Tuesday, May 22, 2007

Bank of America’s new mortgage product

Bank of America now offers a no-fee mortgage to home buyers. The lender will not charge for loan applications, title insurance, appraisals and flood certifications. Private mortgage insurance, usually required when a borrower makes a down payment of less than 20%, will not be compulsory either.

Some costs, however, will still be paid by the borrower, including property insurance and taxes, recording taxes, and other services, such as home inspections.

Bank of America officials believe that mortgage borrowers are likely to take advantage of the bank's other services and less prone to switch lenders. Refinance loans and loans taken through mortgage brokers do not qualify for the program. To take out a no-fee loan, borrowers must have at least one account with Bank of America and obtain their loan trhough the bank's retail channels. The bank claims it has already issued $1 billion in no fee loans.

Meanwhile, the Fed Funds Rate, to which mortgage rates are tied, remains at 5.25%. The Fed decided to keep rates unchanged for the seventh consecutive time.

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