I have been exchanging e-mails for about a week with a mortgage officer at Bank of America. My current mortgage is with them and I THOUGHT it would be faster and less expensive to simply re-fi with them for 15 years. I also was looking at other banks just in case.
I was told that re-fi costs for an existing customer would be about $1,500 and was not pleased. Then, this same party e-mailed me asking me to pause my entire refinance search until April 6 because:
"I just heard today that the branches are going to have a Fixed Fee Refi soon. Don't know the details yet, and it has to be done in a branch. They aren't giving the retail loan officers this product. It is to be available, I believe, on April 6."
He also admitted that 15 year mortgages at BofA have "not been that attractively priced these days" and that this was expected to change also. (My research showed BofA to be the only bank charging the same or HIGHER interest rate on a 15 year over a 30. ODD.)
In any event, I trust this person would not tell me it would be worth waiting until April 6 and pass me off to a branch instead of doing my re-fi themselves if they didn't have some knowledge that waiting would be worth it. Why only branches can use this new product escapes me.
I just wanted to share. I can find NOTHING about this online at all. I hope I didn't stop looking to find out this individual is either wrong or the offer sucks when it comes out.
Just sharing in case someone hears something and can add to this.
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April 6th is when the Home Affordable Refinance & Modification programs are supposed to be available through banks. Wonder if this is what your officer was talking about.
BOA is notorious for segementing their financing programs to their different groups. They have always done this. When they were buying loans on the wholesale market they had specific programs that their wholesale side only had and not their retail or bank branches. Their were other programs that were vis-versa as well.
Either suck it up and pay the $1500 in fees and the get the interest rate you are comfortable with or risk waiting it out to see what this new program is with low fees. Just a word of caution, there is NO MYTHICAL free loan. They make money off of you somehow. Otherwise why would they do it. Give you a ball park of low rates and low fees. We are offering 15yr. 4.25% with 1 Pt. Origination and $1100 of bank fees. All other title fees are extra. I hope this helps to determine your cost and potential savings.
Keep us posted. I was in a BoA branch this past weekend and was shocked at how lame their financing offers were. It seemed ot me that they weren't even trying.
Colt2001 said:Just a word of caution, there is NO MYTHICAL free loan. They make money off of you somehow. Otherwise why would they do it. Give you a ball park of low rates and low fees.
I thought a mortgage lender would make money off of you over the life of the loan (in interest) even if you manage to pay it off sooner, you would be their customer and not someone else's?
That is one way to look at it. Lender's do make money over the life of the loan if they service it, which is why they offer Mortgage back Securities in the first place. But every lender looks at the upfront bottom line as if the loan was going to be sold and transferred to Fannie Mae/Freddie Mac. Some do service their own loans and make servicing money as well. But most lender's are not in the business of starting out with a negative profit on a loan considering the loan may be sold to Fannie/Freddie.
Colt2001 said: Just a word of caution, there is NO MYTHICAL free loan. We are offering 15yr. 4.25% with 1 Pt. Origination and $1100 of bank fees. All other title fees are extra.
I never said I wanted a "free loan" and the "we" in your response makes me think you are a competitor to BofA, so I think we have to keep that in mind to be fair.
I am not thrilled with BofA, but if BofA is simply refinancing it's own mortgage one would think you don't need to do many of the processes another lender would. Why would you research title on a house when you already did that and hold the note on the mortgage?
That said, I am going to wait until the 6th and hear what they say. I do have feelers out elsewhere in case this was a waste of time and am ready to close on the 7th if it was possible.
Another comment on the "no free loan" thing. BofA makes about $7,000 on YEAR on mortgage interest in my current loan and has made (at that rate) $50,000 or more interest on me not to mention the money they will pocket each month on my new loan. I know banks will not agree, but consumers paying any "fees" to a bank for a mortgage is bogus. The bank doesn't make back ALL of their internal costs on the first mortgage payment's interest?? Right!
Colt-- Who is "we?" Do you work for BOA or someone else? Just curious.
No one claimed there's a "free loan" out there. But of course it's worth comparing products. And yes, for some people paying very little up front is better than getting the absolute lowest rate out there. It depends on your long term plans for the property among other things.
