Bank of America Mortgages: Lower Rates, at a Cost

Bank of America Mortgages: Lower Rates, at a Cost

Compared to Chase or Wells Fargo, Bank of America offers lower interest rates on the most popular mortgage types but requires significantly more money upfront in its closing costs.

Good for

  • Wide availability and convenient access to branches
  • Competitive closing cost and interest rate estimates
  • Diverse selection of mortgage products

Bad for

  • Troubled reputation in responsible mortgage lending
  • Relatively high proportion of borrower complaints
  • Limited coverage in the Midwest

Editor's Rating

3.0/5.0

Bank of America's nationwide presence and broad variety of mortgage products make it a versatile option for homeowners in almost every state. However, the bank's reputation for servicing mortgages has taken serious blows from its involvement in the 2009 meltdown of mortgage-backed securities, as well as a high proportion of borrower complaints relative to competing lenders like Wells Fargo.

Bank of America Mortgages: Low Costs, Low Satisfaction

Although we found a better mortgage rate and lower closing costs with Bank of America for our homeowner, there is a greater risk of problematic customer service during your mortgage term. Bank of America has thousands of branches in dozens of states, making it an easy option for most consumers, and its online tools consistently estimate competitive costs for all of its mortgage products. Homeowners living in the midwest region may find coverage sparse, as the region is dominated by banks like US Bank.

It's also impossible to ignore the bank's recent string of federal penalties and consumer complaints related to its conduct as a mortgage lender. That said, JD Power's 2016 survey of customer satisfaction found that Bank of America scores just a few points below the industry average for mortgage originations, suggesting that the bank may have taken steps to raise its quality of service in this area. If you manage to find the right loan officer at this bank and stay up to date with the details of your payment schedule, then Bank of America's low rates may end up being a good opportunity for financing your first home purchase.

How Do Bank of America's Mortgage Rates and Fees Compare?

Compared to Chase or Wells Fargo, Bank of America offers lower interest rates on the most popular mortgage types but requires significantly more money upfront in its closing costs. If you'd like to see how Bank of America's mortgage rates compare to today's market, use our comparison tool below to find quotes for your area.

30-Year Fixed Rate Mortgage Estimates at Major Banks

Bank of AmericaChaseWells Fargo
Interest Rate4.00%4.13%4.13%
APR4.35%4.44%4.36%
Closing Costs$8,076$7,230$7,565
Monthly Payment$918$938$925

See Mortgage Rate Quotes for Your Home

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To obtain a better picture of what you can expect to pay on a mortgage with Bank of America, we used its online mortgage tools to obtain a quick estimate of interest rates and closing costs. We relied on a typical borrower profile that included a purchase price of $198,000 and a 10% down payment, with good credit and $58,000 in annual household income. All things held equal, Bank of America's estimate produced the lowest monthly mortgage payment among the three major banks.

Besides 30-year mortgages, Bank of America also offered the lowest rates on 15-year fixed rate loans and 5/1 ARM mortgages. While each bank uses different assumptions for its online quotes, these numbers present a reasonable indicator of where you can expect to start a conversation with the loan officers at each bank. However, a closer look at Bank of America's record of customer service suggests that the bank's lower fees and rates may actually be a case of getting what you pay for.

Customer Service and Mortgage Servicing Ratings

Roughly speaking, Bank of America receives twice as many complaints as either of its closest competitors. Since 2013, Bank of America's customers have filed just over 28,000 mortgage-related complaints with the Consumer Finance Protection Bureau, the most for any mortgage lender. To put that in context, Bank of America received more complaints than Wells Fargo while serving only half as many mortgage borrowers.

Mortgage-Related Complaints at Major Banks, 2013-2017

CompanyMortgage OriginationsCFPB ComplaintsRatio2017 JD Power Rating
Bank of America1,172,11328,1872.40%767
Chase948,00014,7781.56%764
Wells Fargo2,155,22225,1821.17%745

Unfortunately, Bank of America also holds the unenviable record for incurring the biggest share of mortgage-related federal penalties in the wake of the 2009 financial crisis. The bank paid out nearly $28 billion in total settlements as a result of reckless lending practices that led to mass foreclosures among its borrowers. By itself, Bank of America accounts for nearly two-thirds of the $43 billion in mortgage lender fines imposed since 2010.

As a rule, your individual experience will mostly depend on the skills and conduct of your particular loan officer. This may explain why Bank of America's latest JD Power Rating for Mortgage Origination Satisfaction is actually pretty average. However, Bank of America's history of complaints and legal troubles suggest that unless something drastic has changed, you'll probably find consistently better service elsewhere.

Mortgage Loan Products at Bank of America

As one of the three largest national banks, Bank of America's role as a mortgage lender has it providing practically every popular mortgage product available in the country.

Mortgage ProductInterest RateAPRPoints
30-year fixed rate4.00%4.34%0.54
15-year fixed rate3.38%3.67%0.57
20-year fixed rate3.88%4.14%0.58
5/1 ARM3.13%3.86%0.72
7/1 ARM3.25%3.83%0.80
10/1 ARM3.63%3.93%0.58

Bank of America also offers choices tailored to borrowers seeking a lower down payment on their primary home. FHA mortgage loans can be a cost-effective path to homeownership, with minimum down payments from 3.5%, while VA loans sometimes require no down payment at all from families of qualified veterans. Dozens of banks and direct lenders provide these government-backed mortgages, but the low interest rates on Bank of America's other products suggest that it may also provide a better deal on FHA and VA loans.

Bank of America also offers something called the Affordable Loan Solution®, a fixed-rate product that offers down payments as low as 3% over 25 or 30 years. While this minimum payment is even lower than the 3.5% floor on down payments for FHA mortgages, the Affordable Loan Solution® is limited to certain property types and primary owner-occupied residences. Customers looking at this product may also be required to participate in homebuyer education provided by a government-approved counseling provider.

Where Can You Get a Mortgage With Bank of America?

Bank of America currently operates more branch locations than almost any other bank in the country, with concentrated coverage along the East Coast and West Coast.

map of Bank of America branches in the US, by county

Obtaining your mortgage from a national brand like Bank of America guarantees a measure of predictability when it comes to terms and pricing, factors which smaller local banks may not define as consistently. However, you may find that big banks won't provide as much customized care when it comes to helping you manage the mortgage. Mortgage defaults hurt the lender as well as the borrower, so local banks will be more invested in managing each mortgage loan, whereas a giant company like Bank of America might see one foreclosure as a drop in the bucket.

How Does Bank of America Compare to Today's Mortgage Rates?

If you'd like to get a sense of how Bank of America compares to other mortgage companies, use the table below to explore alternative lender options.

LenderAPRMonthly PaymentLoan Fees
Homestead Funding Corp4.780%$834.64$545.00Inquire Now
Ally Bank5.017%$858.91$309.00Inquire Now
First Internet Bank of Indiana5.027%$858.91$482.00Inquire Now
Citibank, N. A.5.179%$858.91$3,207.00Inquire Now
HomeDirect Mortgage4.875%$846.73$0.00Inquire Now

Rates assume a home purchase of $200,000 in New York with a 20% down payment and credit score of 740.

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