Relationship mortgage discounts for moving a million assets

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
samstar
Posts: 52
Joined: Wed Jul 25, 2018 12:34 am

Re: Relationship mortgage discounts for moving a million assets

Post by samstar » Sun Jun 02, 2019 10:06 am

......
Last edited by samstar on Thu Jul 11, 2019 2:26 am, edited 1 time in total.

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Sun Jun 02, 2019 10:32 am

desi_kalle wrote:
Fri May 31, 2019 7:39 pm
Impressive rate. Wonder what the 5/1 or 7/1 would have been. Was this a standard offer or did you have to "price match" with another lender?
This did involve a price match. As I understand it, the mortgage banker took Citi’s 2.875% rate (which includes a $1M AUM relationship discount) to his management, and got them to match the rate. Then he’s able to apply BofA’s relationship discount on top of this. It sounds like double-dipping, but it definitely works in my favor.
samstar wrote:
Sun Jun 02, 2019 2:07 am
What range was your credit score? 760+, 780+, 800+? Thanks.
780+
sc9182 wrote:
Sun Jun 02, 2019 7:56 am
Have any of us tried getting Interest-Only ARM mortgage for 10/1 or 7/1 ARMs ? What would be BoA requirement for I/O option - is it more down-payment or higher rate or both ? (last time I checked Chase private-client, their Jumbos had .25% higher rate, and minimum 25%-30% down payment required). Hoping for clarity from either BoA or WF considering these low rates ..

Thanks in advance
sc9182
I did look into this with Citi. It was a 1/8% difference for 30 year fixed and 1/4% for 10/1 ARM (10 year interest only period in both cases). If I remember correctly, going interest only improved the lender credit on the 10/1 ARM, but made it worse on the 30 year fixed loan. It seems possible to surmise that the premium they charge is in between 1/8% and 1/4%.

I was tempted, but didn’t end up going interest only. I did some modeling around it and the time to break even by investing the difference wasn’t as quick as I would have guessed. IO would have added more interest rate risk and sequence of returns risk, which are already significant for a traditional 10/1 ARM. And my co-borrower likes the forced savings of amortization. Plus it’s a harder product to negotiate on, since it’s nonstandard.

So I like the idea of foregoing amortization in the abstract - I’m pretty confident I can get > ~3% returns elsewhere - but the rate difference, risk management, and other practical factors convinced me to shy away from the interest only product.

I was surprised they’d do interest only at 80% LTV. Some banks won’t even touch refis in general at 80% LTV.

Chiron
Posts: 17
Joined: Tue Jun 04, 2013 4:20 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Chiron » Mon Jun 03, 2019 2:11 pm

samstar wrote:
Sun Jun 02, 2019 9:08 am
Anyone have a good way to track what bank rate sheets are doing vs market mortgage yields?

Unless there’s very big intraday market swings, the loan officers typically get one rate sheet per weekday in the morning.

Generally there can be a slight lag (few days?) from when mbs yields go down to when banks start offering them.

Point of all this is to try to figure out a locking strategy if possible.

Check out
https://www.fanniemae.com/singlefamily/ ... net-yields
And
https://www.fanniemae.com/content/datag ... cur15.html

I *think* that gives a *rough* sense of what banks are seeing when they have to hedge their rate exposure.
I was always told to watch the 10 year treasury for a sense of the next day's rates on the 30 year. It is down sharply again today. If it stays lower, I imagine the refinancing market will start to heat up.

Bruce T
Posts: 67
Joined: Wed Mar 28, 2018 8:34 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Bruce T » Mon Jun 03, 2019 5:26 pm

Today WF Private (informally) offered me 2.75% on a 15 year fixed after 0.5% relationship discount for $1M transfer in assets. They said that there was no long term tie on assets and that Vanguard index funds transferred to WF is OK. This was for a jumbo (approx $500K). I think they said they could not offer this on a non-jumbo. The WF rep said that a sale-based financing had 0.125% rate advantage (included in the 2.75%) vs. a refi. They also indicated that the financing settlement could be up to 90 days after the house closing, if there were timing issues on the transfer (i.e. if we were to pay cash and then do the financing).

Questions:
1. Has anyone had timing or other issues doing in-kind transfer from VG to WF (assuming starting w/ no brokerage account at WF)?
2. are there other perqs w/ WF asset transfer that sweeten this further to be aware of?
3. Is anyone aware of a better deal on a 15 year w/ $1M asset transfer (in this case, it's also tied to an asset depletion/dissipation income basis).

Thanks,
Bruce

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Mon Jun 03, 2019 5:31 pm

The key is to shop around and get multiple bids. People spend much more time shopping for cars to save 500 vs saving tens of thousands on a mortgage.

confused1
Posts: 29
Joined: Mon Jul 27, 2015 12:03 am

Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Mon Jun 03, 2019 6:44 pm

Bruce T wrote:
Mon Jun 03, 2019 5:26 pm

1. Has anyone had timing or other issues doing in-kind transfer from VG to WF (assuming starting w/ no brokerage account at WF)?
Just in the process of doing this myself, I went with the simple Wellstrade account (https://www.wellsfargo.com/investing/we ... brokerage/)

Account can be created online with lots of electronic signatures!

Account versification can be a pain, requiring notarized docs

In-Kind transfer from Vanguard is a paper form you have to fax over :-( Process takes 7-10 business days to complete.

Finally, looks like there is a ~~$70 fee when you close the account.

