Pay me now or pay

Pay me now or pay me later? Bank of America is test-marketing a no-fee mortgage in Washington state that the bank says carries the same interest rate as the loans it offers in states where borrowers pay fees. That could make consumers take seriously BofA's claim that its No Fee Mortgage Plus loan is "A Revolution in Home Buying."

BofA says that not only do borrowers get out of paying closing fees, but they can take advantage of lower interest rates once a year without paying a fee. Unlike most other loans, there's also no requirement to pay for private mortgage insurance when making down payments of less than 20 percent.

No-fee mortgage loans often often carry higher interest rates, though, which may allow lenders to recoup the savings homebuyers realize at closing time and more. That's the case with the no-fee mortgage offered by BofA rival Wells Fargo. But when the Seattle Times looked at both loans, Wells Fargo's no-fee loan with the higher interest rate was still a better deal than BofA's (assuming interest rates don't come down).

So it apparently still pays to shop around, and ask whether a particular no-fee loan is a revolution in home buying, or a revolution in marketing.
--Matt Carter, Inman News

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.