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BofA's newest mortgage: 3% down, no PMI, no FHA

CHARLOTTE, N.C. – Feb. 23, 2016 – A new mortgage program from Bank of America (BofA) will enable borrowers to make downpayments of as little as 3 percent while avoiding private mortgage insurance.
The Charlotte, N.C.-based lender is partnering with Freddie Mac and a Durham-based nonprofit, Self-Help Ventures Fund, for the program that cuts the Federal Housing Administration (FHA) out of the process.
“We need an alternative in the marketplace that helps creditworthy borrowers with a track record of paying debts on time,” says BofA managing director D. Steve Boland. “We think there are still a lot of uncertainties out there in working with FHA.”
Under the program, mortgages made by BofA will be sold to Self-Help, which will sell the loans to Freddie Mac. In the event of a default, Self-Help would take a large chunk of the losses before Freddie Mac, which helps eliminate the private mortgage insurance requirements.
Self-Help will also provide counseling to borrowers who are struggling to pay in an effort to prevent foreclosure.
To be eligible for the program, borrowers must have credit scores of at least 660 and incomes less than the area’s median. BofA says a $150,000 mortgage with a 3 percent downpayment and a credit score of 680 to 719 will cost borrowers about $782 per month, versus $887 per month for comparable FHA borrowers.
Source: Wall Street Journal (02/22/16) P. C1; Light, Joe
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Source: Florida Realtors Feed

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