Hope that helps

nepats
Posts: 306
Joined: Mon Jul 20, 2009 11:56 am

Re: Relationship mortgage discounts for moving a million assets

Post by nepats » Tue Jun 04, 2019 8:16 am

confused1 wrote:
Mon Jun 03, 2019 6:44 pm
Bruce T wrote:
Mon Jun 03, 2019 5:26 pm

1. Has anyone had timing or other issues doing in-kind transfer from VG to WF (assuming starting w/ no brokerage account at WF)?
Just in the process of doing this myself, I went with the simple Wellstrade account (https://www.wellsfargo.com/investing/we ... brokerage/)

Account can be created online with lots of electronic signatures!

Account versification can be a pain, requiring notarized docs

In-Kind transfer from Vanguard is a paper form you have to fax over :-( Process takes 7-10 business days to complete.

Finally, looks like there is a ~~$70 fee when you close the account.

Hope that helps
What is account verification?

confused1
Posts: 29
Joined: Mon Jul 27, 2015 12:03 am

Re: Relationship mortgage discounts for moving a million assets

Post by confused1 » Tue Jun 04, 2019 8:27 am

Identify verification sorry - in our case we had to send proof of permanent resident status. Assume it may not be needed for everyone.

DEBTINATOR
Posts: 103
Joined: Thu Oct 20, 2011 8:05 pm

Re: Relationship mortgage discounts for moving a million assets

Post by DEBTINATOR » Tue Jun 04, 2019 2:05 pm

Startled Cat wrote:
Fri May 31, 2019 5:35 pm
WOW

BofA finally came through after several days with this offer:

2.625% 10/1 ARM, -1/8 point lender credit, conditional on $500k in new money
This caused me to give BOA a call today. The guy basically said that was impossible (I'm not questioning Startled Cat, the CSR could be wrong).

For 10/1, they quoted me 3.375 with a sliding scale of points based on credit scores between 760 and 800.

For a 30yr fixed, they also quoted me 3.625 with negative points (some lender credits) that could be reduced by 0.25% if I move $500k. So I could go from 4% to 3.375, and pick up some IRA bonuses as well. He was fairly sure that IRAs count, and even said the $ doesn't have to stay. Rate locks are for 60 days, so I have some time to move the $ (though you have to keep for 90 days for transfer bonuses).

The funny thing is, with the standard deduction being what it is, and CA income/RE taxes capped, the benefit of reducing a Jumbo mortgage from 4 to 3.3 isn't that big. It'll definitely pay for the cell phone and cable tv, but at these rates, we're inching back under the standard deduction. A good problem to have I suppose, and you can't beat the flexibility of a reduced monthly cash commitment.

User avatar
grabiner
Advisory Board
Posts: 25110
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Relationship mortgage discounts for moving a million assets

Post by grabiner » Tue Jun 04, 2019 8:55 pm

DEBTINATOR wrote:
Tue Jun 04, 2019 2:05 pm
The funny thing is, with the standard deduction being what it is, and CA income/RE taxes capped, the benefit of reducing a Jumbo mortgage from 4 to 3.3 isn't that big. It'll definitely pay for the cell phone and cable tv, but at these rates, we're inching back under the standard deduction. A good problem to have I suppose, and you can't beat the flexibility of a reduced monthly cash commitment.
If you take the standard deduction, that increases the benefit from lowering your mortgage rate.

Suppose that you reduce your mortgage interest from $16,000 to $13,000. If you take the standard deduction for both federal and state taxes, that saves you the full $3000. If you itemize deductions at a 33.3% combined rate (24% federal and 9.3% CA), and would still itemize even at the lower rate, that saves you only $2000. If you itemize state but not federal, or switch from standard to itemized part of the way through, you save somewhere between $2000 and $3000.
Wiki David Grabiner

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Tue Jun 04, 2019 10:20 pm

DEBTINATOR wrote:
Tue Jun 04, 2019 2:05 pm
Startled Cat wrote:
Fri May 31, 2019 5:35 pm
WOW

BofA finally came through after several days with this offer:

2.625% 10/1 ARM, -1/8 point lender credit, conditional on $500k in new money
This caused me to give BOA a call today. The guy basically said that was impossible (I'm not questioning Startled Cat, the CSR could be wrong).

For 10/1, they quoted me 3.375 with a sliding scale of points based on credit scores between 760 and 800.

For a 30yr fixed, they also quoted me 3.625 with negative points (some lender credits) that could be reduced by 0.25% if I move $500k. So I could go from 4% to 3.375, and pick up some IRA bonuses as well. He was fairly sure that IRAs count, and even said the $ doesn't have to stay. Rate locks are for 60 days, so I have some time to move the $ (though you have to keep for 90 days for transfer bonuses).

The funny thing is, with the standard deduction being what it is, and CA income/RE taxes capped, the benefit of reducing a Jumbo mortgage from 4 to 3.3 isn't that big. It'll definitely pay for the cell phone and cable tv, but at these rates, we're inching back under the standard deduction. A good problem to have I suppose, and you can't beat the flexibility of a reduced monthly cash commitment.
I hope it's real. I haven't been able to get a loan estimate reflecting 2.625%, because the loan offer says the relationship discount only gets applied after the new assets are verified. He assures me that the rate will drop to 2.625% once the conditions are met.

So I'm moving forward with BofA without formal confirmation of the rate, but I have correspondence with the loan officer claiming that the rate will be reduced to 2.625% once the new assets are verified, and if that doesn't happen, I think I'll be in a good position to raise a stink.

