More info on the Bank of America No Fee Mortgage Plus

Today's rate is 6.25% with how much in origination and how much in discount?

It says .781 right at the bottom of his quote...

To make the fees seem lower a number of lenders in my area will disclose .781 in discount and assume everyone knows that there is 1% origination.  When in reality it is 1.781 in origination and discount.

I have been reading some of the conversations about this BOA no closing cost loan and would have to say that it is a fantastic program. Granted, I work in the mtg industry and have come up against it a few times and from what I have seen it is what it seems. A close friend of mine that had previously worked in the mtg industry just closed on a home and he got the financing through BOA.

Some of you other mtg peeps may wonder why he did not do business with myself but when we were looking at what I could offer and what BOA was offering it made a lot of sense to take what they were offering. From looking at my rate sheets I had a good idea of what they were making in YSP which looked to be about 1% (give or take), in the end he also ended up paying 1 point to buy the rate down to 5.625% on the 30 yr/fx. So BOA for 1 point in costs gave him a no PMI (10% down) 30 year fixed and paid all of his closing costs (recording fees, title, appraisal, etc…). Now he locked his rate about a month ago hence the lower rate, but to make things even more interesting he had a 55% back end debt ratio and somehow BOA gave him the approval (much to my surprise). Not only that but at the last minute he decided not to escrow and they did not even hit him for the .25% hit.

I know I could have gotten him a better interest rate with the same amount of points (or less) but I would not have been able to pay all of his other closing costs. As much as I hate to say it this program is for real, not everyone will qualify but for those who do it is a great option.

The No Fee Mortgage Plus is a great product.  Currently, you can finance 90% 1st without MI, most escrow and bank fees waived.  The rate is a little higher but if you take your savings in fees and buy down the rate..... aj

I'm wondering if there is a pre-payment penalty? Does anyone remember the BankAz loans with the .5 is YSP for a 5 year PPP? Then another .5 YSP for 60% LTV. Then another .5 for 720+ scores. We did some crazy deals, BUT, most had to have substantial PPP's.

It seems that BofA is trying to get more aggressive in the purchase market, and doing all these innovative things BECAUSE they need to offset the albatross that is Countrywide. I could be wrong, but for a company who really didn't have much market share in mortgage origination to suddenly feel the need to be ultra-competitive is kind of strange. Will they take the market over in the next two-three years? Maybe that is what they are aiming for.

This program has been around for a long time, well before Countrywide.  I think it is more to gain CRA credits than anything else.

No pre-payment penalty as stated above.

Also, no origination.

According to the rep you can buy down your loan rate as well.

Yeah my friend bought in NJ which is a no pre-pay state so I do not know about other states.

It's a great loan take it and run!

Seems like a great option if I can scrape together 10% downpayment.

Bank of America has been competitive in the purchase market for some time. I cant believe none of you mentioned fighting with them over the ACORN program, that program crapped on us from such a height it was as if from god himself.  A solid 1% in rate below their wholesale rate every time and no MI....they started requiring 10% down though.  For their clients that have 100K plus invested in their accounts they will make some startling exceptions.

ACORN was an amazing program, but is also one of the highest foreclosed programs on the market...govt subsidies make it "work". But, that pricing of 6.25% with a 0.781 discount fee is not at all that good. Assuming the loan is 300K, that's going to be about 2.125 in total compensation to be distributed out to 3rd party costs and then pocketing the rest....Lender Paid MI included.

A good broker can beat it. It's OK.

My wife and I are closing on May 16th.  We've been working with one of our local credit union's.  We're approved with them, but had been hoping for rates to come down a bit more towards 5.5%.  This BofA program is curious and I'd be interested in hearing what you all think about it's applicability to our purchase.  We are buying in Great Fals, MT.  The piece that makes the BofA program a possibility for us is my wife's job.  She is a United Methodist minister completing her 1st year of a new appointment in Great Falls, after serving smaller communities the last ten years (5 years each).  In the UM system clergy are sent to the parish within the local conference boundaries (all of MT, top of WY) as needs of both the churches and the clergy arise.  Her predecessor here had a tenure of ten years, but that is no guarantee that she will stay that long.  We will have to move to another town at some point.  We just don't know now when that might be.  So, long explanation I know, but what I'm saying is would this program be better suited to buyers like us due to the fact that we could apply the ~ $3,900 in lender fees and other closing costs to existing debt or pay down the mortgage up front, which could yield a higher equity percetage when we have to sell in two or 5 or 10 years?  Here's the home and CU loan info:

PP $139,000

Loan $125,000

5.875% interest rate

30-yr conventional (no points)

$2,175 Section 800

$3,864 total lender/title/pre-paids

Our FICO between 750-770

Thanks!

