Bank of America recently announced it is offering no-fee mortgages and will not charge for private mortgage insurance (PMI).
You will not pay fees for: Bank of America will not charge for applications, appraisals, loan originations, title insurance, or flood certifications. BoA has also announced they will not charge for PMI, which is often required for borrowers who put less than a 20 percent down-payment of the house’s purchase price.
You will pay fees for: Refinancing is not covered under their new program and borrowers are still responsible for transfer taxes, recording fees, their own title insurance (which is not always necessary!) and legal fees, among other charges.
Other perks: To remain competitive with their rates, Bank of America will also pay $250 to people who obtain mortgage approvals but close with other lenders. BoA also guarantees the loans will close within 25 days unless the customer requests more time or there are extenuating circumstances.
Why are they doing this when no one else is? Bank of America is the nation’s 2nd largest bank, and it seems as though they are making moves to take over the top spot. This is the latest in a series of moves that is intended to shake up the industry, and more importantly, bring lasting customers to BoA.
Concerning this most recent deal, Floyd Robinson, the president of BoA’s home loan business said, “We’ve found that when a customer has a mortgage with the bank, he typically buys five other products, so it’s a great way to build a relationship.”
If you are in the market for a new home, it can’t hurt to at least look at Bank of America as an option. It might even save you a couple thousand dollars. 🙂
Avoiding PMI – Don’t Pay it if You Don’t Have to!
When you’re looking to buy a home, there are dozens and dozens of different fees you’re going to pay.
One of the most notable is the PMI.
You have probably heard about PMI if you have done research on mortgages and home loans. Getting your mortgage through BoA is a great way to avoid the PMI charges, but there are several other ways you can get a mortgage without being required to get PMI.
One of the most obvious ways to avoid the PMI is to put at least 20% down on your mortgage. With just about any mortgage company, they won’t require you get mortgage insurance if you put 20%. It’s a lot of money to save up, but it can save you thousands and thousands of dollars throughout the course of your loan. You might also be able to avoid PMI if you refinance your mortgage.
Other types of loans, like one called an 80-10-10, might help you achieve the same goal, with less out of pocket. In a nut shell, the 80% is the main mortgage loan, while 10% is the buyer’s down payment, and the final 10% is a second loan. This second loan, which piggybacks the 80% loan, will complete the full value of the loan needed, but without traditional PMI payments.