COBBCITY said: I never said I wanted a "free loan" and the "we" in your response makes me think you are a competitor to BofA, so I think we have to keep that in mind to be fair.
I wasn't damning BOA, I was just making the point that they make up their fees in some fashion. I have never seen a true no fee or low fee loan that didn't jack up the interest rate. The question is, as RJG correctly said, how long are you going to be in the property. If you are going to be in the property for 3-4 years take the no fee option. If you plan to be in the house for 10 years or more, take the lower rate and pay the fees.
COBBCITY said: The bank doesn't make back ALL of their internal costs on the first mortgage payment's interest?? Right!
Sorry this is simply conjecture and although it sounds right, is totally false. Banks/ mortgage backed security investors spend thousands of dollars upfront on the production and sales side on each loan. They dont make their upfront costs back for 1-2 years at a minimum, on smaller loans even longer. Particularly, I am speaking of the entity that purchases the servicing rights. All the costs are passed on to that buyer. If the majority of a portfolio refinanced or sold off in 2 years or less the investor would lose their shorts and their would be no MBS markets. The investors buy a portfolio assuming an actuary table of a majority of the loans stay on the books for years for them to make any money. The spreads just are not there for the investors to make any money in the short term.
By the way just because your lender (I.E. BOA) services your loan does not mean they own it. That is why your credit report will read Fannie Mae or Freddie Mac on it under your Chase, Wells, Citi, or BOA tradeline. They are just servicing the payments and pass on the potential profits to the institutional investor. Who then passes that profit on to the MBS bond holders.
RJG said: Who is "we?" Do you work for BOA or someone else? Just curious.
I was speaking of banks/lenders in general. I dont work for BOA, they are too slow in underwritting for my taste. I work for a Regional Community FDIC Bank in Texas. We lend in all 50 states on conventional products.
By the way, to the OP, for no bank fees or origination fees I would offer 4.625% 15yr. in most cases. Just for you to compare with BOA.
I also forgot to answer the title insurance question. You have to buy title insurance because the former policy only insures the original loan and insures clear title on the original transaction. The new mortgage lien and investor needs to know that the title is clean and no other lien effects the superiority of the new loan. What you are talking about is a loan modification. If you modify the terms of the original lien then you do not need a new title policy. But no lender does that unless there is a distressed situation. When you refinance you are paying off the original loan which means you are paying off the original invester/bondholder. The original bondholder is not going to modify because that means they get different terms on their money than what they lent to the Bank and finally to you in the first place. When you refinance a new bondholder, through the new MBS Security that is being created by the Mortgage Loan, is agreeing to the new interest rate and needs to be protected against hidden liens, hence you need a new title insurance policy.
Colt2001 said: They dont make their upfront costs back for 1-2 years at a minimum, on smaller loans even longer. Particularly, I am speaking of the entity that purchases the servicing rights.
I see your point and have had past mortgages sold. However, my loan was originated by BofA and is being serviced by BofA who is pocketing my monthly interest. Certainly, in that case, their upfront costs are taken care of quite quickly. I am simply asking BofA to "change my interest rate" and keep me as a customer. Now, I understand they just can't change the rate, they are going to have to create a new mortgage and pay off the old.
However, their costs to do that should be minimal, so I expect them to be minimal to me also. Am I not correct that the current mortgage holder simply refinancing into a new mortgage also held by them is ideal when it comes to saving upfront costs?
Not debating you. I do find your knowlegde helpful and appreciate it.
Colt2001 said: I also forgot to answer the title insurance question. You have to buy title insurance because the former policy only insures the original loan and insures clear title on the original transaction. The new mortgage lien and investor needs to know that the title is clean and no other lien effects the superiority of the new loan. What you are talking about is a loan modification. If you modify the terms of the original lien then you do not need a new title policy. But no lender does that unless there is a distressed situation. When you refinance you are paying off the original loan which means you are paying off the original invester/bondholder. The original bondholder is not going to modify because that means they get different terms on their money than what they lent to the Bank and finally to you in the first place. When you refinance a new bondholder, through the new MBS Security that is being created by the Mortgage Loan, is agreeing to the new interest rate and needs to be protected against hidden liens, hence you need a new title insurance policy.
