Bank of America Lender Credit for Interest Rate Buy-Down

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  • #62276
    NiiBoye
    Member

    Hi ALL!
    So prior to today, my loan terms reflected that I will be receiving a 2% lender credit from BofA to buy-down the interest rate. My MC also confirmed this but upon signing my loan application today and reviewing it, that credit was not included in the buy-down amount; my MC said it’s because I am purchasing a multi-family property?! This seem unfair as this changes everything! 2% equates to 14k in my situation and it hurts to have that added in the initial calculations only to be withheld this late in the process. Tim, are you able to she’s some light on the accuracy of this? Or anyone who experienced this. Why the distinction and why does it matter what I’m purchasing? My thought process is that it’s a grant, not a loan, so I should be able to take advantage of it. And can I utilize this credit in another way such as paying realtor fees as oppose to buy-down? I do not want to leave 14k on the table!!!

    • This topic was modified 1 year, 10 months ago by TTrumble.
    #62319
    TTrumble
    Member

    Hello NiiBoye,

    I’m afraid you’ve either left something out of your post or have misunderstood something along the line.

    What is it that qualifies you for the 2% that you say you should be receiving? That figure doesn’t match up with anything BOA is doing right now.

    Your best best is to consult directly with your counselor about this to make sure you are both on the same page about what is happening.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #62324
    Nelsont
    Member

    Why do you have to pay realtor fees? You don’t if you use naca. BOA will pay the fees and all closing costs for naca members. Besides it’s typically the seller that pays the realtor fees for both parties if you were not a naca member. This is a big reason why it’s easy to get seller concessions – a naca sale is actually cheaper for the seller out of pocket!

    #62325
    NiiBoye
    Member

    Thanks you so much Tim!
    I wish my MC would respond half as quickly as you do… but she termed the 2% as a “lender credit of 2 points” and if I accepted that credit, I would only be allowed to buy-down the interest rate to 1.75%. I didn’t realize this as a “thing” until she presented it to me so I’m unsure of what qualifies me for it; but to provide detail my purchase amount is $715k at a rate of 3.25%. I wanted to buy-down to 1.50% but when she told me about the above option, my obvious response was “hell yes!”…only to be disappoint at our next meeting. This is why I was hoping to get some clarification from you or anyone who has been presented this option as well. What figure does match with what BofA is doing Tim?! And what terms should I use in correspondence with my MC to make sure I take advantage of all options?

    Nelsont,
    Thanks for chiming in as well and everything you said is correct; I’m not paying any fees associated with realtor services. My comment was geared toward a way to recoup this mysterious “lender credit” by increasing my realtors fee or allocating it for repairs as oppose to using it to buy-down, which I cannot apparently.

    If my MC was confused or erred regarding the application of this “lender credit”, I want to clarify and make sure I’m not leaving any funds I can take advantage of.

    Thank you all once more

    #62326
    Nelsont
    Member

    You are definitely confusing things. In real estate lingo a point is an arbitrary unit of measure defined by the bank in step-wise percentage decreases. In this case 1 point = 0.25% interest rate reduction. 2 points is half a percent (0.5%) which is exactly what BOA is offering at the moment. Not at all 2%…it’s 2 points. Prior to September is was 1% or 4 points. It may go back up again to 1% in 2020 but, that’s not definite.

    All realtors will have different fees. BOA just pays them. They don’t have a a limit that are able to go up to. It’s just part of the program. They pay it so if you get your realtor to increase their fees the only thing that would happen is you realtor gets more money. Nothing else would happen except for the possibility of BOA noticing the fee increase and questioning it.

    • This reply was modified 1 year, 10 months ago by Nelsont.
    • This reply was modified 1 year, 10 months ago by Nelsont.
    • This reply was modified 1 year, 10 months ago by Nelsont.
    #62330
    NiiBoye
    Member

    Nelsont so as I stated earlier, purchase price is 715k. It costs 1% of purchase price to buy-down 0.25 which is also equal to 1 point right? So considering the purchase price of 715k, 1 point or 0.25 will amount to $7,150 right? So 2 points will be 14,300 or 2% right? What am I missing?

    #62331
    Nelsont
    Member

    Yes.

    The lender credit is a misnomer. In fact BOA does not call it a credit themselves they actually only refer to it as a rate reduction. They are not giving you 14k or 2% of the purchase price. They are simply offering you a better interest rate. Almost like having a 750 credit score will get better offers than having a 650 score. Just to use the language correctly points refers to only the interest rate and % refers to the value of the points. It’s splitting hairs but that’s why if you talk to someone without the full context when you say points the assumption would be 0.25% increments and not cost. If you are a priority member you will be offered this I think.

    • This reply was modified 1 year, 10 months ago by Nelsont.
    #62333
    NiiBoye
    Member

    Ok I see! So can you or anyone confirm any other criteria besides being a priority member that would QUALIFY or DISQUALIFY you for this rate reduction? I am a priority member but I am also purchasing a multi-family property.

    #62334
    Nelsont
    Member

    The concept is naca. The program is bank of america. Try looking on their website. When citi was issuing loans they had different rules for the naca buy down program. But I do believe all properties are acceptable. I could be wrong.

    #62335
    NiiBoye
    Member

    Ok thank you! I’m gona try calling them as well

    #62344
    Peapod0609
    Member

    It sounds like your MC is referring to Bank of America’s grant program with NACA. Anyone who is at 80% or less of the median family income in the MSA they’re purchasing in gets an automatic 0.50% lower interest rate from Bank of America. I received this same grant on our home that we closed on last Friday.

    Now, I have no idea about why a multi-family home would be not included in this, I never heard about anything like that. My understanding was that as long as you 1) Were at or below the 80% median family income in the MSA you are buying in and 2) you are purchasing in a qualified MSA for the grant, then you would automatically receive it when you sign the bank app.


    @TTrumble
    have you heard about the BOA interest rate reduction grant not being available to people who are buying multi-family properties?

    #62346
    NiiBoye
    Member

    Peapod0609
    Thank you for providing more clarity. I hope someone @TTrumble can clarify the multi-unit factor because I meet the other criteria you mentioned above, as far as I know. I attempted to look on the website and didn’t get anywhere.

    #62347
    southflorida
    Member

    I just wanted to clarify something @Nelsont mentioned about Realtor fees, with the NACA program, Bank of America does not pay for the seller’s or buyer’s realtor fees, that’s paid by the seller just like in any type of loan.

    Bank of America pays for some closing costs, but definitely nothing to do with realtor’s commissions.

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