Bank offering 0.25% off mortgage interest for asset transfer

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wwtas
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Bank offering 0.25% off mortgage interest for asset transfer

Post by wwtas » Fri Jan 12, 2018 9:09 am

I'm considering to buy a condo and Bank of America is offering a 0.25% mortgage rate discount upon transfer of >= $500k in assets to Merrill Lynch. I'm currently holding all my assets at Vanguard - I imagine I could just transfer part of my assets in kind (currently mostly admiral shares of total stock market index and total international stock market), leave them for a bit and transfer back in kind once the loan is finalized. Worst case (I hope) the funds would become investor shares instead of admiral temporarily. Loan officer confirmed there is no minimum time the assets have to remain with Merrill Lynch, i.e. could be taken out right away once the loan is final.

Anything I'm missing here or caveats with doing this to get the better rate? Why would they offer this without imposing a minimum amount of time assets have to stay there?

Angelus359
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Angelus359 » Fri Jan 12, 2018 9:24 am

Does this rate beat other rates, such as one from bankrate.com?

It likely might not.
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ThriftyPhD
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by ThriftyPhD » Fri Jan 12, 2018 9:24 am

Is it Merrill Lynch, or Merrill Edge? You won't be able to have admiral shares, but one option would be to convert to the ETF which has the same ER, and you could hold the ER at Merrill.

Things I would look for are exit fees, selling fees, account closing fees, etc.

Is the BofA rate cost competitive without the discount? Could you get as good of a rate elsewhere without needing to do the asset transfer?

With a $500k transfer, you could probably get some good brokerage transfer bonuses: viewtopic.php?t=196884

How would those bonuses compare to the cost of buying points to lower your interest rate?

TheHouse7
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by TheHouse7 » Fri Jan 12, 2018 9:29 am

I'm gonna bet your going to get a better rate with a local credit union. Shop around. :happy
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aristotelian
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by aristotelian » Fri Jan 12, 2018 9:36 am

I guess with no time limit you should be fine. They are betting that their funds are competitive enough and that you are lazy enough that you will keep your assets there out of inertia. Do make sure you are aware of in-kind transfer fees on both sides.

jcf
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by jcf » Fri Jan 12, 2018 9:37 am

Compare the rates first. Most likely BOA is offering higher rates than others. It really pays to shop around for mortgage rates. Try standard comparison sites, e.g. Bankrate, Zillow etc. Go with smaller banks and mortgage companies. My recent experience was 0.6% difference between big banks and the deal I got from smaller mortgage loan company.
Another factor is the process itself with big banks. They take forever to process the loan and ask for documents they shouldn't be asking to get the loan done. I lost on a house because BOA failed to close on a loan on time as their underwriters were clueless (I had the equivalent cash sitting in the bank account!). Smaller mortgage loan companies are more focused and looking to get your business. Stay away from BOA.

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WoodSpinner
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by WoodSpinner » Fri Jan 12, 2018 10:53 am

OP,

Agree with the other suggestions to check around for mortgage rates.

That said, I really like Merril Edge and have taken advantage of the perks BofA offer for having funds there. No mortgage but like the checking, ATM, Credit Card and Safety Deposit box.

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Jacobkg
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Jacobkg » Fri Jan 12, 2018 11:03 am

There was a similar deal with Chase where you could save .25% off mortgage rate by transferring assets to JP Morgan. I moved my funds over from Vanguard "in-kind". It cost nothing and took about a week. My loan closed and I indeed got the .25% rate discount.

Could I have gotten a lower rate outside Chase? Maybe. I didn't look that hard I admit. I did call a mortgage broker who said he couldn't beat it so that's something.

wwtas
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by wwtas » Fri Jan 12, 2018 5:52 pm

Thanks everyone! I'm currently shopping for the best rates, the question was mostly if there are any caveats with this assuming the BoA rate (after discount) beats other rates. Not done shopping, but so far the BoA rate looks pretty good in comparison (better than anything shown on bankrate.com for instance). Other transfer bonuses are likely not beneficial in comparison (relatively large loan).

I'll definitely watch out for exist/transfer fees etc before going this route, thanks! I don't want to switch to ETFs because I'd like to keep my portfolio in mutual funds, going to investor shares for a short amount of time and then back to admiral should be ok. I'm not planning to leave my assets with Merrill Edge, I prefer Vanguard.

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Earl Lemongrab
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Earl Lemongrab » Sat Jan 13, 2018 6:27 pm

I would not move the money for a short period. You would qualify for a cash bonus plus Preferred Rewards. People have reported being able to transfer Admiral shares to Edge. ETFs would always work.
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stan_the_man
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by stan_the_man » Sat Jan 13, 2018 9:02 pm

If the account is taxable, I would be worried about losing cost basis information. That could be costly.

