The perfect borrower?

Imagine how calm the mortgage, housing and financial markets would be right now if every prospective homebuyer was like "PT," a certified public accountant who works for a technology company in Texas.

PT says he and his wife were able to put together a 20 percent down payment on a townhouse by paying down their costly debts and utilizing no less than FOUR bank accounts (two checking and two savings) to eliminate fees and maximize the interest rates they earn on their savings.

PT -- those are his initials --  is the kind of guy who worries about little details like what's the best deal in a video rental plan. Why was it important for him to have a 20 percent down payment? Because he wanted to avoid the cost of private mortgage insurance, he says (a not insignificant cost, these days, and we've pretty much said goodbye to piggyback loans).

PT, who reveals these and other intimate details about his financial life on a blog, Prime Time Money, wants to know if InmanBlog readers have had any experience comparison shopping Bank of America's No Fee Mortgage PLUS loan. 

BofA promises the loan carries no "junk fees" and pays third-party charges for stuff like title insurance, mortgage insurance, appraisal costs, and a credit report. There are skeptics, but BofA says that if you can close on a better deal, they'll cut you a check for $250. PT says he did just that -- and hasn't been able to get the $250 check out of BofA.

So, anyone else explore the BofA No Fee loan and end up finding a better deal? Did you or did you not get the $250 check?

PT's blog is full of advice that gets you wondering: If lenders are now fighting over borrowers like PT because they are safe bets to extend credit to, will some of those borrowers end up with the upper hand?

UPDATE: PT writes to say he got the check on Dec. 12. He says that he initially missed a step in the process to claim the check -- he was supposed to call an 800 number and take a survey -- and he had to spend "2 or 3 hours" making phone calls, taking the survey, and faxing his HUD-1 settlement statement from his Sept. 28 closing. PT says "Bank of America doesn't make it easy to understand and follow this process and claim your $250" but that "Ultimately I'd say it was worth it." Interestingly, he says, there's only one person at BofA handling these claims. Read all about PT's experience at Prime Time Money.

One reason BofA has said it thinks it can make money on its "No Fee" loan is that it's only available to BofA customers. If you're not already a customer, you have to open up an account to qualify for the loan. Within two years, the bank says, its average mortgage customer uses almost six other services, such as checking accounts or credit cards, which can generate very nice fees, thank you very much. Especially from consumers who don't know to play the game.

But it's clear from Prime Time Money that PT does, in fact, know how to play the game. He keeps the minimum he needs in his checking accounts to avoid fees, and keeps the rest in linked, savings accounts that pay interest. PT may not be earning as much interest as his deposits are earning for the banks that hold them, but who knows, given the deteriorating performance of not only home and auto loans but credit card debt.

While scrupulous about paying off his credit cards, PT also knows how to use this debt to his advantage. In his post on his debt reduction goals, he says he loves the 0 percent introductory rates offered on some credit cards.

These "pre-approved" offers often include an option to transfer balances from other credit cards you're paying off at a higher rate to get a short breather (6 months, 12 months, etc.) from high interest rates. Some credit card issuers will even offer cash advances with no or low temporary interest rates.

You have to read the fine print, but depending on the size of any balance transfer or cash advance fee, these offers can make sense -- if you can pay the debt off (or transfer it again) before the rate goes up.

If, like PT, you never have to make any payments at the higher interest rate, the lender can't be making much, if anything, on these introductory offers. Depending on what's happening with inflation, they may even be losing money in real terms.

"I love the 0% credit card," PT writes. "This is the ultimate in leverage. It's a dangerous game for the undisciplined though. We always aim to pay these off a month before they actually expire."

PT doesn't say he's done this, but you could -- and plenty of people with good credit do -- take a cash advance at a low introductory rate, move it into a savings account or CD that pays a higher rate, and pocket the difference for as long as the introductory rate lasts. On Wall Street, they call it arbitrage.

You could conceivably makes even more buying stocks or trading futures -- but then you're taking on risk. In fact, you've entered the realm of the house flipper, borrowing money to purchase an asset that you HOPE (rather than know) will appreciate so you can turn a profit.

So far, lawmakers and regulators have largely been content to let consumers -- and lenders -- take on the risks associated with introductory rates on credit cards, auto loans and home loans. As Congress looks at curbing some of the most abusive lending practices of the housing boom, many would argue that its important to remember that depending on the circumstances, they're not always a bad deal for consumers. Kind of like that other bugaboo, yield spread premiums.   

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