Bank of America HELOC Review: Is It Worth It?

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Bank of America is a strong option for homeowners looking for a HELOC, especially if you’re already a customer or need to borrow a large amount of home equity.

This Bank of America HELOC review covers the bank’s offers, how its rates and fees stack up, who qualifies and how it compares to other lenders.

Quick Summary: Is a Bank of America Home Equity Loan the Right Fit for You?

• Ideal for:
  • Existing Bank of America customers who want loyalty rate discounts
  • Borrowers who want to access fixed-rate payment options
  • Borrowers who want to borrow up to $1 million

• Not ideal for:
  • People who need to borrow less than $25,000
  • Anyone wanting a completely online experience

Pros and Cons of Bank of America Home Equity Products

Bank of America HELOC Overview

Bank of America is one of the largest financial institutions in the world. With Bank of America’s HELOCs, borrowers pay no application fees, closing costs or annual fees. HELOC customers have convenient access to their funds in person, through online banking or by phone. The application process is quick, and you can check your application status securely online. You’ll need to meet in person at a branch to finalize your HELOC.

As a borrower with Bank of America, you can enjoy up to 0.750% in HELOC interest rate discounts by utilizing automatic monthly payments, making an initial withdrawal or being a Bank of America Preferred Rewards member. 

What Types of Home Equity Products Does Bank of America Offer?

Bank of America offers home equity lines of credit, allowing you to borrow up to 85% of your available home equity. There are discounts available to Bank of America members, and you can borrow up to $1 million.

You may also be able to convert a portion of the initial amount you borrow to a fixed-rate loan, making your payments — and interest rate — more predictable. Here are the details of Bank of America’s home equity products.

Home Equity Line of Credit

The Home Equity Line-of-Credit from Bank of America offers standard terms, such as a 10-year draw, 20-year repayment, along with competitive rates.

You may be able to get rate discounts for being a Bank of America Preferred Rewards member, and can borrow quite a bit of money — up to $1 million.

Here’s what you need to know about Bank of America HELOCs:

• Variable rate, 10-year draw, 20-year repayment
• May include the option to convert the balance to a fixed rate
• Rate discounts are available for Bank of America members.
• Rate discounts are available upon initial withdrawal and setting up autopay.
• Borrow up to $1 million, depending on location.
• Maximum 85% loan-to-value borrowing ability

Fixed Rate Loan Conversion

You may be able to convert some of your initial withdrawal amount from your HELOC into a fixed-rate loan with fixed monthly payments. This can add some stability to your HELOC payments and lock your rates in. Here are the details:

• Can convert a portion of HELOC to a fixed-rate loan
• Interest rate and monthly payment stay the same.
• Term length is set at 12 months.
• The minimum amount is $5,000.
• The maximum is 90% of the HELOC borrowed.

What Rates and Discounts Can You Get?

Bank of America offers several discounts for members and new borrowers who open a new HELOC. Here are the rates and discounts available:

• Typical APR range: Starts at 8.90% variable APR
• Intro offer: Fixed 6-month intro rate of 6.49%.
• Rate discounts: 
  • 0.25% discount for automatic payments
  • Up to 0.625% off for preferred banking tiers
  • Up to 1.50% based on the initial withdrawal amount.

The preferred banking discounts are available to Bank of America rewards members, with the discount amount increasing for each tier. Here’s how it breaks down:

• 0.125% rate discount for Gold tier
• 0.250% rate discount for Platinum tier
• 0.375% rate discount for Platinum Honors tier
• 0.625% rate discount for Diamond tier
• 0.750% rate discount  for Diamond Honors tier

Achieving these status tiers with Bank of America requires minimum daily balances across your Bank of America accounts.

Are There Fees or Closing Costs?

Bank of America is known for having higher fees — but their HELOC is an exception. There are no application or annual fees charged on your HELOC. And you won’t pay any closing costs on your HELOC in most states. But there is an early closure fee if you shut down the account too soon.

Here’s a breakdown of fees and costs associated with a Bank of America HELOC:

• No application or annual fees
• No closing costs in most states
• Early closure fee of $450 if you close the HELOC within 36 months
• May pay appraisal or title fees, depending on the property

Who Qualifies for a Home Equity Product?

Although Bank of America doesn’t state the minimum credit score needed to qualify, according to Experian, generally a score of 680 is what most lenders like to see.