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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by gostars » Sun Jan 14, 2018 4:15 am

One should absolutely make a copy of all cost basis information before doing any MF->ETF conversions or transferring anything in a taxable account to a new brokerage. If something doesn't go through properly, you can always contact the brokerage and get them to fix it. Absolute worst case, when you sell those shares, you report the correct basis on form 8949.

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Earl Lemongrab
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Earl Lemongrab » Sun Jan 14, 2018 11:19 am

stan_the_man wrote:
Sat Jan 13, 2018 9:02 pm
If the account is taxable, I would be worried about losing cost basis information. That could be costly.
It's pretty easy these days to record that. Most brokerages have an "unrealized gain" view, often with download capability. That being said, I've generally had basis info transfer over without problem. Note that with ACATS it can take a while to catch up.
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wwtas
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by wwtas » Fri Jan 26, 2018 2:53 pm

Update: I'm considering Chase instead of BoA at this point (pretty much decided actually). They are offering the same discount for transferring assets. I would also become a private client and might keep investments with them for a while to see if I like the benefits. I'd only do this if I get a self-directed investing account where I'm not bothered too much by their advisors and pay no fees - apparently one can trade admiral shares of Vanguard mutual funds there without transaction fees.

However, one person in Chase told me I need to have a wealth management relationship with them first in order to open a self-directed investing account. No fees for that but apparently I'd need to transfer to a different account with their wealth management first, then open the self-directed one and transfer assets there. Also the first account needs stay open and keep a minimum balance... This is kind of confusing and seems to not make sense. Was anyone able to open a self-directed investing account with Chase directly without going through an additional step? Any other thoughts on this?

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Earl Lemongrab
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Earl Lemongrab » Fri Jan 26, 2018 3:29 pm

What are the advantages at Chase over BOA/Merrill Edge?
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by cadreamer2015 » Fri Jan 26, 2018 3:39 pm

I did this with Bank of America in the fall of 2016. We transferred Vanguard Total Stock Market Admiral shares in-kind to Merrill Edge. Got a $1,200 bonus from BofA after 9 months. Transferred the shares the shares back to Vanguard after the 9 months were up. Got 0.25% off the interest rate for the life of the loan.

No credit union I found would underwrite our mortgage as we needed an asset depletion qualification. In our case BofA was competitive with other lenders I found through a couple of mortgage brokers before the rate reduction, so it was a no brainer to save 25 bps and get $1,200 bonus on top of that. I'm happy with the 3.25% 30-year fixed rate and term.
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wwtas
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by wwtas » Fri Jan 26, 2018 4:01 pm

Main advantages (for me) of Chase over Merrill:
- ability to trade Vanguard admiral shares (Merrill can only do investor shares or ETFs)
- various private client benefits, e.g. worldwide reimbursement on ATM fees, free outgoing wire transfers (both not offered by BoA)
- had a car loan with Chase before and it worked pretty smoothly, all-in-all their website and auto-pay set up seems more intuitive/convenient

My question is specifically about the self-directed investing account Chase offers, if it makes sense to go through another wealth management related account as an additional transfer step or if people got around that.

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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by cadreamer2015 » Fri Jan 26, 2018 4:48 pm

I guess I'd ask why are you trading? In my case I just let my Vanguard Admiral shares sit in the Merrill Edge account. The only transactions were the transfer in and the transfer out (minus the account closure fee, which was $45 as I recall). Any portfolio adjustments I needed to make I could do outside of the account at Merrill Edge.
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delconte
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by delconte » Fri Jan 26, 2018 4:53 pm

Chase should allow you to transfer directly to a self-managed account and not require you to go through a managed account.
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Earl Lemongrab
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by Earl Lemongrab » Fri Jan 26, 2018 5:01 pm

wwtas wrote:
Fri Jan 26, 2018 4:01 pm
Main advantages (for me) of Chase over Merrill:
- ability to trade Vanguard admiral shares (Merrill can only do investor shares or ETFs)
- various private client benefits, e.g. worldwide reimbursement on ATM fees, free outgoing wire transfers (both not offered by BoA)
- had a car loan with Chase before and it worked pretty smoothly, all-in-all their website and auto-pay set up seems more intuitive/convenient
I had read previously on the forums that Admiral shares weren't available at Chase anymore.

viewtopic.php?t=236694

Have you verified that?
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by denovo » Fri Jan 26, 2018 5:05 pm

