As one of the world’s leading financial institutions, Bank of America has branches located in 38 states but originates mortgage loans across all 50 states in the U.S. It offers a number of different mortgage loans, including refinance, home equity, conventional, jumbo, FHA and VA loans.
Customers can begin the mortgage application process by applying online, over the phone, or in person at one of the bank’s branch locations. What makes this lender stand out is its Preferred Rewards program. Preferred rewards members see perks such as discounted mortgage origination fees and discounted home equity interest rates. The price of membership, though, is high. The lowest tier with the lowest rewards starts with a balance of $20,000 in combined Bank of America accounts. This perk makes the company a competitive mortgage lender for those who have high cash flow balances.
While the bank’s website does provide a good amount of basic information about the mortgage process, customers who have questions may find it difficult to get a clear answer from lending specialists. Here are a few things you should know about Bank of America before applying.
Pros and Cons of Bank of America
Originates mortgage loans in all 50 states
Reduced fees for Preferred Rewards clients
Estimates for rates and fees for mortgage loans available online
Offers a variety of products, including low down-payment options and housing assistance programs
Offices are only located in 38 states
No fee estimates available online for refinance loans
Difficult to get answers to questions if not listed on the website
Bank of America: Loan Types and Products
Bank of America offers a variety of loans for anyone looking to purchase or refinance a home. In addition to conventional and jumbo loans, the bank also offers low down payment programs, FHA and VA government loans, and home equity loans.
Here is a list of the mortgage products offered by Bank of America:
- Purchase loans
- Refinance loans
- Conventional loans
- Jumbo loans
- Home equity loans
- Fixed-rate mortgages
- Adjustable-rate mortgages
- FHA loans
- VA loans
- Affordable Home Solution loans (low down payment)
- Down payment assistance programs
Customers looking for a loan amount that exceeds conforming limits set by the Federal Housing Finance Agency may be placed into a jumbo loan program. Conforming loan limits can change each year and are also dependent factors such as property location and property type. Jumbo loans typically have higher interest rates and stricter underwriting rules, so this is something you should consider when thinking about a down payment and loan amount.
In addition to offering fixed-rate mortgage loans, Bank of America also offers customers the choice of several adjustable-rate mortgages (ARMs). Available options include a 5y/6m, 7y/6m, and a 10y/6m term. Compared to fixed-rate mortgages, ARMs generally offer a lower interest rate for the first several years, after which the interest rate may be adjusted up or down. For example, with the bank’s 5y/6m ARM, the interest rate remains fixed for the first five years, after which it can adjust every six months.
Homebuyers who do not have a large down payment may benefit from the bank’s Affordable Loan Solution and Freddie Mac Home Possible mortgages. Both programs allow for a down payment as low as 3%, and in the case of the Affordable Loan Solution mortgage, it may not require the added cost of mortgage insurance. Qualifying buyers will be subject to certain income and loan limits, which vary based on location.
In addition to offering resources for down payment assistance through state and other local agencies, Bank of America also offers its own programs. The America’s Home Grant program offers a lender credit of up to $7,500 that can be used towards certain closing costs and fees, with no repayment required. The Down Payment Grant program offers a grant of up to 3% of the home purchase price (not to exceed $10,000) that can be used as part of the down payment.
Government programs, such as FHA and VA loans, are another option for those having difficulty qualifying for a conventional loan. That’s because these government programs offer more flexible qualification guidelines. VA loans require a military affiliation, but for those who are eligible, it is possible to qualify for a $0 down payment loan.
Customers looking to borrow against the equity they have built-in their home can take advantage of Bank of America’s home equity line of credit (HELOC) product, which has no application fees, no closing costs, and no annual fee. The interest rate on the HELOC is not fixed, although the bank is currently offering a special introductory fixed rate for the first six months. Interest rate discounts are also available for setting up automatic monthly payments, Preferred Rewards clients, and for making an initial withdrawal when the account is opened. Customers looking for more predictable payments also have the option to convert their variable-rate balance to a fixed-rate loan option.
Bank of America Transparency
Bank of America allows customers to easily view interest rates online based on a loan amount, down payment, and zip code. The bank’s intuitive website also has basic information about the mortgage loan process. However, getting a clear answer to anything not listed on the website proved to be challenging.
Although the bank provides an online calculator to estimate closing expenses for those purchasing a home, customers looking to refinance their home must call a lending specialist during regular operating hours to get a loan estimate. A lending specialist told us that this process requires a hard pull of your credit, as rates and fees can depend on your credit score.
