Bank of America: 2022 Home Equity Review

You have the option to convert a HELOC into a fixed-rate loan, which is ideal as interest rates keep rising.

Bank of America is headquartered in Charlotte, North Carolina, and is the second-largest bank in the US, having acquired Merrill Lynch in 2008.

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Bank of America

This nationwide lender offers home equity lines of credit, or HELOCs, in all 50 states and the District of Columbia. One of the biggest benefits of a Bank of America HELOC is the option to convert the loan into a fixed-rate home loan. HELOCs typically have variable interest rates that will go up and down depending on what's happening with the economy and interest trends overall. That means that right now, as interest rates continue to rise, the ability to lock in a fixed rate for HELOC is a particularly appealing option. 

Bank of America: At a glance

Types of loans offered HELOC
APR range Starting at 7.40%
Loan amounts $25,000 to $1 million
Credit score requirements Undisclosed
Repayment terms 10-year draw period, 20-year repayment
Average time for application As little as 15 minutes

What we like

Minimal to no fees: There's no application fee or annual fee for a Bank of America home equity line of credit, or HELOC, and the bank also says it takes care of closing costs for its home loans up to $1 million. 

Discounts: You can receive discounts on your interest rate if you enroll in various programs with Bank of America. For example, a 0.25% discount is available if you enroll in auto-pay before or during your HELOC application with an eligible Bank of America deposit account.

Fixed-rate conversion: The option to convert a variable-rate HELOC into a fixed-rate loan is ideal in today's rising interest environment. Not all lenders offer this type of HELOC, which makes Bank of America a good candidate to consider, given that the Federal Reserve is expected to raise interest rates one more time before the end of the year. 

What we don't like 

Preference for Bank of America clients: You aren't eligible for all of the available discounts if you aren't a Bank of America client. However, clients get additional discounts, like receiving a discount of up to a 0.375% on your interest rate depending on what kind of account you have.

Early closure fee: Although one of the major benefits of a Bank of America HELOC is the minimal fees, if you close your account within 36 months for any reason, you will be charged a $450 fee and have to reimburse any third-party fees for closing costs that the bank paid on your behalf.

Higher rates for fixed loans: If you do decide to convert your HELOC into a fixed-rate loan, keep in mind your new interest rate will be slightly higher than your original variable interest rate. So although you don't have to pay a fee to make the conversion, your interest rate will go up a bit. However, your rate may stay lower over the long-term compared with what your variable rate could go up to. 

Home equity loan product options

Bank of America originates mortgages and refinances as well as HELOCs, but doesn't currently have a home equity loan option. However, because the bank allows you to convert HELOCs into fixed-rate loans, it still offers homeowners a home equity option with predictable monthly payments, which could be ideal in the near future as experts expect interest rates to rise amid persistent inflation and a possible recession. 

Fees

One of the benefits of Bank of America is minimal to no fees. You aren't required to pay an application fee or closing costs, and there is no annual fee to maintain your HELOC account, which is a common fee that other lenders may charge.

If you close your account within 36 months of opening, you must pay a $450 early closure fee, as well as reimburse any other third-party fees the bank paid on your behalf during the approval process, such as recording fees or taxes. If you live in Maryland, however, the fee is waived if your maximum line of credit is less than $25,000.

How to qualify

Because Bank of America doesn't disclose its minimum credit score requirements, it's advisable for prospective clients to review their credit to make sure their credit scores are very good to exceptional in order to qualify for a low interest rate. Generally speaking, most lenders prefer a credit score of 700 or higher, but some lenders, such as Bank of America, will accept a lower score in the mid-600 range -- but expect to pay higher interest rates. 

You'll need the standard paperwork to prove you have adequate, verifiable income -- including your recent Form W-2, tax returns and pay stubs. You'll also need to provide documentation for your existing mortgage and whether or not you have current homeowners insurance. 

Getting started

You can apply online, in-person or over the phone for a HELOC with Bank of America. However, to close your loan you will have to go in-person to one of its brick and mortar locations. Once your loan is closed, you can manage all of your documents throughout the process using the bank's online portal.  

Customer service

You can apply for a HELOC online and the process should take as little as 15 minutes, according to Bank of America. You also have the option to schedule an appointment via its website. Most live phone support is available Monday to Friday, 8 a.m. to 9 p.m. ET, though certain lines are also open on Saturday and Sunday. Check the website for details. 

Live phone support:

  • Talk to a lending specialist: 800-763-4820 
  • New home equity applications: 800-779-3894 
  • Existing HELOC clients: 800-934-5626
  • If you can't make a payment for any reason: 800-451-6362