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Low Cost Mortgages from Bank of America and ING Direct

By Erik Folgate

The mortgage business has been a hot topic lately after the recent fallout of subprime lenders and the restrictions put on them by the federal government. It was only a matter of time before the government started putting their hand in this market, because it was being abused by mortgage loan sharks. I am not a proponent of the government sticking their nose in everything, but there comes a time when the government needs to help protect its citizens. I think that consumers need to take the time to educate themselves more before signing the dotted line on a certain mortgage, but banks and subprime lenders need to have a responsibility to give loans only those that can truly afford to pay them back.

Bank of America and ING Direct are two companies that have stepped it up in the world of mortgage lending. It pains me to say that Bank of America actually did something right, but I have to admit that they finally made a decision that benefits their customers. Both companies will start offering low closing cost mortgages with competitive interest rates. Here’s a breakdown of what they are offering:

Bank of America

  • BOA is now offering a no-fee mortgage
  • This includes no appraisal, title insurance, loan origination, or application fees
  • They are also not charging Private mortgage insurance! That part really excited me. I think PMI is ridiculous. The company shouldn’t take on the loan risk if they think you’re going to default on the loan.
  • The program does not cover refinancing, only new purchases.

ING Direct

  • The difference with the ING mortgage is that it’s usually a 5/1 or 7/1 ARM.
  • They boast a 5.5% interest rate, but again, this is for an ARM.
  • $895 closing costs for houses less than $500,000!! Plus any applicable taxes and odd days’ interest
  • They guarantee their rate for 60 days
  • They require you to use one of their approved title companies.
  • If you’re interested in saving some big money in closing costs, check out these two programs. The reason I was interested is that I am looking to buy a house soon, and I HATE paying closing costs. I usually try to get the seller to pay them, and this may be an extra incentive to get them to pay for it if they know the costs will be cheap. You should never have to pay for points or origination fees. They are just fancy words for pre-paid interest. We’re in a buyer’s market, so put in your negotiating hat and see what kind of deals you can get!

    Does anyone else know any companies offering similar mortgage programs?

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • T S

    We are shopping for a mortgage and were interested in the ING 5/1 arm at only 5.5%. The $895 closing costs are deceiving, however. This $895 only includes part of the closing costs (i.e. it doesn’t inlclude title insurance, recording fees, etc etc etc). Beware … expect your closing costs to be closer to $3000 and this doesn’t include prepaids such as interest, insurance, etc

  • erik.folgate

    Hey TS,

    Thanks for the tip. I should have known that the $895 did not include EVERYTHING. ING should not advertise it that way. It’s pretty misleading to me.

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