Bank of America’s No-Fee Mortgage
Posted by admin in Housing
Major banks generally have a reputation for working hard to screw you in the fine print, whether it's mortgages, credit cards or what have you. But so far I haven't been able to find a catch with Bank of America's No-Fee Mortgage Plus program.
Here's the deal. You take out a morgage and you don't pay a bunch of crappy little fees that usually lead to thousands more dollars than you think you're paying when you made the decision to buy the house. There are no Loan origination fees, no closing fees, and, probably best of all, no private mortgage insurance (PMI) if you're doing a down payment of less than 20%.
If you've never bought a house or condo, this might not mean much to you. But if you have, you're well aware of what a pain in the can it is. You settle on a place to buy, you find a lender to take on your mortgage, and then all of a sudden the shakedown begins. You get nickeled and dimed left and right until you sudden;y find yourself sitting at the closing table ready to cry. Home ownership can be great; home buying is generally torture.
There's no guarantee that Bank of America will be offering you a loan at an overall lower cost than anyone else, so it still makes sense to compare rates, but as a buyer it is nice to feel like you understand all the costs up front instead of constantly digging for extra cash after you thought you'd so carefully figured out how much house you could afford.
The program has been running in a handful of test markets and supposedly Bank of America's already done a billion dollars of morgages under it. If you happen to be one of Bank of America's No-Fee buyers, I'd be hugely interested to hear about how the process went for you.
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Better check your rate closely folks. You’re paying for this somewhere, if not in the fees, then in a much higher rate than you would otherwise be entitled to.
If higher monthly payments are better for you than paying fees up front, then do it. Just be aware, nothing’s free. You WILL pay.
Nothing is for free–that is correct. I have studied this offer in depth (I am a competitor) and the GFE I have in hand looks attractive. the problem is they require you to pay some discount points and dont give you the rate one could get paying those points on a traditional scenario. They waive $2500 of stuff and collect 1.25 points. No MI? Everyone has that ..its called Lender Paid MI and they will jack up the rate accordingly. This is a real disservice as MI is now tax deductible for most people. You also have to have a B of A account and probably an auto-pay feature.
At my company, I am running the same promotion personally. its not difficult to match them…its all in the packaging.
300,000.00 Mortgage. 15 Year Term. 5.25% with 2 Discount Points. Only $6K in total fees. We expected to spend closer to 9K. Bank of America is going to put a lot of companies out of business. The program is AMAZING!! No Auto Pay Feature.
I am currently pre-approved for the no-fee mortgage with BofA. It does seem that there really are no lender fees associated with this loan (based on my good faith estimate). I am not sure if the rate is as competitive as the bank has marketed it to be. I have not found a property to purchase, but am interested in hearing about other mortgage products from companies who also offer no or low fee loans and have lower rates. I was thinking that I could use the money that I would have paid in fees to buy down the rate and possibly save on both ends. Any suggestions?
I am pre approved for this promotion as well. I like the fact that i;m not dealing with a creepy mortgage broker, or the builders “preferred” lender. This also works for me because the seller/builder is giving me 25K for closing costs and rate buy down! in my scenario, you can’t beat this.
JT
I just closed a house with one of these mortgages, and there were truly no fees. It was a refreshing and wonderful experience! Their rates were also a quarter-point lower than anyone else’s. I’m not sure how or why they’re doing it, but it is as good as it sounds.
Because I’m a mortgage broker, I’ve been getting an earful about the BoA “No Fee Mortgage Plus” product. So I did a bit of surfing and here’s what I found…When asked about the no-fee mortgage program, Floyd Robinson, Bank of America’s president of consumer real estate and insurance services said, “this is about a relationship more so than about a single product sell. We are here to build relationships, to become the trusted adviser for the customer.” Bank officials say they typically are able to cross-sell 5.3 additional products for every mortgage customer.
Over the last few years, the company has tried hard to land new investment banking and trading clients. That helped the company increase its service fee and investment banking income. The two drove non-interest income at the bank up 10.1%, to $9.8 billion, from $8.9 billion a year ago.
Now you know how they plan to recover the lost revenue from all of the “No Fee” mortgages they originate.
I’ve found that the rates with Bank of America are about .30 higher then others. I checked in early May and mid June and both times the rates were about the same hike. But since we are only putting 5% down the overall monthly payments were the same as other lenders minus the 5k of closing costs. As far as being approved they didn’t require anything during the application process that other lenders asked.