I absolutely think you're correct and I will always be a believer in Title Insurance. My title insurance helped to resolve a situation in which I was the last of 4 new condo units to close and I was encumbered with a $250,000 +/- lien.
And it was resolved quickly, too !
So your point is well taken about how one will need a new title insurance policy. Thank you!
BOA may give you lower fees to keep you as a client and simply make less margin of profit on the deal just to keep the servicing protfolio. They are known for doing that. But the upfront costs on the sales, production, and portfolio side do not go down for an existing customer compared to a new customer. The process is still the same and the costs are still the same to originate the loan to their investors.
By the way as I mentioned before just because BOA services the loan does not mean they own the loan. More than likely they do not. No bank has the liquid reserves to lend their own account holder's money on the unbelieveable scale that BOA operates on. They merely service the loan (for a fee) and pass the profits on to their WallStreet Investors or Fannie/Freddie, who then passes the profits on to their MBS Bondholders. This all gets really complicated but BOA is just the face or the "agent" if you will of the investor but not the lien owner. BOA does portfolio some products but the majority of their stuff is serviced through their company and sold to WallSteet or Fannie Mae/Freddie Mac. This why I am saying the that BOA and their investor's dont make any money upfront, but in the long term. BOA really doesn't own the loan in the first place, they just service it for the investor. They pass all of the upfront costs on, at a profit, to the investor, who then sells a huge multi-million dollar bond package in MBS securities to a Bondholder.
This is weird, for some reason, by above statement is coming out like a moron wrote it. i did not write it with all the gramatical errors. Somehow it FW is posting it phonetically.
When I try to edit it, it is fixed but when i post it is all messed up. Odd, really Odd
BOA may give you lower fees to keep you as a client and simply make less margin of profit on the deal just to keep the servicing protfolio. They are known for doing that. But the upfront costs on the sales, production, and portfolio side do not go down for an existing customer compared to a new customer. The process is still the same and the costs are still the same to originate the loan to their investors.
By the way as I mentioned before just because BOA services the loan does not mean they own the loan. More than likely they do not. No bank has the liquid reserves to lend their own account holder's money on the unbelieveable scale that BOA operates on. They merely service the loan (for a fee) and pass the profits on to their WallStreet Investors or Fannie/Freddie, who then passes the profits on to their MBS Bondholders. This all gets really complicated but BOA is just the face or the "agent" if you will of the investor but not the lien owner. BOA does portfolio some products but the majority of their stuff is serviced through their company and sold to WallSteet or Fannie Mae/Freddie Mac. This why I am saying the that BOA and their investor's dont make any money upfront, but in the long term. BOA really doesn't own the loan in the first place, they just service it for the investor.
Colt2001 said:This is weird, for some reason, by above statement is coming out like a moron wrote it. i did not write it with all the gramatical errors. Somehow it FW is posting it phonetically.
When I try to edit it, it is fixed but when i post it is all messed up. Odd, really Odd it's been going on all morning.
Colt2001 said:This is weird, for some reason, by above statement is coming out like a moron wrote it. i did not write it with all the gramatical errors. Somehow it FW is posting it phonetically.
When I try to edit it, it is fixed but when i post it is all messed up. Odd, really Odd
It's an April Fools joke. Only you can see your grammatical mistakes.
I just visited a BofA branch near my office to make sure I was not lied to. Sure enough, the mortgage rep confirmed they had a "new mortgage program" coming out April 6th and gave me her card. I told her all I had heard and she just kept nodding, but I got the impression she could not say much. She did acknowlegde she had not been given all the details yet.
I am to call her Monday to be sure what she offers is indeed better than I can get elsewhere. If so, she said to have all my paperwork from the last loan handy and it would take us about an hour to get through the process.
We'll see, as I said to her if they are going to offer an unattractive rate on a 15 year just to say "one low fee" I am not a fool. I am not paying BofA thousands of dollars in extra interest just to save a couple in fees.
I guess I remain on hold until Monday, but at least I know something is coming.
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