Does the loan that you are being offered by the CU have PMI?

Yes, $54.17/mo

In all honesty it sounds like what you are being offered is a fairly good deal. Generally whatever lending institution that you go through is going to offer you a slightly higher interest rate when they are not charging you points. Basically they are just building those “up-front” fees into the higher interest rate and the same occurs with the no PMI programs.

From the details you gave of your CU’s offer I think you would have a hard time finding a better interest rate especially with no points. Given the fact that you truly do not know how long you will reside in that home it would be harder to justify paying points to get the lower rate since you may be moving well before you break even point.

I would not "rock the boat" too much searching for a better deal since what your CU has offered you sounds like a great option.

I did the BOA no fee mortgage plus loan. I would reccomend it as I got out of PMI on my $210K purchase price. They required us to put down $10.5K (5% of the purchase price).

I think I ended up paying .25% more with BOA but I saved ~1% on the PMI... My mortgage broker could get us 6.25% + 1% PMI while I got 6.5% + 0 PMI with BOA (This is in CO back in Early-Mid December).

No origination fee and I ended up paying ~$15 in points (.008 point). I choose to escrow the insurance/taxes so I had some pre-paids that I would have had with anyone.

I would reccomend if you qualify and have the down payment. We had good credit (both my wife and I above 715 with all 3 creditors), but we almost could not drudge up the down payment - we were 1st time home buyers. One gotchya that they might try to pull is that you have to be a BOA customer to qualify. They really tried to sell us a credit card but I ended up with a checking account (which qualified us) as I didnt want another line of credit opened while I was mortgage shopping! I'm going to close the checking account within a few months as I really dont need it...



BEST OF LUCK!

**Beware** My seller payed half of the closing cost.Bank of America keep it for themself.They said it was good luck for them.If you go with the no fee loan get  everthing that free.Always remember something free is seldom free.

ahh...huh?

A no fee mortgage is simply a bunch of 'srp' or ysp if you want to call it that, jacked up to encompass all the costs.

For a while BOA wanted great paper and actually offered a good deal but I can assure you that the 'no cost loan' can be offered by any broker or lender if the borrow accepts a high enough rate.

Its what the APR is for.

trgreer, are you saying you closed a no fee loan w/ B of A? If yes and there were no fees, what did B of A collect from the sellers?   

Clay

I have often thought of offering 'no cost' mortgages myself, since its such a pyschological con job in the first place. But I havent brought myself to do it.

This idea of advertising a loan -under the assumption the seller pays all costs - is another angle lenders like to tapdance to.

There is no free lunch. They just hide the money in seller pays and the interest rate.

Just curious, does the no closing cost thing mean BofA covered title as well?  If they do, I don't know how they can afford it; if they don't, then I don't think it's as killer as it sounds, well, other than the no MI thing.  To go no MI, I've got some pretty stiff adjustments.  Around here, I usually lose the no mi business to credit unions. 

John.

Banks have to make a profit. They dont just take losses on a 300k loan for fun. While I believe BOA last year wanted excellent paper and put on a 'special' for selected ficos and what not for 100% loans, they cant work under different rules than every other bank.

Its akin to saying that rates are 6.25% right now but they will offer 5% for fun.

The BoA does cover title it is a good deal however they do typically charge a point or some portion of a point to make the rate appear better than it really is.  You don't pay closing costs but you pay .75 Orig or discount fee....on a $250,000 loan that's $1,875 to pay the closing costs not as good of a deal as the "No Fee" would make you believe.

I am closing a Fee loan refi that the borrower walked away from the closing table on a BoA loan because the "No Fee" loan was over promised and shocker under delivered!

No magic loans, no magic rates

Guys....I want to say that BofA has backed off this program quite a bit since the post originally began.  I found myself gonig up against them quite a bit in the spring/early summer but now not so much.  The big shell game was that they were charging discount points that still had to be paid.  The only other thing you paid was per diem, escrows, recording taxes.  Since they plan on never selling the loan, they can do what they want with MI and the small SRP that still existed covered those waived fees.  I would imagine that hooked up with a title company in some way to shave those fees down as well.

Tom,

If BoA wants to buy the mortgage market by offering below market rates, they can!  Just like you and I can work for less so can the big banks.  They have the advantage of an economy of scale.  I wouldn't want to get into a price war with guy that has the deepest pocket! 

Portfolio city ? At a loss?

I dunno bud. BOA has its own problems with the new CW portfolio . I dont think their 'no cost mortgage' is the same pricing except they eat all the costs.

SF,

I'm with you on that point, that's why this whole discussion seemed a little scary at first.  I missed the part about the discount/origination point, however, so that's nothing special.  That is a shell game; I guess they're learning something from Countrywide.  It never seems to end with them!