I just got my quote from the local BOA today for this loan. I may not be their target customer, because I am putting down >20% on my house, but their no-fee option results in higher points for the same rate, so there is a catch. For example, I was quoted the following for a 30yr fixed with I/O option: 6.625 interest rate with 1.91 points (and with an extra $3337 in closing costs) versus 6.625 interest rate with 2.602 points and discounted the $3337 in extra closing costs. In addition, those rates cost 1 point more (=.25% higher interest rate) than what I found through my mortgage broker. FYI.
over a decade ago one back in ny offered a rate, with no points, that matched the lowest rate that had points. I tried to find the “catch” since I planned to prepay.
There was a “catch.” I had to wait a year to start prepaying.
I paid it all off.
I benefitted from something that seemed to need a “catch.” There really was no catch.
The BOA offer may or may not have a catch. Caveat Emptor – but sometimes FREE really means FREE, and NO FEE really means NO FEE.
No Fee may really be No Fee.
Think of it as degregulation
The comments was very helpful.
i think all the mortgage brokers are alittle worried that there is a program that they can’t touch. I see that you guys have plenty of time to talk bad about this program….business must be slow.
I am a Bank of America mortgage specialist on our LoanLine channel, and I can tell you that this loan truly has NO fees, this is NOT your traditional lender paid PMI, the biggest difference between this loan and a normal loan under the same circumstances is 1/8th of a point(.125) Points are not required, just tell your AE that you don’t want to buy points. no catch to this trust me. in addition to that, escrow is not required on a %95 LTV loan, and no penalties against that. So trust me, say what you want, do your digging, this is truly a great loan option. Keep your ears tuned for 9/17/2007 though, special refinance program similiar to this on the way
So I have finally just finished the process with BofA here in Tucson and purchased our first home. We only had a 3 week window to close and let me tell you everything went so smooth. I called my Lendor every other day because I was thinking there was some “catch” and I was going to get screwed somewhere and I was thinking this is too good to be true. The only thing I noticed is: you will pay a slightly higher interest rate then what the market is saying, but no fees at closing is true and we ended up paying $200 less at signing then what he gave us in my Good Faith Estimate. No other lendor could match what they gave me and most of all there REALLY IS NO PMI. I’m a very satisfied customer of BofA’s program
Is this loan applicable for investment properties?
I have been a mortgage broker for 15 years. A friend who is a Bank Manager at BofA was really pumped when this program came out (I had also done his loan for a lower rate than BofA ever offered after they denied his refi. He was amazed.) I have gone head to head with BofA 3 times on this No Fee loan and beaten them 3 times (up to .5% on one). Before the no fee push, I generally beat them by .25%. The big question is whether they process the paperwork the way they are supposed to, which is not a given. I have seen too many loans blow up there, and deposits lost, due to a lack of employee experience and diligence. The fact that people are saying that recently they didn’t have to supply any paperwork, and they are apparently self insuring MI at no cost(while MI companies are posting giant losses) means they are throwing responsible underwriting to the wind for the next quarter’s profit — like Countrywide. They just may be next year’s casualty on Wall Street.
What are they afraid of? If Bank of americas no fee and Countrywide no cost programs are so good, why don’t they advertize the interest rate? why is it a secret?.
I tried getting the rate on the phone and it was imposible. they only way they will even talk to you is if you give them your name, address,phone # social sec.# etc.
I told them I needed to refinance my owner occupied SFR of 10 yeas, I would need a loan of $400,000,80% financing,my credit is execellent with a 800 credit score, my income and bank reserves were adequate and verifiable. No they had to have my name and soccial security #. NO DEAL
CLIK
Some of you people are jokes…
There is no one cookie cutter product for ANYTHING.
The No Fee program is great. It can be greatly beneficial for numerous people.
Conversely, there are some programs that may fit someone’s situation better. It all depends.
In my opinion, less than 20% down, an option vs. 100% financing (utilizing closing costs funds for a 5% down payment and taking a higher rate), or for financing for a short-term, then you won’t find a better deal.
Can a broker get a better deal??? It depends. With 20% down, yes. But you better do your due diligence and make sure you are dealing with a legitimate broker and there’s no surprises in the 11th hour.
I am Nabin Parajuli from Nepal. I want to start business from your bank if it available.
Nice article. Nice comments from several sides. I’m all over this!
Has anyone ended up NOT going with BOA (b/c you found better value somewhere else) and tried to get the $250 Best Value Gaurantee? I’m in the midst of this process and it is taking entirely too long. They don’t make it very easy to get your $250. I’ve faxed my HUD in, taken their survey, and called them several times to check up on the status. Still no check. Very painful. I’ve definitely earned my $250.
