Bank of America Home Equity Line of Credit Review

Bank of America has a long history of providing financial services, as it can trace its roots back to 1784. In 1998, a merger with NationsBank made Bank of America the first truly coast-to-coast bank in the country.

Because of its ubiquity, Bank of America has a reputation for accessibility and offers a wide variety of financial products including home equity lines of credit (HELOC).  HELOCs allow you to tap into the equity you’ve built in your home and withdraw flexible amounts of money at reasonable rates.

In this review:

• Getting a Bank of America HELOC
• The Basics: Bank of America HELOC Rates & Fees
• The Benefits
• The Downsides

Getting a Bank of America HELOC

Home equity loans are available only to borrowers with equity in their homes. If your home is worth $200,000 but you’ve already paid your mortgage down to $125,000, you have $75,000 in equity. But, if you’ve just recently purchased a home and have little or no equity in it yet, you won’t be eligible for a Bank of American HELOC.

If you believe you have sufficient equity and want to apply for a Bank of America HELOC, the application process is simple and most of the steps can be done online. An online application takes about 15 minutes, and there’s no obligation to accept the HELOC if you don’t like the terms. 

You can check your application status online. And after you’ve received pre-approval a Bank of America specialist will guide you through the rest of the process step by step. There is no application fee, no closing costs, and you can access your funds quickly via online banking, by phone, at a Bank of America location, or through a check mailed to you.

The Basics: Bank of America HELOC Rates & Fees

Bank of America’s rates and fees for a HELOC are relatively standard for the industry. The lender is offering an introductory APR of 3.99% for 12 months, after which the rate goes up. The standard APR after the intro period varies by state and your credit score can also affect your rate, so it’s best to get a rate quote to see what you can expect to pay. You can also take advantage of a rate discount of .25% if you set up autopay. 

Your credit limit, as with most HELOCs, is up to 85% of your home value minus the amount you already owe. A solid credit history with few other sources of debt will make you more likely to get approved to borrow the full amount allowed based on your loan-to-value ratio. There are no application or closing fees, and Bank of America does not charge annual maintenance fees either.

The Benefits

Bank of American HELOC reviews are typically positive. The financial servicer makes accessibility a top priority by providing clients with home equity specialists to answer questions, assist with applications, and streamline the borrowing process. Other offers Bank of America extends to new HELOC applicants include:

• Calculators to find out home equity, estimated home value, and repayment options
• Interest rate discounts when making an initial withdrawal upon opening an account
• Further interest rate discounts for current Bank of America customers in the Preferred Rewards program. These discounts could be as high as .375%
• Easy-to-use mobile banking apps that provide instant access to funds

Flexible Borrowing Amounts

A Bank of American home equity line of credit helps borrowers take advantage of revolving credit without the costs that often accompany these types of loans. Like a credit card, you can borrow up to your credit limit on a HELOC and can borrow more as you pay down your balance. But, compare the costs of putting a $5,000 purchase on a credit card, which could have an interest rate in the teens or higher, versus borrowing that same $5,000 using a HELOC with a 3.99% introductory rate. The interest savings are significant. 

The revolving nature of a HELOC makes this option more flexible than home equity loans, which offer a fixed loan amount and no option to borrow more in future months. This might mean taking out more loans in the future if the first loan wasn’t enough to cover expenses. HELOCs avoid this problem.

Fixed-Rate Options

If you’re concerned about the unpredictability of a variable interest rate, Bank of America also offers a Fixed Rate Loan Option. 

With a fixed-rate loan, your rate will never change for the agreed-upon length of time. Bank of America makes this option accessible by providing a quick transfer service for those who have variable-rate home equity lines of credit. And, there are no fees for transferring. Using a fixed-rate option, borrowers can protect themselves against rising interest rates and count on predictable monthly payments.

Discounts

Bank of America HELOCs come with a number of discounts. They include:

• An intro APR of 3.99% for the first 12 months
• An autopay discount of .25%
• Interest rate discounts on withdrawals made upon account opening
• Preferred Rewards discounts for current Bank of America members ranging from .25% to .375%

By stacking these discounts together, savvy borrowers can significantly reduce costs for using their HELOC, both immediately and over time.

Online Support

Bank of America offers robust online support. You can reach a specialist via live chat right from your computer or you can call a support expert directly. If you don’t have time to wait on the phone, you can also request a call back when it’s more convenient for you. Or, you can schedule an appointment to speak with a representative directly with any concerns you have. 

The company’s website also offers a number of helpful tools for customers including a calculator to help you determine how much you can borrow and how much you’ll pay. You can use these tools to estimate the value of your home and what your HELOC will cost.

The Downsides

While Bank of America’s home equity lines of credit tend to be an ideal way to borrow for many households, these loans also have been the subject of many complaints. Some borrowers were taken aback at the credit line they were awarded or the fees they had to pay. Others noted that the online application was much more accessible and easier to complete than doing the same process over the phone. This might be a deal-breaker for some. 

No Bank of America Home Equity Loans

Those looking for flexibility in their home funding options may be disappointed in Bank of America due to the institution’s limited offerings that do not include standard home equity loans. Home equity lines of credit are the only choice for borrowers who want to borrow against their homes and do business with Bank of America. However, borrowers do have the option to freeze their HELOC rate for a period of time, which mimics some of the benefits of a home equity loan by removing a bit of unpredictability.

Foreclosure Risks

Whenever you borrow against your home, foreclosure is always a risk. Both home equity loans and home equity lines of credit are secured by your home so your home is the collateral you offer to the bank. 

If you can’t pay your HELOC, you risk losing your home because the bank will seize the collateral to pay off your debt. This means that home equity lines of credit, whether from Bank of America or elsewhere, are only appropriate for those who know they can pay down the debt. A HELOC is never meant to be used to finance irresponsible spending.

Bottom Line 

While it’s true that Bank of America only offers home equity lines of credit and not home equity loans, the financial institution does provide borrowers with many benefits including accessible customer support and a number of helpful online tools. Current Bank of America Preferred Rewards customers will see the greatest benefit from Bank of America HELOCs thanks to interest rate reductions, but non-members can also get a loan at a competitive rate.