TheHouse7 wrote:
Fri Jan 12, 2018 9:29 am
I'm gonna bet your going to get a better rate with a local credit union. Shop around. :happy

YMMV, but in my experience online mortgage lenders have the best rate.
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RetiredCSProf
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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by RetiredCSProf » Fri Jan 26, 2018 11:50 pm

Jacobkg wrote:
Fri Jan 12, 2018 11:03 am
There was a similar deal with Chase where you could save .25% off mortgage rate by transferring assets to JP Morgan. I moved my funds over from Vanguard "in-kind". It cost nothing and took about a week. My loan closed and I indeed got the .25% rate discount.
I am in this situation now with Chase on a HELOC application. If I transfer at least $250K into their brokerage, they offer a 0.25% discount on the HELOC rate and will waive the $50 origination fee for the loan. I don't have enough in my Vanguard portfolio, but my TRPrice portfolio would work. My Fidelity portfolio includes ETFs, which are not available at Chase brokerage.

The only incentive for me to move and then keep the portfolio in their brokerage would be to waive the annual $50 fee on the HELOC until I pay it off. There may be some other perks, like a free safe deposit box.

When I rolled over my Fidelity 403B to a managed IRA account with a different brokerage, Fidelity sent me a check and I had a gap of several weeks before the funds were rolled over. A couple years later, I transferred the funds in kind from the managed account back into Fidelity in a self-managed account, but I don't think I had a gap then.

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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by RetiredCSProf » Sun Feb 11, 2018 11:00 pm

wwtas wrote:
Fri Jan 26, 2018 2:53 pm
However, one person in Chase told me I need to have a wealth management relationship with them first in order to open a self-directed investing account. ... Was anyone able to open a self-directed investing account with Chase directly without going through an additional step? Any other thoughts on this?
I met with Chase last week to discuss possibly transferring my TRP tIRA into Chase brokerage to give me 0.25% off interest on the HELOC for which I'm applying there. Result: No, I'm not doing it!

The Chase salesman spent nearly an hour claiming that there would be no fees associated with my transferring my TRP account "in kind" into Chase -- without clarifying even once that he was talking specifically about a managed account.

He went on and on about how Chase would be able to offer me a 5-star account built with 5-star funds -- made it sound like a luxury hotel -- when, of course, he was referring simply to Morningstar 5-star ranked funds, which are accessible without having a Chase managed account. He was essentially asking me to liquidate my TRP account and move it into a Chase managed account of actively managed mutual funds, for which the net expenses would be waived in lieu of a Chase management fee.

Toward the end of the hour, he finally told me that I would pay a $50 per transaction fee if I moved my TRP account in kind into a self-directed account at Chase and kept the funds invested in TRP!

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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by gsmith » Mon Feb 12, 2018 1:16 am

RetiredCSProf wrote:
Sun Feb 11, 2018 11:00 pm
Toward the end of the hour, he finally told me that I would pay a $50 per transaction fee if I moved my TRP account in kind into a self-directed account at Chase and kept the funds invested in TRP!
There are a couple things my Chase advisor told me.

- Chase calls non-managed accounts "Self-Directed", and most fees are waived for Chase Private Client. ($250k+)
- Chase has a really crazy interpretation of Fiduciary rules applied to retirement accounts, and a self-directed IRA/Roth would require permission from compliance, and it sounded complicated and unlikely.
- I was the only "Self-Directed" client he had, and he understood that I was allergic to fees.
- Moving Fidelity SP500 Premium FUSVX from a Fidelity Brokerage Account to a Chase Self-Directed taxable account shouldn't be an issue

I got paranoid like everyone else, and read their mutual fund families book https://www.chase.com/content/dam/chase ... _FINAL.pdf

The transfer was successful, the FUSVX was not converted into investor class (FUSEX), and within a week or two the cost basis transfered, and we got our Chase Private Client free checking (no fees!), business account, and free museum card (within a month)

The only downside was waiting until Fed 15th for the 1099, but banks will be slower.

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Re: Bank offering 0.25% off mortgage interest for asset transfer

Post by rgs92 » Mon Feb 12, 2018 2:17 am

A quarter of 1% is $250 per $100,000 borrowed each year. 'not worth the trouble in my opinion.

You could probably find some discount broker offering a bonus for moving your money, but that's a hassle too for a very small gain.

You are probably better shopping around for a rock-bottom expense ratio, like the ~3-basis-point expense ratio on index funds from Schwab or Fidelity or the Ishares ITOT/IVV (total stock market/S&P 500) ETFs.

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