Bank of America’s new no-PMI, no-fee mortgage program isn’t all it’s cracked up to be, claims Lending Clarity:
BofA will give you a conforming 30 year fixed rate for 6.25% with 1.001 Points. Wait a minute, points? I thought this was a No Fee loan? Apparently, in BofA’s world, points are not fees.
So how does this quote compare to a typical market deal? No difference.
It may not be common knowledge to consumers. But when putting less than 20% down on a conventional loan, anybody can do a single loan and not pay for mortgage insurance. It’s called lender-paid mortgage insurance. Rather than collecting a premium for a third party MI company, the lender charges a higher interest rate and self-insures against the potential loss. It just isn’t used much because mortgage insurance is temporary and the higher rate is permanent.
- The Truth About the BofA No Fee Mortgage Plus loan [Lending Clarity]
- BofA waives private mortgage insurance on ‘no-fee’ loan [Inman News]