Apparently, instead of 2.625%, I could opt for 2.75% with a much bigger lender credit. It would be several thousand dollars more than the gross closing costs, so I'm not sure what would happen to the remainder. Would I get a check for the difference? If so, would it be taxable income? I'm trying to figure out the parameters for evaluating that decision.

sc9182
Posts: 288
Joined: Wed Aug 17, 2016 7:43 pm

Re: Relationship mortgage discounts for moving a million assets

Post by sc9182 » Tue Jun 04, 2019 11:42 pm

Startled Cat wrote:
Tue Jun 04, 2019 10:20 pm
Apparently, instead of 2.625%, I could opt for 2.75% with a much bigger lender credit. It would be several thousand dollars more than the gross closing costs, so I'm not sure what would happen to the remainder. Would I get a check for the difference? If so, would it be taxable income? I'm trying to figure out the parameters for evaluating that decision.
Some of that excess rebate can be applied towards prepaids, but not a lot. Don’t shoot for too much excess, as cash won’t be returning to you, unless you are talking cash-out refi !!

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Wed Jun 05, 2019 12:09 am

Remember to ask for the a account move bonus so you can double dip. Fyi, taxed as interest.

samstar
Posts: 52
Joined: Wed Jul 25, 2018 12:34 am

Re: Relationship mortgage discounts for moving a million assets

Post by samstar » Wed Jun 05, 2019 1:17 am

......
Last edited by samstar on Thu Jul 11, 2019 2:24 am, edited 1 time in total.

downtownrb
Posts: 5
Joined: Tue Oct 25, 2016 12:13 pm

Re: Relationship mortgage discounts for moving a million assets

Post by downtownrb » Wed Jun 05, 2019 7:51 am

Who are you speaking with at BoA? I am not an existing BoA customer (other than a credit card) and stopped in at my local office asking what the best rate was if I moved over $500k in a new money. They escalated it up to the Merrill group and I was told the rate would be the same. The best I would get is $600 off orig fee being a Platinum Honors customer.

I am looking at a 15 year fixed (3.125 now) vs an ARM but a 2.65 % 10/1 ARM on 500k of new money would be tempting (assuming I can find someone who knows of this promo rate).

DH0
Posts: 32
Joined: Thu Jan 11, 2018 3:00 pm

Re: Relationship mortgage discounts for moving a million assets

Post by DH0 » Wed Jun 05, 2019 7:56 am

The promo rate is there, sounds like you need to talk to someone else. I did the same thing you did, walked into a branch and talked to the Merril rep. Was told 1/8th of a pt discount for every $250k moved up to $1M. This is the same discount WF has. Citi's numbers are a bit different and can be found online (CitiGold).

HEDGEFUNDIE
Posts: 3399
Joined: Sun Oct 22, 2017 2:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Wed Jun 05, 2019 10:11 am

downtownrb wrote:
Wed Jun 05, 2019 7:51 am
Who are you speaking with at BoA? I am not an existing BoA customer (other than a credit card) and stopped in at my local office asking what the best rate was if I moved over $500k in a new money. They escalated it up to the Merrill group and I was told the rate would be the same. The best I would get is $600 off orig fee being a Platinum Honors customer.

I am looking at a 15 year fixed (3.125 now) vs an ARM but a 2.65 % 10/1 ARM on 500k of new money would be tempting (assuming I can find someone who knows of this promo rate).
The title you are looking for is “Wealth Management Lending Officer”

DEBTINATOR
Posts: 103
Joined: Thu Oct 20, 2011 8:05 pm

Re: Relationship mortgage discounts for moving a million assets

Post by DEBTINATOR » Wed Jun 05, 2019 10:56 am

Question for those that have done this before. My wife has an 810 credit score. I don't know, but suspect I'm closer to 780-800 (they use the mortgage lending model which is hard to find w/out paying myFICO.com). I may add myself but it'll reduce lender credits and possibly rate, which kind of defeats the purpose of moving the money in the first place.

My questions:

1. If my wife was alone on the mortgage, does that mean only her assets can count toward the $500k of assets? (e.g. cannot count my IRA, but can count hers + joint brokerage)

2. If I'm on the title, does that matter (for purposes of asset counting)?

3. The mortgage guy seemed a bit loose on the details regarding relationship pricing, but basically said it would show up later in the process.

The part that concerns me is that we have had money at Merrill Edge for 2 mos, so we should at least qualify for Platinum ($400 origination discount). He is seeing no status for preferred rewards (which contradicts what I was initially told). Thoughts?

4. Is the 500k strictly "NEW" money? Should my ~100k in Merrill Edge for 2 mos. count?

barelybarefoot
Posts: 44
Joined: Mon Oct 21, 2013 7:15 pm

Re: Relationship mortgage discounts for moving a million assets

Post by barelybarefoot » Thu Jun 06, 2019 12:05 am

HEDGEFUNDIE wrote:
Fri May 24, 2019 3:28 pm
DH0 wrote:
Fri May 24, 2019 12:01 pm
HEDGEFUNDIE wrote:
Wed May 08, 2019 9:51 pm
First Republic needs to be on your list. I just refinanced with them at 2.65%.

