Bank of America offers No Fee Mortgage - A good deal?

By
Real Estate Agent with Bradenton Realtor and Sarasota Homes for Sale Anna Maria Real Estate

Bank of America latest product look quite nice. A No fee mortgage!

No application fee
no closing fees
no PMI (private mortgage insurance).

Guarantee to close your loan within 25 calendar days after the date you submit your completed loan application to them, or your first month's mortgage payment (principal & interest) is on them!

STOP!STOP!STOP!

Actually, as a Realtor and a mortgage broker I can usually do better as I can provide backup approvals
from Wells, Wamu, TBW, or Provident, or whatever. Since a purchase loan should be controlled by the realtor who represents the buyer, I will let you know that there is usually a longer turnaround time and the possibility that BoA might not close by the deadline. And I have doubt the deal is really so good as they advertise it. BoA is "well" known for their customer satisfaction.

In this case they would pay you something, but is a possibly lost deal worth that hassle? 

I don't think you as a Realtor want this, nor the buyer. I don't know  any Realtor who wants to do business with BoA as they will lose their grip on the loan process and they know going with a big bank means delay. It's just like gambling... Either they make it in time or not.

By going with a broker, not only can the Realtor bother the broker by calling up daily but can ask us to give backup approvals from another lender for "just in case" as well.  After all, it's doesn't look that great with the higher rate.

I always feel that the purchase transaction is so personalized that the broker and the realtor have to interact daily to weed out the loose ends and the little glitches here and there. Unfortunately for Realtors not aware of the glitches of the system the BoA program might just generate a lot of system turndowns.

IMO: A wise Realtor who really knows how the systems work would hardly recommend this program.

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Rainer
168,035
Matthew J Blum - (retired from the business)
Palm Beach Gardens, FL
I met with someone about this... all it really is (no such thing as a free lunch)  you take a hit to the rate.  Usually it is 1/4 to 1/2 in rate.  But hey no closing costs..
May 17, 2007 05:11 AM #1
Rainer
60,896
Axel Weiss
Bradenton Realtor and Sarasota Homes for Sale - Bradenton, FL
Sea to Sky Realty

This is a nice statement from a different forum:

Originally Posted by 86 GradCock The information being posted here is very good. But I want to clear up one common misconception about mortgage brokers. The banks want you to believe that brokers charge excessive "junk fees" or closing costs that are merely masked profits for the broker. This is not true if you are working with a reputable mortgage broker. Brokers do charge fees for services that a bank typically will not charge, things like processing or underwriting for instance. However, the advantage that a broker has over a bank is the ability to deliver a lower interest rate on your loan because they shop among many different lenders to find the best deal. Because of the competition among wholesale mortgage lenders, rates given to brokers are typically .25% to .375% lower than the retail rates at the bank. That spread in interest rates equates to about 1 to 1.5 discount points, or $1000 to $1500 for every $100,000 in loan amount. The higher the rate, the more the profit to the bank. They then use some of this profit to lower closing costs, however, a broker can almost always deliver a deal with a lower rate and lower closing costs than the bank. The only exception is with special "portfolio loans" that can only be offered by lenders that have their own money to lend, i.e. a bank.

I have been a mortgage broker in the Atlanta, GA area for over 11 years. I have had several opportunities to work for banks as a mortgage loan officer, but I prefer to do my business as a broker because I can deliver a larger variety of loan programs with lower rates and closing costs. I would highly advise anyone looking for a mortgage to check with a mortgage broker before selecting a lender. If you are working with a real estate agent, that agent is the best source for a referral to a good broker.

 

May 17, 2007 05:56 AM #2
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Rainer
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Axel Weiss

Sea to Sky Realty
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