To apply online, you’ll need to request a minimum amount of $25,000. Any amount lower than that, and you’ll have to call the bank. 

Here are the details on qualifying for a Bank of America HELOC:

• Credit score: 680 or higher recommended
• Equity requirement: 15% minimum (30% recommended for best rates)
• Other requirements:
  • Proof of income
  • Low debt-to-income ratio, under 43%
  • If you’re self-employed, expect to submit additional income documents.
  • Discounts assume a $100K HELOC or higher

What’s the Application Process Like?

You can start the application process online and complete your HELOC application within about 15 minutes. 

• How to apply: Online, by phone, in-person
• Prequalification: Available with soft credit pull or not
• Funding time: Usually two to four weeks
• Documents needed: Proof of income, property tax info, mortgage statement

Maximum LTV Ratio

The loan-to-value ratio compares the amount of the loan you want to your home’s value minus the amount you currently owe. An LTV of 80% or lower is considered good. Bank of America generally allows borrowers up to 85% of their home’s value.

For example, if your home is appraised at $300,000, then 85% of that is $255,000. If you still owe $130,000 on your mortgage, subtract that amount, and the maximum HELOC amount you could borrow is $125,000. Your monthly HELOC payment would be around $1,008 with a 10-year draw period followed by a 20-year repayment period.

Minimum Credit Score

Bank of America doesn’t explicitly list the minimum credit score needed to qualify for a HELOC on its website. Most lenders would like to see at least a 620 credit score minimum, as a general standard, according to Rocket Mortgage.

Other factors beyond your credit score go into the application process and whether or not you’re approved for a HELOC. These include how much debt you currently have, your home’s equity and your employment history. All in all, however, it’s best to keep an average or better credit score to ensure you’ll get approved with the best rates.

Fees

Bank of America charges no application, closing or annual fees on HELOCs up to $1 million. You can also convert your variable-rate balance to a fixed-rate loan at no additional charge.

Prime Rates

Bank of America’s current prime rate is 8.50%. Based on your state, you could take advantage of Bank of America’s special introductory variable HELOC rates. You could pay 7.49% APR for the first six months, and after the introductory period, you’d pay 9.90%. These rates are comparable to other lenders’ rates in the current market.

How Does Bank of America Compare to Other Lenders?

For most HELOC borrowers, Bank of America seems to be a good choice. But it’s wise to compare what other lenders have to offer before making a final decision. Here’s where Bank of America stands against two competing lenders: Fifth Third Bank and Truist Bank.

Fifth Third Bank

Both banks have a streamlined online application process that facilitates faster closing. However, Fifth Third Bank’s lowest possible interest rate offering is 6.49%, the same as Bank of America’s 6.49%. Fifth Third only allows borrowing up to $500,000, while Bank of America offers up to $1 million.

Truist

Truist Bank fares better than Bank of America for borrowers in the rate department. Bank of America has a 6.49% for a six-month promotional rate, while Truist has a 5.99% for a nine-month promotional rate. Borrowers can also apply for HELOC loans as low as $5,000 with Truist instead of the $25,000 minimum with Bank of America.

Final Verdict: Should You Choose Bank of America?

Bank of America offers a solid HELOC plan with competitive rates and no closing costs or annual fees. Bank of America also offers the ability to roll some of your balance into a fixed-rate loan to lock in your monthly payments.

You’ll pay a $450 fee if you close the HELOC before 36 months, and you need to open at least a $25,000 line of credit to work with Bank of America. If you have substantial equity and are already a Bank of America customer, the discounts and low fees make for a compelling HELOC option. But just be aware of the requirements before applying.

Choose Bank of America if:

• You’re an existing customer eligible for discounts.
• You want $0 closing costs and don’t mind applying in person.

Look elsewhere if:

• You have lower credit or need quicker funding.
• You prefer a fully fixed-rate product.

Key Takeaways

• Bank of America offers HELOCs with competitive rates and $0 fees for most users
• Most users will qualify if they have at least 15% home equity and a solid income and credit score.
• You can apply for a HELOC online, but you must finish the process in person
• You can borrow up to $1 million in a Bank of America HELOC.
• Bank of America HELOCs are best for existing customers, borrowers with good credit and those with substantial home equity.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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