Yes they use Pershing, but Pershing actually has some positives. For example you get access to DFA funds, no advisory fee required.
Curious how you negotiated this rate with First Republic. I just took a shot...was told the floor was 2.95% for a 7/1 ARM or 3.3% for a 10/1. To get this rate they either needed 15% of the loan value in a checking account (Savings or CDs don't count) or >$1M in wealth management (1.25% annual fee). $900k mortgage on a $2M house. Am I not talking to the right person?
Likely you are not. PM me for a referral.
I walked into First Republic today as well and asked to speak with Wealth Management person. Of course, they asked me first if I was there to drop off a package (stealth wealth on my part) before realizing I was looking to be a customer. I have 3.625 30 Y fixed with WF since 2015, currently mortgage is a 1M and 50% LTV (using Zillow estimates). First Republic quoted me the following:
1) 3.4%/3.425 APR for 30 Y fixed, this is with 10% loan value moved to their 0.05% interest checking (100k essentially earning nothing),
2) 3.1%/3.144 APR for 15 Y fixed, again with 10% loan value in checking
3) 7/1 ARM, 2.8%/4.068% APR, with 25% loan value in checking
4) 10/1 ARM, 3.15/3.95%, with 25% loan value in checking
*** closing cost was a ridiculous $7300 ($1365 of which is prepaid interest)

There was no mention of Pershings even though I said I could move $500k over to investment accounts.

I contacted my WF person where we currently have our mortgage. here's what she said she could offer
1) 10/1 2.875/3.573 APR w/ 500K relationship, she said they have a Recast feature which is not seen with other mortgages
2) 30Y fixed 3.5/3.597 with me paying fees ($3500) and make it 25yr amortization
3) 15y fixed 3.125/3.152 APR ($3500 fees) with 500K assets transferred

I walked into Chase, they were not as helpful, they will email me some offers, but did not throw out any competitive numbers. Thoughts DHO or Hedgefundie about the First Republic Offers? Closing fees are quite high....

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Thu Jun 06, 2019 12:24 am

Try bofa and citi. They seem to be most aggressive right now. wF ARM looks ok, fixed looks a little high. Excluding prepaid interest, closing is high for first republic, I was quoted 3.5 to 4 for the big banks.

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 1:51 am

I refi’ed a few months ago with BofA.

$3M mortgage
Interest only
10 year IO at 2.625% with the 0.5% discount for moving over $1M
Also got about $5k in cash bonuses so long as I keep my assets there for 9 months

They offered me 2.375% on the 7 year IO

The 10 year treasury is down about .25% from 2.35% when I locked in late March to around 2.1% today so you could probably do better

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 2:04 am

softwaregeek wrote:
Fri May 10, 2019 2:30 pm
nepats wrote:
Fri May 10, 2019 1:36 pm
Timely topic. At what point in the process do they lock in the discount? For example, if I move some accounts just prior to closing does that count or does it have to be done at the time of application?
My experience with BofA/Merrill was that the accounts had to be moved by five days prior to close. This was allow them time to prepare paperwork.

It went very easily, but at the last minute they told me I needed to have a BofA checking account as well. I went online and funded one with $100 from my debit card.

There was no requirement that I keep the money there after close , but they offered me a retention bonus to keep for 90 days and for a year. so I kept the money there for that, and also frankly because i was curious about Merrill Edge and a big bank, because I had only Schwab bank for 20+ years. I've kept it there because I've been pondering the fat credit card rewards they offer with higher tier accounts.

My conclusion was that the technology piece of BofA was slicker than Schwab, but if you need to talk to someone, you're hosed. Even if you're in the $250k-$1 million account tier. Every time I called BofA, I got frustrated.
I have had a very different experience with BofA but I have over $1M so may have a different tier of service. I have an assigned rep who answers my calls and emails promptly and handles everything for me. No waiting when I call and if I can’t get my guy immediately I can talk to someone else right away.

I participated in a friend and family IPO recently and had to open a separate account. The rep handled the paperwork for me directly and then merged the accounts so both show up when I log in.

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 9:27 am

8foot7 wrote:
Sun May 12, 2019 4:24 pm
These rates are so low that I fear you may be letting perfect be the enemy of good enough. The ARM is risky, the 30 year fixed is so low as to be nearly a no-brainer. It would be for me.
A 30 year is not the right product for most people. If you’re going to live in a house for 15 years or less you should use an ARM. If you’re going to live there 10 years or less, you should definitely use an ARM. The average home ownership length is 11 years, but I assume a 30 year fixed is far and away the most used mortgage.

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 9:38 am

mrspock wrote:
Sat May 25, 2019 8:03 pm
Startled Cat wrote:
Sat May 25, 2019 7:45 pm
mrspock wrote:
Sat May 25, 2019 7:20 pm
.... or just goto a credit union. Patelco 3.0% 5/1 ARM done. None of this goofy AUM nonsense.

It’s probably not the absolute lowest, but darn close, without the hassles.
Okay, but the 10/1 ARM is 3.375%, which is exactly Citi's rate without the relationship discount. It's a difference of 0.5% - do you think it's not worth moving some assets around to save about $7300 of interest per year?
I don’t need or want a ten year mortgage, the bond market is telling us something if we will listen. Also: are there any strings or fees attached to these AUM arrangements? What’s the fine print (market drops, can they loan out my shares)? For me it’s more like $4500/yr (900k mortgage) or $2250/yr net of taxes. Is Schwab worth that to me? Quite possibly (free amex platinum, free trades, free vanguard MF trades, solid trading platform, excellent customer service, not being foolish in 2008 financial crisis etc).

I also, wonder if Patelco would go lower than their posted rate, so the difference might be even less, I’ve honestly never bothered to haggle with them.
I got the 0.5% discount from BofA. On a $3M mortgage on a 10 year loan, I save $150k over the 10 year period for moving over the $1M.

I’m addition to that, I got about $5k in incentives for moving the investments over if I leave it there for 9 months.

There are no fees at all. I get 100 free trades a month and there are no asset management fees.

There are no strings attached to the loan. It’s a standard loan.

It’s a pretty unbelievable deal.