PT
Prime:Time:Money
http://ptmoneyblog.com
I have just turned down a loan for B of A. As it turns out, they wanted three points to buy down to a competitive rate. That would have only gotten me around 6.1%. They offered me the conventional mortgage at 5.85%. They may not call in closing, but they are definately still going to get their money.
Just got my check for $250. Check out my blog post about it at Prime Time Money http://ptmoney.blogspot.com/2007/12/how-to-get-250-from-bank-of-americas.html
I’m closing 12/21…Rates are competitive…No Mortgage broker to deal with(I used a friend last time for 10k…YIKES and thanks alot..BOA pays my attorney fees I found out today along with a litanny of other costs.I can buy down to 5.625/5.375..for a few points …Sounds like alot but, over the long haul you make it back.With no closing costs I’m just reallocating $ for the better rate…No hassles with documents..I was approved in minutes.I’m saving “several thousand” in closing costs.As far as rates go…Boa is right there in the mix with the others….So far so good.I will repost after closing.
I have applied for a Bank of Americ ‘No-Fee Mortgage Plus’ loan. I did have a bit of a problem with communications at first–played phone tag with my loan officer for about 3 days, now she’s on vacation when I need questions answered. When I call the loan officer who is standing in for her, I get no response, regardless of how many messages I’ve sent. So, so far I’ve begun to feel a little uneasy about getting involved with Bank of America. Really, the only reason I’ve decided to stay with them is the ‘no fee’ deal. But now I’m not so sure it’s been a good choice. I haven’t locked in a rate yet, so I still can get out. Another point, I called the hotline number, because my officer will be gone for another week. I questioned the ‘no fee’ attorney. I wanted to know what this really entitles us to. They said it meant I could choose an attorney of my liking, then at closing, they would pick up the cost of this attorney. This, however, has been brought to my attention of the attorney I’ve chosen, as a farce. He has had several clients who were duped into believing that they were getting his services at no charge. Apparently, the attorney claims that Bank of America covers the cost of their attorneys, not ours, the buyer’s. I am still awaiting a response in regards to this. Because according to my attorney, they will not pay up in the end, as they have done so with several of his unhappy clients.
Ok. I took the bait on this mortgage almost a year ago. It was being test marketed here in Seattle. The process was incredibly painful. I couldn’t get a straight forward answer on rates etc. from anyone. It took me 20 days to get a Good Faith Estimate. I should have known then it was a bad idea. Now, I’m calling to check to see what the process is for getting the no fee refi that was advertised. I’ve been on the phone for 40 minutes. The customer service rep is telling me that I am not qualified to get the free refi, since they have to research it. Apparently not only do 12 months need to go by, but also the rates have to drop by a certain percentage. This is really annoying, since I don’t believe this was disclosed to me. I have been screwed by bofa so many times on little things like this in other aspects of my dealings with them, I am very tired of this hassle with them.
Has anyone, since the last post about BofA’s no fee mortgage, come up with any more information on whether this deal is real or not. We got preapproved for this mortgage plus program. $412,425 and 5% down. We were quoted a 6.1% interest rate on our truth in lending, but subsequently when the rates dropped, were offered a 5.8%….how is this no PMI not worked into the rate some way some how??? baffled.
Hi, I’m still confused. Should we try it or not. More input please!
OK..here’s the follow up…I used BOA No-Fee….The rates we’re a little higher,but this was a second home purchase so they generally are…However..BOA paid for ALL my closing costs including MY Atty fees All I paid for we’re taxes..Mort.interest etc…I would have liked a better rate(They had a buy down for several K but,I didn’t bite)….Also a bit of phone tag in the beginning and I had to pursue follow ups but it all worked out in the end…All in all I was pleased…AND NO CLOSING COSTS AT ALL.
I got preapproved by BOA No Fee Morgage Plus for 280K . Rate is 5.625% . This is without points . But I am probably go with much lesser downpayment to fully exploit the benifit of this program . I am still going to go ahead and talk with other lenders to see how much things differ . Will keep you posted . Request others to share experience
I got preapproved by BOA No Fee Morgage Plus for 280K . Rate is 5.625% . This is without points . But I am probably go with much lesser downpayment to fully exploit the benifit of this program . I am still going to go ahead and talk with other lenders to see how much things differ . Will keep you posted . Request others to share experience
“What are they afraid of? If Bank of americas no fee and Countrywide no cost programs are so good, why don’t they advertize the interest rate? why is it a secret?.
“I tried getting the rate on the phone and it was imposible. they only way they will even talk to you is if you give them your name, address,phone # social sec.# etc”
I just went to Bankofamerica.com and the rates are clearly posted for the no fee plus mortgage.
ok that post is messed up, but go to their website. Bankofamerica.com and the rates are clearly posted for the the no fee loan.
