No Fee Mortgage

Asked by Ronnie, Philadelphia, PA Mon Aug 11, 2008

I'm seriously considering going through BofA for my 1st time home loan b/c they have a program that pays all closing, application fees, etc. as long as you have a savings and/or checkin account with them. But they're telling me I need no less than 15% down, which is a problem. Does anyone know of another lender that provides a simialr program??

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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Mon Aug 11, 2008

Any lender or mortgage broker can provide a "No Fee" mortgage. The way BoA and others do it is by selling you a rate of interest that is higher than the base rate offered by the lender. The overage is used to cover lender, appraisal, and title fees. Mortgage brokers must disclose the amount of the overage in writing; banks and direct lenders are exempt.

You will still be required by BoA or any similar lender's program to pay for your escrow impounds, state and local transfer taxes, and interim interest. In many cases, these fees will be higher than the lender, appraisal, and title fees that BoA "doesn't charge".

If you want a lower down payment, then FHA may be the best way to go, unless you can find a bank willing to lend a combination of a 1st mortgage and 2nd mortgage. The problem is with PMI (which is required by Fannie Mae & Freddie Mac on any single loan amount over 80% of purchase price) - the PMI companies have suffered massive losses due to foreclosures and have dramatically tightened their guidelines on loans they will insure.

BoA could go to 10% down, but PMI might not be available at any price with so little down, or BoA may be unable to absorb the cost of lender-paid PMI in the "No Fee" mortgage offer.

By the way, if you look at BoA's "No Fee" mortgage comparison to a "traditional" mortgage on BoA's web site, many of the charges BoA claims other lenders charge rarely appear - and some CAN'T be combined.

Don't be lured in by ANY lender's marketing gimmick. Shop at least three lenders. Ask your Realtor for a suggestion.
1 vote
Chris & Step…, Agent, Philadelphia, PA
Mon Aug 11, 2008

Do you have a buyers agent that is helping you with your purchase ? If not, feel free to give us a call. These are questions your buyers agent can help you out with. Any lender can provide a program that covers your closing costs - it is called sellers assist. If you get a 6 percent sellers assist, that will cover all of your closing costs. It is not like they go away, put at least its less money out of your pocket - it just gets built into the loan.

Your best bet would probably be FHA, which allows a lower downpayment ( only 2 1/4 percent down) and allows for up to a 6 percent assist. The other option would be to find a conventional loan for 5 or 10 percent down, but you may not get the 6 percent assist. Feel free to email us from our website below. We know many top mortgage professionals in Philadelphia. Are you already under contract for you property ?
0 votes
Jeremy S. Hi…, , Cherry Hill, NJ
Mon Aug 11, 2008

I have actually seen HUDS(closing sheets) with BOA program. What they do is give you are higher rate to make up for the closing costs that they cover. You still have to escrow for taxes and insurance. Its best that you negoiate the seller to pay your closing costs with your offer to purchase. I can save you by waiving junk fees. Call me to get a good faith estimate.
0 votes
Michael D De…, , 18969
Mon Aug 11, 2008
Using a program with no closing costs isn't always in your best interest. Usually you are charged more in interest for the privilidge of not paying some closing costs. You may be better served asking a seller for a seller assist for closing costs. You would have the lower rate and get your closing costs paid for. The best of luck to you.

Michael D Delp
Mortgage Pro
4802 Old Bethlehem Pike,
Telford Pa. 18969
Ph- 215-453-1025
Fax- 215-453-1012
Cell- 610-762-0318
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