What are negative points or lender credits, and when should I take them?

Negative points, also called lender credits, are the reverse of discount points: the lender gives you money toward closing costs in exchange for accepting a slightly higher interest rate. They are useful when you are short on cash to close or plan to sell or refinance within a few years, since you avoid paying upfront for a rate you will not keep long enough to benefit from. The trade-off is a higher monthly payment for as long as you hold the loan. Compare the extra interest you will pay over your expected time in the home against the upfront cash saved. Ask each lender to show a version of your Loan Estimate with and without credits so you can see the true cost.