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.

WoodSpinner

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.

gostars
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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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