If you’re looking for a robust suite of mortgages from a major bank, then Bank of America could be a good fit. There are countless resources and online tools to take advantage of, not to mention a comprehensive network of branches across the country in case you need a personal touch.
Mortgage Application Requirements
The bare minimum for a Bank of America mortgage is a credit score of 620, but that drops to 600 if you’re applying for an FHA loan.
In general, it depends on the type of mortgage for which you’d like to apply — for some, you may need a higher credit score. Because Bank of America offers a wide array of options, qualifications vary drastically depending on what kind of home loan you want.
Of course, they’ll also look at other factors, including your debt to income ratio and employment verification.
Types of Home Loans Available
Because it’s such a stalwart in the financial industry, Bank of America has one of the widest arrays of home loan options. Here’s each type of mortgage product you can expect to find.
Fixed Rate Mortgages
A fixed rate mortgage allows you to keep the same interest for the entire life of the loan. Bank of America allows you to choose between a 15- and 30-year loan in this category.
The benefit of getting a 15-year mortgage is that the interest rate is usually lower and you’ll pay less interest over a shorter period of time. However, you should expect your monthly payment to be higher since you’re paying off a large amount of money in a short period of time.
The more common 30-year fixed rate mortgage may have a slightly higher APR and cost you more over the life of the loan, but your monthly payments should be much more affordable. Either way, it’s good to have options and compare your near-term and long-term costs to find the mortgage that’s right for you.
Adjustable Rate Mortgages
You can also get an adjustable rate mortgage (ARM) through Bank of America. They offer 5/1, 7/1 and 10/1 ARMs. The numbers refer to how long you have a fixed price, followed by how frequently your adjustable mortgage will be recalculated.
For example, with a 5/1 ARM, your first five years would have a fixed interest rate. After that, your mortgage rate would reset every year (that accounts for the one).
When should you consider an adjustable rate mortgage?
It may be a good option if you don’t plan on owning the house for more than a few years. Or maybe you want to free up some cash flow in the near-term for improvements or other expenses. Just know that there’s a risk involved in case interest rates spike and you’re unable to refinance for some reason.
Affordable Loan Solution Mortgage
This is a special mortgage specific to Bank of America and is aimed at helping people buy a home without saving up for a huge down payment. You’re only required to pay 3% down and the upside here is that you don’t have to pay any mortgage insurance premium. That can save you both in upfront closing costs and in your monthly payments.
If you’re a first-time homebuyer, you may be required to complete an education course before closing on your home loan. Additionally, depending on where you live, there may be income and loan amount limits.
FHA and VA Loans
Bank of America offers two government-back mortgages: FHA and VA home loans. An FHA loan has lower credit and down payment requirements compared to other loan types. We mentioned you only need a 600 credit score and you could qualify for a down payment of just 3.5% of your home’s purchase price.
That automatically makes home ownership a lot more viable for many people. You will, however, have to pay mortgage insurance with an FHA loan, both upfront and each year. That can quickly add up over the life of the loan.
A VA loan is for active military members and veterans and comes with lower credit standards and an option for a 0% down payment. A Bank of America loan officer can walk you through the application process and make sure you have all of the necessary paperwork to qualify for a VA loan.
For individuals purchasing above average real estate, Bank of America offers jumbo loans up to $5 million. This may seem like a wild amount for many people, but the limit for a conforming loan is only $453,100.
If you live in an extremely expensive market like San Francisco or New York City, starter home prices are well above that price point. A jumbo loan can help you get the funds you need to afford your own place no matter where you live.
Fees and Rates
Because of Bank of America’s size, interest rates are pretty competitive. You can access real-time rates directly on Bank of America’s website to see where they are today, especially since the exact numbers fluctuate daily.
Bank of America also charges an origination fee, which is charged as part of your closing costs. This is standard for many lenders, but it is always wise to compare offers to make sure the fee you’re being charged isn’t wildly beyond industry standards. It’s good to consider the entire cost of the home loan, not just your interest rate.
Bank of America’s Mortgage Process
Before filling out a formal mortgage application, you can get prequalified through Bank of America’s website. Once you’ve completed that step, you’ll consult with a loan officer to really get the ball rolling.
Next, create an account with their portal called Home Loan Navigator, which can be accessed through your desktop or via mobile app. Once there, you can conveniently upload all of your supporting documentation.
Plus, you’re able to electronically sign your disclosure forms and other paperwork, while always knowing exactly where your loan stands. You can even schedule a video conference with a loan officer if you don’t have one at a local branch near you.
If you’re a preferred rewards customer, you can qualify to have your origination fee reduced between $200 and $600. There are three tiers of Preferred Rewards based on how much of a balance you carry in your Bank of America bank accounts or investing and trading accounts through Merrill Edge of Merrill Lynch.
You always want to shop around to compare your loan options but Bank of America provides quite a few standout features. The wide selection of mortgage products paired with stellar service both online and off makes this lender a strong pick for just about anyone.