Why would they advertise their rates if they change literally every day based on the price of the 10 year treasury bond? Plus buyers have different credit/FICO scores, so not everyone will get the best rates.
Hi everybody. No fees no wories no stress on BofA web site. Belive me gus fees, 1 month wories , ton of stress. Loan officer of BofA will make you problems during the process.
They are slow !!!
Thank you guys for clear advice. I have pre-approved for the same programme and sent my contract last week. I haven’t got any lender able to bit BOA no fee mortgage. Ofcourse it is true their interest rate is little higher as compare to these online crap low interest rate lender with lot of baggage fee. I have assessed the total cost for the next five years, I have found BOA no fee programme really worth praise. It is true I will pay higher money if I have stay in the house for next 30 years. Who cares I am not entitled to stay for such long years in the same home. Low monthly payment due to luck of PMI and no enforcement to escrow account. I personally prefer to pay tax sparate once a year rather than paying every month. They gave me that choice. It is really good to have that option if you really come to the point you have decided to buy a first home
I am a real estate agent, and have residential loan training experience, although my specialty is sales. I just purchased a home, and I was skeptical of this program at first, but after doing more research, reading articles on the internet, and comparing loan programs at several different lending institutions (including my very good friends) I have found that bank of america’s no fee program was the best. the best thing about it is NO PMI – that alone saved me about $100/month. My friends who do loans told me that they hope that none of their prospective clients hear about the bofa program. One reason why they can do this with almost no catch is because they are going to keep the loan for its entire life. Thats why they are able to shed all of the fees, because they are going to keep it in their portfolio. That goes to show you that it is a great deal. Of course shop around because rates, policies, and promotions change from time to time.
Does anyone know if there are any type of “pre-payment penalty?”
Thanks
I was referring to bofa’s no closing cost mortgages. Any pre payment penalty? If anyone has already inquired about this, please let me know. Thanks
No pre-payment penalty for the no fee mortgage unless they changed the rules in the past 6 months.
Buyer Beware! I have continually found B of A’s customer service appalling over 30 years in the real estate marketplace. We purposely did not mortgage with them but, over time, our loan was sold to them. Now we have an insurance loss and B of A requires an escrow account to release our monies to pay contractors repairing our home. They promised an advance two weeks ago, it has not shown up and they continue to ask for more documentation that they did not ask for initially. And, they admit this fact to me, don’t change their mind, and have never called me to tell me they need more paperwork ! If I don’t call B of A, I don’t learn about the delays. Just remember these hassles are common with B of A when you want to close an escrow on time, pay off your mortgage, or make home improvements. I have found them uncaring and difficult to deal with for 30 years. So, buyer beware…you get what you pay for.
They certainly don’t have knowledgeable mortgage loan officers. I had locked in the rate coupel of days ago on this no mortgage fee deal and found out that what I was promised was not what was locked in. The rep didnot know that the rate had changed and she was locking the rate with additional points to buy. I was surprised after I received the GFE a week later. Now when I went back to them complaining, they are like I cannot do anything about it as thsi is the rate that is locked down.. bla bla bla…I don’t know what to expect on the close. I can’t decide at this point to go with them or not.
We are currently selling our house and the buyers are using BOA. WORST SELLING NIGHTMARE POSSIBLE! BOA no longer gives confirmation of their loan until closing or very close to it so this is a horrible train wreck for anybody who is expecting notice prior to closing about a possible closing date. The mortgage processors in the branches are now paper pushers and low paid so not very good. They have to send everything to underwriting who won’t reveal ANYTHING to the buyers or sellers about their progress. STAY AWAY FROM BOA!!!!!!!!!!!!!!!!!!!!!!
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Deborah
http://termlifeinsurance2.com
Was pre-approved for the “no fee mortgage plus”, but 2 weeks to closing, we were told we need another 5% down on top of the 10% we are putting down. BoA knows how much money we have and that we don’t have another 5%. Now the lady handling it won’t even call us back!
i love reading your blog whenever i can, i dont often get the time these days, but usually have a quick read in my dinner break or just after i get home from work, sometimes its quite interesting reading – thanks.
I am a very educated buyer and the no fee mortgage plus beat the competition.
What is amazing is that you can lock in for free. I was working with BOA and a mortgage broker at the same time. Early in the process I locked in with BOA since it was free, over the next several weeks rates climbed.
Even when I locked in with BOA their rate/point combination was awesome. Essentially I pay no fees, but have 1 point @ 3K. My mortgage is 300K, and 90% LTV. Locked in at 4.75 on 2/1. BOA crushed all 80/10/10 options out there.
