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Bank of America offers conventional, FHA, VA, and jumbo purchase and refinance loans in all 50 states. It also offers home equity loans and home equity lines of credit (HELOCs). Bank of America is a favorite among consumers and is consistently rated one of the best mortgage lenders. As a large lender, Bank of America can tailor its mortgage offerings to meet most individual borrowers' needs, including special programs to help qualified borrowers with their down payment and closing costs. Our Bank of America mortgage review will help you decide whether or not this is the right fit for you.
Few lenders can match the lineup of loan products and terms. The high-tech digital experience compliments the banks extensive branch network. The interest rate and fee discounts for Preferred Rewards members define what relationship banking should look like.
Customer discount: Some Bank of America customers will qualify for a discount on the mortgage origination fee. To be eligible, the customer must sign up for the Preferred Rewards program, which requires a three-month combined average daily balance of $20,000 or more in qualifying Bank of America banking accounts and/or Merrill investment accounts. The Preferred Rewards program is free to join, and the origination fee discounts are as follows:
Preferred Rewards members can also get a mortgage interest rate discount of up to 0.375% on a home equity line of credit (HELOC).
Affordable mortgage loans: Bank of America offers multiple loan options to borrowers who have qualifying incomes and may be low on available cash.
Qualified applicants can apply for a VA loan (Department of Veterans Affairs), which has no minimum down payment requirement.
Cash grants: Bank of America offers closing credits up to $7,500 and down payment grants of up to $10,000 (the programs can be combined for a total possible benefit of $17,500). Eligibility requirements include income caps, geographical restrictions, occupancy restrictions (primary residence only) and loan limits.
Through the Bank of America Down Payment Center, a comprehensive online resource, the bank also helps borrowers identify other down payment and closing cost assistance programs that may be specific to the county or city where the borrower lives. Bank of America places no restriction on the combination of assistance programs it will allow. Many homebuyer assistance programs are for first-time homebuyers only and require homebuyer education.
Affordable HELOC: For borrowers considering a cash-out refinance loan, Bank of America's home equity line of credit may be an alternative to consider. It comes with no application fee, no closing costs, no annual fee, and no fee to access cash. Bank of America makes HELOCs even more affordable with interest rate discounts that are available to customers who set up automatic payments and those who make an initial withdrawal of at least $10,000. Also, there is no fee to convert a variable-rate HELOC to a fixed-rate loan.
Digital application: Many buyers want to handle financial matters from the comfort and privacy of home, and Bank of America delivers with a fully online application process.
Accepts non-traditional credit data: To help more borrowers qualify, Bank of America considers alternative credit data such as rent, utility, and cellphone payments for some of its loan products.
High industry rankings: Bank of America consistently ranks highly in independent studies:
Zero-down mortgage options for more borrowers: Bank of America does not offer a mortgage with zero money down other than the VA loan. Borrowers who don't qualify for the VA loan or the income-limited cash grants will need to look elsewhere for a zero-down loan or come up with a down payment.
Fee transparency: Bank of America says its origination fees average about $1,200. This figure is competitive. But for the number-crunchers and loan-shoppers, it would be nice to know exactly what the loan will cost before applying.
Better discounts: Some high-net-worth borrowers may prefer an interest rate discount over a one-time cash discount. The closing cost discount is a nice perk, but an even better relationship perk would be to trim the long-term cost of the loan.
You can get general information about rates and options online without providing any personal information. Then, when you're ready, you can get pre-approved. Pre-approval means an underwriter reviews and verifies your information and makes a commitment to lend, provided nothing in your application changes prior to loan closing.
Pre-approval requires your Social Security number and documentation such as paystubs, W-2s, tax returns, and bank statements. Bank of America will verify that you have stable employment, and in most cases you'll need to show that you have at least some cash in the bank.
Check your credit report before you apply so you can get any errors corrected. It's best not to have any open disputes, outstanding collection accounts, or recent late payments on your report. AnnualCreditReport.com is the only source authorized to provide the free credit reports you are entitled to by law from each of the major credit bureaus every 12 months.
You should also check your credit score for free online (although it's unlikely to be exactly the same as the credit score the bank sees). For most loans at Bank of America, you'll need a FICO® Score of at least 620. If you qualify for an FHA loan, your credit score can be as low as 600, but note that the mortgage insurance requirement makes this a more costly loan.
If you qualify for a VA loan, you'll need a credit score of 660, and this requirement is lowered to 620 if your debt-to-income ratio (DTI) is below 25%.
Most BofA mortgage loans require a DTI under 43%. But Bank of America does allow higher DTIs (up to 55%) on conforming (loan-to-value ratio of 80% or less), Affordable Loan Solution®, Home Possible®, FHA, and VA loans for qualified borrowers. A qualified borrower's application will be stronger in other areas. For example, you may need to make a larger down payment and/or have a higher credit score.
Citi Mortgage is an outstanding option for borrowers with enough assets to qualify for a discount. You need to be a Citi customer with a qualifying average account balance; if you are, you can get up to 5/8% off your mortgage interest rate. This discount could be worth a substantial amount of money. Let's say you borrow $250,000. If you are able to lower the rate to 3.375% from 4.0%, you'll save more than $31,000 over the life of a 30-year loan.
New American Funding is a great option for borrowers who qualify for the USDA or VA loan programs and have limited cash resources. USDA loans are for low- to moderate-income borrowers purchasing a primary residence in a qualified rural area. VA loans are for servicemembers, veterans, and some surviving spouses. Neither the USDA nor the VA loan program requires a down payment.
Chase is a great choice for borrowers who want a fast loan process. The period between applying for a mortgage and closing your loan can be 30 to 45 days or even longer, depending on the circumstances. Chase guarantees your loan will close within 21 days after you submit the required documents, or you'll get $2,500 back in cash.
The big winner at Bank of America is the low- to moderate-income borrower with a credit score of at least 640. This borrower could potentially buy a home for more than $300,000 with no money out of pocket. Not every applicant or every property will qualify, but for those that do, Bank of America's affordable mortgage options put homeownership in reach.
Bank of America mortgages might also be a great choice for BofA customers with significant assets. Between the mortgage closing cost discount and the HELOC interest rate discount, Bank of America's products stand out in a competitive market.
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