Lending officers have varying levels of experience and knowledge. To ensure you are being given the right information to your questions, it’s a good idea to speak with different individuals to see if they provide you with the same answers.
The bank does not list the minimum credit scores needed for each loan program. We called the bank multiple times and received ranges from 620 to 660 for conventional loans. It was difficult to get minimum credit score requirements for loan programs other than conventional loans.
Bank of America: Rates and Fees
Customers looking to purchase or refinance a home can find interest rates listed on Bank of America’s website for 15-year fixed, 20-year fixed, 30-year fixed, 10y/6m ARM, 7y/6m ARM, 5y/6m ARM, jumbo, and home equity loans. Interest rates may change daily and vary based on a variety of factors, such as your credit score or down payment amount.
Fees for refinancing a mortgage are not listed. Instead, customers are instructed to call or submit a formal loan application to get a loan estimate. However, homebuyers can use the bank’s online closing cost calculator to view an estimate of closing costs based on a purchase price, down payment, loan type, and zip code of the property.
These closing costs include:
- Discount points
- Lender origination fee
- Appraisal fee
- Credit report fee
- Tax service fee
- Flood certification fee
- Life of loan flood monitoring
- Title endorsement
- Closing/escrow fee
- Lender’s title insurance
- Mortgage recording fee
- Owner’s title insurance (optional)
Bank of America states there are no application fees, closing costs, annual fees for its home equity loans. However, an early closure fee may be charged if the HELOC is closed within 36 months. This fee can be as much as $450 plus any closing agent or attorney fees the bank may have paid on your behalf. Otherwise, Bank of America does not charge any prepayment penalty for its FHA, VA, Jumbo, or Conventional mortgage loans.
Refinancing With Bank of America
Existing homeowners can refinance their current mortgage loan to lower the interest rate, monthly payment, or to take advantage of the equity they’ve built up in their home. Bank of America offers the following refinance options:
- Rate and term refinance
- Cash-out refinance
- Fixed-rate refinance
- Adjustable-rate refinance
- FHA & VA refinance (only available for existing Bank of America home loan clients)
The bank’s website provides information on what to expect during the mortgage refinance process. Customers can read about what steps are involved, what mortgage terms mean, and what documents they should be prepared to provide. Bank of America does not provide an estimate for how long the process can take as they state every home loan situation is different.
Preferred Rewards members with Bank of America can qualify for a reduction of $200-$600 in the mortgage origination fee. The amount you qualify for will be based on eligible balances at the time of application. Bank of America does not list what fees are associated with refinancing. To get this information, customers are directed to call one of the bank’s lending specialists during normal operating hours.
Bank of America Compared to Other Mortgage Lenders
|Bank of America||Wells Fargo||Loan Depot|
|Minimum credit score||Conventional: 620|
|Minimum down payment||Conventional: 5%|
|0% to 3.5%, depending on the loan program||0% to 5%, depending on the loan program|
|Where does the lender operate?||All 50 states||All 50 states||All 50 states|
|Major loan types||Purchase, refinance, cash-out refinance, conventional, jumbo, home equity, fixed-rate, adjustable-rate, FHA, and VA loans||Conventional, jumbo, VA, FHA, adjustable-rate, fixed-rate, refinance, cash-out refinance, construction loans||Conventional, jumbo, VA, FHA, renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance|
How to Shop Around to Get the Best Mortgage Rate
Interest rates and fees can vary dramatically among different lenders, so it’s important to obtain loan estimates from multiple lenders. This may require you to submit a loan application and agree to a hard credit pull, but it also means the lender is committing to a written estimate of loan fees. It can also be useful to consider different types of lenders, such as credit unions, local and regional banks, and online lenders.
You’ll also want to make sure that the loan applications you submit contain the same information. This is because rates and fees can vary based on loan amounts, property types, occupancy type, and the down payment. By submitting the same information to each lender, you’ll be able to more easily compare loan estimates.
Customers who have questions will likely need to be very persistent with this bank. Given that we received conflicting information after having called several times, you may want to make sure you get the same answer from multiple lending specialists to be sure you have the right answers to your questions.
However, Bank of America can be a good option for wealthy Preferred Rewards clients because of the reduction in the mortgage origination fee charged. Customers with strong credit and few questions about the mortgage process could also do well with this bank. Regardless of what you decide to do, it’s always a good idea to shop interest rates and fees with other lenders before reaching a final decision.