblemProblemSelect oneOffensive contentIrrelevant contentSpam (pure self-promotion)OtherDetailsYour emailPlease enter a valid email address.Submit CancelContent flaggedWe will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.We're sorry. This service is temporarily unavailable. Please come back later and try again.