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Thu Jun 06, 2019 9:58 am

LFKB wrote:
Thu Jun 06, 2019 1:51 am
I refi’ed a few months ago with BofA.

$3M mortgage
Interest only
10 year IO at 2.625% with the 0.5% discount for moving over $1M
Also got about $5k in cash bonuses so long as I keep my assets there for 9 months

They offered me 2.375% on the 7 year IO

The 10 year treasury is down about .25% from 2.35% when I locked in late March to around 2.1% today so you could probably do better
Did BofA charge a rate premium for the IO version?

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 10:24 am

Startled Cat wrote:
Thu Jun 06, 2019 9:58 am
LFKB wrote:
Thu Jun 06, 2019 1:51 am
I refi’ed a few months ago with BofA.

$3M mortgage
Interest only
10 year IO at 2.625% with the 0.5% discount for moving over $1M
Also got about $5k in cash bonuses so long as I keep my assets there for 9 months

They offered me 2.375% on the 7 year IO

The 10 year treasury is down about .25% from 2.35% when I locked in late March to around 2.1% today so you could probably do better
Did BofA charge a rate premium for the IO version?
No, the IO and amortizing were the same rate IIRC, at least on the 7 and the 10, but there was a higher bar to qualify for the IO in terms of income, reserves, etc

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 10:28 am

Startled Cat wrote:
Thu Jun 06, 2019 9:58 am
LFKB wrote:
Thu Jun 06, 2019 1:51 am
I refi’ed a few months ago with BofA.

$3M mortgage
Interest only
10 year IO at 2.625% with the 0.5% discount for moving over $1M
Also got about $5k in cash bonuses so long as I keep my assets there for 9 months

They offered me 2.375% on the 7 year IO

The 10 year treasury is down about .25% from 2.35% when I locked in late March to around 2.1% today so you could probably do better
Did BofA charge a rate premium for the IO version?
Based on where you are in the process you should still be able to change the term or to IO. Just ask.

Also, the relationship rate won’t be reflected in the loan estimate initially as you were told, but they’ll come through with it so long as you move the assets.

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Thu Jun 06, 2019 10:44 am

Did you move over more than 1m? That bonus was high than mine. I am

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Thu Jun 06, 2019 10:54 am

LFKB wrote:
Thu Jun 06, 2019 10:28 am
Based on where you are in the process you should still be able to change the term or to IO. Just ask.

Also, the relationship rate won’t be reflected in the loan estimate initially as you were told, but they’ll come through with it so long as you move the assets.
I will ask about it, thanks. I have a rate locked so I'm not sure I'd be able to make changes like this, but I'll see what they say.

My main concern about the relationship rate was that the pre-relationship rate comes from a rate match against Citi, and the rate they are matching includes a 0.5% relationship discount. Taking the discount a second time on top of this seems like double-dipping. But I'm assured it's possible.

LFKB
Posts: 590
Joined: Mon Dec 24, 2012 7:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by LFKB » Thu Jun 06, 2019 11:59 am

Startled Cat wrote:
Thu Jun 06, 2019 10:54 am
LFKB wrote:
Thu Jun 06, 2019 10:28 am
Based on where you are in the process you should still be able to change the term or to IO. Just ask.

Also, the relationship rate won’t be reflected in the loan estimate initially as you were told, but they’ll come through with it so long as you move the assets.
I will ask about it, thanks. I have a rate locked so I'm not sure I'd be able to make changes like this, but I'll see what they say.

My main concern about the relationship rate was that the pre-relationship rate comes from a rate match against Citi, and the rate they are matching includes a 0.5% relationship discount. Taking the discount a second time on top of this seems like double-dipping. But I'm assured it's possible.
You can still change after the rate lock

sc9182
Posts: 288
Joined: Wed Aug 17, 2016 7:43 pm

Re: Relationship mortgage discounts for moving a million assets

Post by sc9182 » Sat Jun 08, 2019 8:55 am

Got a matching quote from BofA:
10/1 ARM for 3% on 800k+ jumbo loan (20% down). Zero points/orig, plus normal closing costs. Their
Interest only option seem to require 30% down, same rate

Relationship discount of .25% for bringing $500k net new money (NNM) to BofA (they indicated their max discount tops at $500k level @ 0.25%). Where as other institutions Chase/WF seem to indicate they can do upto 0.5% discount upon a higher $1 MM NNM.

Ideally shooting for 2.5% on 10/1 ARM IO product, hoping they can do so with 20% down., no escrow. (Bringing-in $500k - $1MM NNM)

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Thu Jun 13, 2019 10:33 pm

BofA will allow me to go interest only at the cost of paying points or going with a 1/8% higher rate.

Here are the options:
  • 10/1 ARM, amortizing, 2.625% initial rate, 0.125% lender credit
  • 10/1 ARM, interest only at 2.625% initial rate, 1/3 point
  • 10/1 ARM, interest only at 2.75% initial rate, 0.275% lender credit
I'm definitely tempted by interest-only. I don't like the idea of paying down principal before I have to. Paying it down is equivalent to an illiquid investment that pays 2.625% before tax, and I think I can do better. That said, the hurdle is a bit higher in this case because the interest-only loan comes at a slightly higher cost.

I ran some numbers and the higher-rate option with the lender credit seems a lot better than the alternative I/O scenario. I'm not completely confident in my analysis, but it looks like if I opted for a higher rate, it would start out better than the amortizing loan due to the higher lender credit, and if I was able to earn more than about 3% after tax on money I would otherwise use to pay down principal, it would maintain the edge continuously. The version with points takes at least several years to break even against the amortizing loan, and 7-10 years to break even with the higher rate I/O option, depending on investment return. I'm pleasantly surprised by this outcome, since I'm disinclined to pay points to begin with.

