New loan program available with as little as 5 percent down.

Santa Clarita homebuyers rejoice! There is light at the end of the tunnel in the real estate lending industry at last!

Bank of America (BofA) has just announced a new "no catch, no surprises" loan program that pays lender fees and doesn’t require private mortgage insurance (PMI) for buyers with as little as 5 percent down.

This new loan program pays the loan origination fees, appraisal fees, title and flood determination fees, and to top things off it comes with a 25-day "close on time" guarantee.

What’s the catch? Well… ummmm… BofA officials were silent about that part. It’s safe to say that there will be an increased interest rate to cover these costs though, since there’s really no such thing as a true free lunch these days. Still, BofA says that they will be offering this new product at favorable rates through economies of scale and by holding the loans in their own portfolio instead of selling them off. In addition, BofA hopes to market other products to these customers.

The minor catch to this program (other than possibly a higher than market interest rate) is that the borrower must be a BofA customer with a FICO score of 620 or more. Wow… many lenders aren’t touching the 620 FICO right now, so this looks like a good deal on the surface!

Look for other lenders to follow suit on offering similar products, since the lending industry is highly competitive.

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