BOA Customer service sucks, but it is worth the $100 bucks a month I will save. I have no other accounts with them.
I provided my broker the GFE and he could not do anything even close.
BY THE WAY – THIS PROGRAM IS NOW DEAD. BOA WILL NO LONGER PROVIDE NO FEE MORTGAGE PLUS AS OF APRIL 09′.
Its not lender paid PMI. DOnt speak if you don’t know.
They’re crafty to avoid it. They don’t sell the loans to Fannie mae so they can avoid the MI requirement. After a few years Fanie Mae has the option to invest in it if customer paid on time.
thats a crafty way of getting round the regulations.
BE CAREFUL OF THIS PROGRAM WITH BOA.
ITS A COMPLETE JOKE. My client is currently purchasing a home and using the no fee program. The service is the worst I have ever seen in four years of experience. YOU PAY FOR WHAT YOU GET. Closing date is missed.
Phones calls and emails never returned. I tried to call the manager and never had a call returned.
Its basically a bad experience with these jokers. Go pay a little extra and get the service you deserve.
It all sounds great, but the customer service is NO GOOD. I’ve been waiting 31 days for them to close the loan and they still haven’t given me a closing date. They promise a 25 day closing, but now that we’re in deep, no such thing exists. GO ELSEWHERE.
Sounds good, but in practice the customer service is a joke. We have been waiting 31 days for our loan to close with no end in sight. BUYERS BEWARE. Go elsewhere. We may loose this deal because of BOA.
i really love reading your website , although i just started doing overtime recently, so it is less frequent now
All the negative comments about this program is true. It’s classic bait and switch. They will delay everything until 1 or 2 days before closing and all of a sudden say they need this or that and change the terms on you.
After the stretched it for 45 days, the promo was over and terms were changed, forcing us to either cancel and lose the deposit, or go with their scheme.
The loan center and officers can’t and won’t answer you questions, mislead, and LIE!
I hate Bank of America.
We have this mortgage, obtained in Oct. 07, before the credit industry went to hell. This mortage was perfect for us, and we had a very positive experience. It all depends on your scenario. We are not sure we will be in the house long, thus are fine with a slightly higher % rate versus huge fees up front. Everything was EASY! But we also have perfect credit history and a very large down payment. And we don’t even have a BoA in our town. I recommend this mortgage for like buyers.
I am a first time homebuyer so I can’t comment on whether it is better or worse than other offers. I can say that I shopped carefully and this seemed like a good deal. The rate was comparable to those of other financial institutions, with the added bonus of not having to pay most of the closing costs. They even told me that they would pay my legal fees regardless of who I hired. This is where I’m experiencing my problems with BOA’s mortgage.
My home has now closed and they are refusing to pay my legal fees because supposedly it was supposed to be on the HUD 1, as if anyone who doesn’t make thier living in mortgage banking even knows what the heck a HUD 1 is. BOA never expressed to me or my lawers that this needed to be done in order to have the legal fees payed. They made no mention of it at all, and so I assumed that like all of the other closing costs they automatically took care of this would have been too. I was dead wrong about that.
I have been spending the last 45 days trying to get them to pay what owe with no luck so far. The loan officer has referred me to customer service, who I have concluded must be specially trained to run the customer around in circles while pretending they don’t understand what you are talking about until the customer hangs up in frustration. I have talked to the vice president of the branch and to the bank’s closing lawyer. On every one of these paths I have run into a solid brick wall. I don’t really know where to go from here but I know I want what I am owed.
They also delayed closing for as long as they could and when they finally showed up at the table they had forgotten to include my escrow. As I had all of my earthly posessions on a truck at the time, because I had to get out of my appartment that day, I had no choice but to close anyways. My conclusion is that BOA is full of a bunch of unprofessional jerks, and it is no wonder that they needed a $22 billion hand out from the taxpayers because they contributed significantly to the near destruction of America’s financial market. They should have named themselves Plague of America.
I have been a client of Bank of America since college and it has offered good offers to me and I haven’t got any problems with it.
In 1964, Isbank partnered with Bank of America in the formation of Turk Dis Ticaret Bankasi, or Disbank. The partnership remained in place until 1981, when Isbank acquired full control of Disbank, after which 15 percent of the company was sold in a public offering. Isbank later sold off its 85 percent stake to Lapis Bank in 1993, but, when Lapis stumbled financially, Isbank retook its Disbank shares. Some 65 percent of the bank was sold to the Dogan Group in 1994.
ISP Private security company – http://security.ispozelguvenlik.com.tr