If the investment return was only in the low 2%s after tax, it would take 7-10 years for I/O to end up better than amortizing. If it's below that, amortizing is better regardless of the timeframe.

Advantages of interest-only:
  • Better liquidity
  • More flexibility with cash flow (valuable for my partner, who has partially commision-based income)
  • Potential for better overall NPV due to investment returns
  • Takes fuller advantage of the mortgage interest deduction
  • Might be able to refinance into another I/O loan at the end of the interest-only period and compound the benefits
Disadvantages of interest-only:
  • No forced savings aspect
  • Adjustment/refinance in 10 years would affect more principal and potentially be more difficult to manage
  • Trying to beat the mortgage rate with investments might involve taking too much risk

User avatar
unclescrooge
Posts: 3773
Joined: Thu Jun 07, 2012 7:00 pm

Re: Relationship mortgage discounts for moving a million assets

Post by unclescrooge » Fri Jun 14, 2019 7:20 am

sc9182 wrote:
Sat Jun 08, 2019 8:55 am
Got a matching quote from BofA:
10/1 ARM for 3% on 800k+ jumbo loan (20% down). Zero points/orig, plus normal closing costs. Their
Interest only option seem to require 30% down, same rate

Relationship discount of .25% for bringing $500k net new money (NNM) to BofA (they indicated their max discount tops at $500k level @ 0.25%). Where as other institutions Chase/WF seem to indicate they can do upto 0.5% discount upon a higher $1 MM NNM.

Ideally shooting for 2.5% on 10/1 ARM IO product, hoping they can do so with 20% down., no escrow. (Bringing-in $500k - $1MM NNM)
So the IO product has more stringent approval, but better rates?

sc9182
Posts: 288
Joined: Wed Aug 17, 2016 7:43 pm

Re: Relationship mortgage discounts for moving a million assets

Post by sc9182 » Fri Jun 14, 2019 7:30 am

unclescrooge wrote:
Fri Jun 14, 2019 7:20 am
sc9182 wrote:
Sat Jun 08, 2019 8:55 am
Got a matching quote from BofA:
10/1 ARM for 3% on 800k+ jumbo loan (20% down). Zero points/orig, plus normal closing costs. Their
Interest only option seem to require 30% down, same rate

Relationship discount of .25% for bringing $500k net new money (NNM) to BofA (they indicated their max discount tops at $500k level @ 0.25%). Where as other institutions Chase/WF seem to indicate they can do upto 0.5% discount upon a higher $1 MM NNM.

Ideally shooting for 2.5% on 10/1 ARM IO product, hoping they can do so with 20% down., no escrow. (Bringing-in $500k - $1MM NNM)
So the IO product has more stringent approval, but better rates?
Same rate as fully amortized rate, but with 30% down payment requirement. (In that post, for the IO product, i was adding the Relationship discount of .25% — boy BofA only seem to allow 0.25% discount upon $500k relationship NNM, whereas other banks let you bring in more $1MM leading upto 0.5% relationship discount)

Startled Cat
Posts: 475
Joined: Thu Apr 03, 2008 8:54 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Startled Cat » Fri Jun 14, 2019 9:50 am

sc9182 wrote:
Fri Jun 14, 2019 7:30 am
Same rate as fully amortized rate, but with 30% down payment requirement. (In that post, for the IO product, i was adding the Relationship discount of .25% — boy BofA only seem to allow 0.25% discount upon $500k relationship NNM, whereas other banks let you bring in more $1MM leading upto 0.5% relationship discount)
I seem to remember that it varies by state. BofA will discount up to 0.5% in CA and NY.

sc9182
Posts: 288
Joined: Wed Aug 17, 2016 7:43 pm

Re: Relationship mortgage discounts for moving a million assets

Post by sc9182 » Fri Jun 14, 2019 5:06 pm

Startled Cat wrote:
Fri Jun 14, 2019 9:50 am
sc9182 wrote:
Fri Jun 14, 2019 7:30 am
Same rate as fully amortized rate, but with 30% down payment requirement. (In that post, for the IO product, i was adding the Relationship discount of .25% — boy BofA only seem to allow 0.25% discount upon $500k relationship NNM, whereas other banks let you bring in more $1MM leading upto 0.5% relationship discount)
I seem to remember that it varies by state. BofA will discount up to 0.5% in CA and NY.
Thanks, makes sense! Will check for higher relationship discount with higher NNM.

Chiron
Posts: 17
Joined: Tue Jun 04, 2013 4:20 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Chiron » Thu Jun 20, 2019 9:57 am

I was offered a 5/1 at 2.625% from Raymond James with no relationship on a ~$700k loan balance and a $1200 origination fee. Currently trying to negotiate with HSBC for a better rate with a $75k relationship. This rate was before this week's drop in treasury yields and I'm floating it for now.

These two have been quite a bit more competitive than the larger players (BofA, WF, Citi) which seem to value loan balances over $1m.

HEDGEFUNDIE
Posts: 3399
Joined: Sun Oct 22, 2017 2:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Thu Jun 20, 2019 10:49 am

Chiron wrote:
Thu Jun 20, 2019 9:57 am
I was offered a 5/1 at 2.625% from Raymond James with no relationship on a ~$700k loan balance and a $1200 origination fee. Currently trying to negotiate with HSBC for a better rate with a $75k relationship. This rate was before this week's drop in treasury yields and I'm floating it for now.

