Need advice on how to use broker rebate during closing

LONG POST! Sorry about the length, I just want to make the most financially sound decision here.

We are purchasing a new townhome with closing set for mid month. At the moment, the builder is giving us 30k in credits to be used with the lender for rate buydowns (permanent and temp) and closing costs. Additionally, we are also getting a separate 1% back from the broker. I just really need some advice on how to best utilize all of this.

My RE agent does state that any of the 1% that is not used will go to him after taxes, and he is willing to give the remainder back to us as cash as well (Aside: I don't know if this is standard practice or not, but it feels really generous and I'm feeling lucky to be represented by him... we didn't ask for any of it!).

Here are some details about the numbers with a conventional 30-yr fixed rate loan:

Purchase price: $711,000

Down (10%): $71,100

Loan amount: $639,900

Seller credit: $30,000

Broker credit: $7110

Fixed rate: 5.25%

P&I: $3,533

PMI: $143

HOA: $240/month

Insurance: $38/month

Taxes: $5,500 (annual)

Currently, the mortgage lender has our fixed rate at 5.25% (this is using 1.125 points). She said base rate with no points was 5.5%, but that we cant lower the rate below 5.25%, so it seems that the broker rebate cant go towards that.
On top of this, they have also used part of the seller credit towards a 2/1 temp rate buydown (says it cost $13,611).

As it currently stands, the 30k seller credit is covering ALL closing costs, including the rate buydowns and basic pre-paids (1 month of HOA + transfer fees + working capital, 1 month of property taxes, 3 months of home insurance). The only thing we would need to bring to closing is the rest of our down payment (already put in earnest money).

But this leaves all of the broker rebate still on the table. One option my loan officer proposed is to buyout the PMI upfront ($6,655) and use the leftover to pre-pay two more months of HOA. Can anyone advise on any pitfalls for this? Would it be a good idea to not have that PMI for the next 8 years? But if our townhome appreciates by 7% in 2-3 years, we can ask for PMI to be removed as we would hit 0.79 in LTV. (PMI for 2 year (minimum): $3,432 and for 3 year: $5,148)

Are there any other options available from those who know more? I have tried to do research into this, but all I can find is sometimes people pay a year of HOA (in this case only uses $2,880) or more of the property tax?

Another option I can think about is to let the 1% go back to my agent, have the taxes taken on it and then use the rest to pay a lump sum directly into the principal.

Any help is appreciated! Thank you!!

submitted by /u/BrownCow_20
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source https://www.reddit.com/r/RealEstate/comments/192881v/need_advice_on_how_to_use_broker_rebate_during/