With a plethora of mortgages to choose from, it’s no surprise that Bank of America is one of nation’s largest mortgage lenders. The bank has a selection of multiple fixed-rate mortgages, variable-rate mortgages, jumbo mortgages and the Affordable Loan Solution® mortgage that offers low down payments.
Bank of America’s interest rates aren’t anything incredible, but they’re typically slightly better than, or right in line with, average mortgage rates across the U.S. You’ll also be able to get a Bank of America mortgage and have access to in-person customer service in any of the 50 states and Washington, D.C.
|30-Year Fixed-Rate||2.875%||0.759||Compare Rates|
|30-Year Fixed Jumbo||3.00%||0.869||Compare Rates|
|15-Year Fixed-Rate||2.25%||0.809||Compare Rates|
|15-Year Fixed Jumbo||2.75%||0.999||Compare Rates|
|5/1 ARM||2.75%||0.719||Compare Rates|
It’s important to note the distinction between an interest rate and an annual percentage rate (APR). An interest rate is the flat rate that you’ll pay on the mortgage. On the other hand, an APR includes a number of other costs you’ll incur, such as fees, closing costs, origination fees, points and insurance.
Overview of Bank of America Mortgages
Like many lenders, Bank of America’s most popular loans are its fixed-rate conventional mortgages. These are generally the most reliable loans, as you’re locked into a pre-specified rate that allows you to know exactly what your payments will be each month.
Bank of America offers these mortgages in 15-, 20- and 30-year terms, affording you flexibility in how long you want to take to pay off your home. Although shorter-term loans allow you to save significantly on interest, you will then be subject to larger monthly payments. But if you can afford these heftier bills, it’s well worth doing.
Jumbo loans are exactly what they sound like: a sizable loan for those that are likely looking to purchase a more expensive home. The exact amount that a mortgage must break in order to be considered “jumbo” was set by Freddie Mac and Fannie Mae, and currently sits at $510,400. Jumbo mortgages sometimes come with higher interest rates than their fixed-rate counterparts, but that’s not always the case, and they can come as either a fixed-rate or adjustable-rate mortgage (ARM).
An ARM is a loan that includes a variable interest rate that will shift over time. These alterations aren’t random, as Bank of America makes changes based on an index called the London Interbank Offered Rate, or LIBOR. However, all ARMs come with an initial payment period that utilizes a lower fixed-rate that makes these a great choice for people with less money to spend now than they will have in the future. When it comes to Bank of America, the shorter the opening period, the better the rate you’ll receive.
At Bank of America, there are three different types of ARMs: a 10/1 ARM, a 7/1 ARM and a 5/1 ARM. The first number in each refers to the number of years the loan will remain at a fixed-rate. Following that, though, your interest rate will be amended every year based on the LIBOR market index.
For those who may find it difficult to muster a large enough of a down payment for a typical mortgage, Bank of America offers the Affordable Loan Solution® mortgage. You may even be eligible for a down payment as little as 3% of the value of your home. These come in either 25- or 30-year terms and are fixed-rate loans. If you already own property, either independently or jointly, you will not be eligible to receive an Affordable Loan Solution® mortgage.
You can also apply for VA loans and FHA loans with Bank of America. An FHA loan is insured by the Federal Housing Administration and is available for low-income households that typically either have little money for a down payment and/or a low credit score. A VA mortgage, as you might expect, is reserved for past and present military members who also have low funding for a down payment.
What Your Monthly Mortgage Payments Could Be With Bank of America
When it comes to what you’ll have to pay on a monthly basis for a Bank of America mortgage, more than just the interest rate and APR come into play. For example, how much of your new home’s value you cover with a down payment will determine exactly how large your loan will need to be to offset the balance. Combining all of these pieces of information will lead you to what your monthly payments will likely be, though your own personal financial situation could vary things slightly.
|These payment calculations do not include homeowners insurance, property taxes or closing costs.|
|Mortgage||Interest Rate||Loan Size||Your Payments|
|30-Year Fixed||2.875%||$200,000||$830/month for 30 years|
|15-Year Fixed||2.25%||$200,000||$1,310/month for 15 years|
|5/1 ARM||2.75%||$200,000||$816/month for 5 years, then variable|
How Bank of America Compares to Other Lenders
Bank of America’s mortgage rates are, for the most part, better than the average national rates for each type of mortgage. The table below illustrates this against some of the lender’s largest competitors in Chase and Wells Fargo.
|Mortgage||Bank of America||Chase||Wells Fargo|
Wells Fargo, Chase and Bank of America all belong to the “Big Four” of banks in the U.S., along with Citi. This indicates that you’ll find similar mortgage offerings with each lender. However, even when it comes to SunTrust, a smaller institution, you can get multiple types of jumbo, conventional, VA, FHA and ARM mortgages.
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Refinancing With Bank of America
If you currently have a mortgage, but the monthly payments or overall loan term are too much for your finances to bear, refinancing might be worth a look. Refinancing rates typically vary just as much as normal mortgage rates, and they include the same determining factors as well. Your credit score and financial history, any mortgage points, your current level of home equity, whether the home is a primary residence or not and the loan's total amount will all combine to formulate what the bank feels comfortable offering you.
Private mortgage insurance (PMI) and closing costs are usually included as a part of your refinancing deal, though they were likely involved in your original mortgage deal as well. But while closing costs are virtually unavoidable, you can get out of needing PMI if you're refinancing, but own at least 20% equity in your home.
Should You Get a Mortgage from Bank of America?
SmartAsset’s in-depth lender review of Bank of America ranked the bank favorably, giving it an overall rating of 4.06 out of 5 possible stars. The bank seemingly has it all, with good interest rates, reasonable APRs, plenty of physical branches and a variety of different loan types to choose from. Aside from typical low down payment options like FHA and VA loans, which BofA offers, the Affordable Loan Solution® mortgage program presents a great mortgage opportunity as well.
Though some may be inclined either to undervalue or overvalue the words of current and former customers, it’s important to take them into account at least partially. Unfortunately for Bank of America, these reviews haven’t been so kind, so be sure to check some of them out and make a final decision for yourself as to how much they should matter.
Tips to Find a Great Mortgage Rate
- Just as you did your due diligence to find the home of your dreams, the search for a lender to give you your mortgage should be equally as rigorous. Although you're almost assuredly very excited to move into your new home, prematurely choosing a loan with a high interest rate or a set of extraneous costs and fees could give you major headaches down the road.
- Mortgages are complicated and affects more than just your monthly bills. It can turn your entire financial life upside down if attended to incorrectly, so some help might be warranted. The SmartAsset financial advisor matching tool will pair you up with as many as three financial advisors in your area that can help ensure the mortgage process goes smoothly.