These two have been quite a bit more competitive than the larger players (BofA, WF, Citi) which seem to value loan balances over $1m.
Fascinating, I didn’t even know RJ wrote mortgages. Which state are you in?

Their published rate for 5/1 Jumbo is at 2.75% right now:

https://www.raymondjames.com/mortgagerates

Chiron
Posts: 17
Joined: Tue Jun 04, 2013 4:20 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Chiron » Thu Jun 20, 2019 11:27 am

This is actually just their published rate with an additional 1/8 discount for enrolling in autopay. State is TX.

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Thu Jun 20, 2019 1:59 pm

For what it is worth, I hear BofA is raising minimum balance to get these deals.

Wells told me an unbelievable thing. They let you use the relationship mortgage balance as a down payment. So of you have a 250 down payment and a 250 IRA, you can get 0.25 off the mortgage.

Not sure I believe either of these without verification, but you should ask.

TXGator
Posts: 32
Joined: Mon Sep 26, 2016 1:38 pm

Re: Relationship mortgage discounts for moving a million assets

Post by TXGator » Thu Jun 20, 2019 2:13 pm

The RJ info is fantastic! I just closed on a 4.875 30 year rate in April :?

violinhead
Posts: 20
Joined: Tue Aug 29, 2017 1:32 am
Location: Bay Area, CA

Re: Relationship mortgage discounts for moving a million assets

Post by violinhead » Sat Jun 22, 2019 3:32 pm

This has been a terrific thread for me to read while I've been going through the refinance process over the last few weeks. Thanks to all who've posted above, for contributing their experiences / knowledge. I wanted to share my experience, in case that's helpful for anyone else.

Background: I live in the Bay Area, and am refinancing a home with a current mortgage of $570k at 3.5% 30 year fixed.

After reviewing the different options, I decided that a 10 year ARM provided my family the best balance of low-rate, yet long-enough fixed term. I figure that at the end of the 10 year ARM, if rates continue to be low, we'll refinance; otherwise, we'll budget over the next 10 years to be able to pay off the balance of the mortgage at that time.

First lesson for me: I learned through this thread that banks are all competing for new assets, and are willing to give a discounted rate for a relationship mortgage.

After shopping around at most of the major banks (Citi, Bank of America, Chase, Wells Fargo) and a local one (First Republic), I ended up receiving the following quotes for a 10/1 ARM.
  • Citi: 2.625% + 0.75 points, contingent on bringing over $1M in new assets
  • Bank of America: 2.5% + 1.0 points, contingent on bringing over $1M in new assets
  • Wells Fargo: 2.75% + -0.75 points of lender credit, contingent on bringing over $750k in new assets
  • Chase: both mortgage reps didn't get back to me with a quote - disappointing, as I am currently a Chase Private Client and am reconsidering because of this
  • First Republic: 2.625% + 0 points, contingent on bringing over $1M in new assets
Second lesson learned for me: shopping around really does make a difference. I would estimate that it took me a total of 6-8 hours total shopping around, and I got more efficient with the process of getting quotes as I talked with more banks. If I were to do this process again, I might try to cut down the time spent in half, and reach out to about 3-4 banks.

Third lesson learned for me: Bringing other banks' quotes and, more importantly, loan estimates, to the conversation was helpful in short-cutting the conversation to getting the best (typically off the mortgage rep's rate sheet) rate. In some cases, I had to lock in a rate to get these quotes / loan estimates, but that was easy to do, without having to "commit" to a loan.

I was ready to go forward with First Republic, but learned that they had a 1% fee for assets under management, and being a self-directed investor, I didn't need that. I then was prepared to go with Bank of America, who was offering some nice perks, in addition to the competitive rate, through their Merrill Edge platform. I currently have my IRAs and Taxable brokerage accounts through Schwab, and so I wrote what I thought was a "Dear John" letter to say thanks for their service, but I was planning on bringing over those assets to BoA for the purposes of this refinance.

My contact at Schwab wrote back quickly, and said that they work with Quicken Loans and would try to match my best offer in order to keep me as a customer at Schwab. I wasn't even considering this in my option set in the beginning, but since I've been happy with the service at Schwab, and it would be one less headache to transfer all of these accounts, I told them to get me their best quote.

On Friday, June 21, I got a response from Schwab through Quicken Loans that they made a pricing exception for me, and could offer me a 2.5% + 0.22 points, with $1750 in promotional discounts. This was the best offer I received, and I accepted the offer, and am going through the underwriting process now.

Fourth lesson learned for me: It never hurts to ask. I didn't even consider Schwab as a mortgage lending option, but am so glad that I reached out, and that my contact there fought for my business.

Last lesson learned for me (so far): Getting my documents organized and ready for the mortgage applications was helpful. It took a total of 10 minutes to e-sign and upload all of the requested documents from Quicken Loans, because I already had the documents labeled and organized from a previous application.

Comments: I know that rates are constantly fluctuating, and perhaps if I went through this process in a different order, I might have different rates for each bank listed above.

And who knows where rates are going? I hesitate to state this, because if it's wrong, I don't want to hurt anyone, but I did notice that it seemed to me that rates were roughly tracking the 10 year treasury yields by about a day. This wasn't 100% fool-proof, but did often directionally point out the rate movement for 10/1 ARMs. You can see those rates here:

https://www.treasury.gov/resource-cente ... data=yield

Chiron
Posts: 17
Joined: Tue Jun 04, 2013 4:20 pm

Re: Relationship mortgage discounts for moving a million assets

Post by Chiron » Sat Jun 22, 2019 5:41 pm

violinhead wrote:
Sat Jun 22, 2019 3:32 pm

Second lesson learned for me: shopping around really does make a difference. I would estimate that it took me a total of 6-8 hours total shopping around, and I got more efficient with the process of getting quotes as I talked with more banks. If I were to do this process again, I might try to cut down the time spent in half, and reach out to about 3-4 banks.

Third lesson learned for me: Bringing other banks' quotes and, more importantly, loan estimates, to the conversation was helpful in short-cutting the conversation to getting the best (typically off the mortgage rep's rate sheet) rate. In some cases, I had to lock in a rate to get these quotes / loan estimates, but that was easy to do, without having to "commit" to a loan.

Fourth lesson learned for me: It never hurts to ask. I didn't even consider Schwab as a mortgage lending option, but am so glad that I reached out, and that my contact there fought for my business.
Agreed. Finding a published, no relationship rate with RJ was great for me since I could get a loan estimate and use it as a starting basis for negotiating with others whose private bankers are pressuring the loan department for the relationship. It's a very quick conversation to shoot them loan estimate and ask what they can do.

samstar
Posts: 52
Joined: Wed Jul 25, 2018 12:34 am

Re: Relationship mortgage discounts for moving a million assets

Post by samstar » Sat Jun 22, 2019 5:49 pm

.....
Last edited by samstar on Thu Jul 11, 2019 2:13 am, edited 1 time in total.

violinhead
Posts: 20
Joined: Tue Aug 29, 2017 1:32 am
Location: Bay Area, CA

Re: Relationship mortgage discounts for moving a million assets

Post by violinhead » Sat Jun 22, 2019 8:20 pm

samstar wrote:
Sat Jun 22, 2019 5:49 pm
Have you considered toggling up your rate a bit to get it at no cost? Closing costs are usually several thousand so ideally you’d get enough lender credit to make it no cost.
Thanks samstar. I hadn't considered that yet, but would love to get my thinking checked on this:

Let's assume that I could get a no-cost loan at 2.75% vs 2.5%, for argument's sake. (I could certainly find out what that rate would be). At my loan size that's roughly a difference of $75 / month of interest payment. The difference in cost would be ~$5000. That's about 5.5 years before break-even. If I assume that I'm going to keep the loan for 10 years, I think I'd come out ahead by taking the lower rate. I'm not factoring time-value of money here, but I don't think that would be a big enough factor to change the calculus on this.

Let me know if there's another way I could be thinking about this.

samstar
Posts: 52
Joined: Wed Jul 25, 2018 12:34 am

Re: Relationship mortgage discounts for moving a million assets

Post by samstar » Sat Jun 22, 2019 8:35 pm

.......
Last edited by samstar on Thu Jul 11, 2019 2:12 am, edited 1 time in total.

HEDGEFUNDIE
Posts: 3399
Joined: Sun Oct 22, 2017 2:06 pm

Re: Relationship mortgage discounts for moving a million assets

Post by HEDGEFUNDIE » Sat Jun 22, 2019 10:17 pm

violinhead wrote:
Sat Jun 22, 2019 3:32 pm
  • First Republic: 2.625% + 0 points, contingent on bringing over $1M in new assets
...
I was ready to go forward with First Republic, but learned that they had a 1% fee for assets under management, and being a self-directed investor, I didn't need that.
For the record, First Republic has a self-directed brokerage option that does not charge any AUM fee.

They also do not actually require the assets to be moved over before they fund the loan, nor do they check afterward that you have actually moved the assets.

violinhead
Posts: 20
Joined: Tue Aug 29, 2017 1:32 am
Location: Bay Area, CA

Re: Relationship mortgage discounts for moving a million assets

Post by violinhead » Sun Jun 23, 2019 8:04 pm

HEDGEFUNDIE wrote:
Sat Jun 22, 2019 10:17 pm
violinhead wrote:
Sat Jun 22, 2019 3:32 pm
  • First Republic: 2.625% + 0 points, contingent on bringing over $1M in new assets
...
I was ready to go forward with First Republic, but learned that they had a 1% fee for assets under management, and being a self-directed investor, I didn't need that.
For the record, First Republic has a self-directed brokerage option that does not charge any AUM fee.

They also do not actually require the assets to be moved over before they fund the loan, nor do they check afterward that you have actually moved the assets.
Thanks HEDGEFUNDIE -- I wasn't aware of either of those, and if I were, that likely would have changed my course of action. I'm consistently impressed with how much I learn from this forum.

grkmec
Posts: 133
Joined: Wed Jun 22, 2016 8:46 am

Re: Relationship mortgage discounts for moving a million assets

Post by grkmec » Mon Jun 24, 2019 12:45 pm

I just signed the paperwork on my refi on Friday. Currently in the 3 day rescission period. I ended up at 2% on a 1.184mm mortgage with a 80% LTV with a credit of 0.1 points at closing. This was for a 5yr IO. FYI, I moved 1mm to Edge.

I just spoke to my banker at BOFA and he said the new money program is changing beginning July 1st. The 750k and 1mm tiers are being eliminated and replaced with a 3mm tier at 3/8. The 250k for 1/8 and 500k for 1/4 will remain. But say goodbye to the 3/8 rate discount for 750k and 1/2 rate discount for 1mm.

If anyone is on the fence about a BofA refi utilizing a 750k or 1mm new money discount, then get your application in LH this Friday.

Topic Author
softwaregeek
Posts: 242
Joined: Wed May 08, 2019 8:59 pm

Re: Relationship mortgage discounts for moving a million assets

Post by softwaregeek » Tue Jun 25, 2019 2:59 am

With BofA reducing, Chase and Citi are the best players.

Post Reply