Bank Of America HELOC – How Does it Work?
What is it all about? The Bank of America HELOC (Home Equity Line of Credit) is a loan given by the Bank of America that is a fantastic choice for property owners hoping to capitalize on the equity in their property. A HELOC provides a line of credit that you can draw on as needed, as opposed to a home equity loan, which provides you with a single sum of money. Similar to credit cards, HELOCs have variable interest rates, so your monthly payment will change according to the current rate and the amount you are currently borrowing.
According to the equity you have on your home, a HELOC normally has a maximum loan amount. You have the option to utilize the entire or part of your credit line, but only the money you have actually drawn is factored into interest calculations. Also, you should be aware that your house will serve as the collateral. Though you may apply for this online. And the process is simple and quick, with help every step of the way.
How Does HELOC Work?
Your home serves as security for a HELOC, which lets you take out loans against the value you have in it. Similar to a credit card, the allotted credit is restored when you pay off the interest on your remaining debt. This implies you can loan against it once more if necessary, or borrow until you reach the limit you set at closing.
You can therefore borrow any amount you like. HELOC terms are divided into two sections. The first is known as the “draw period,” while the second is known as the “repayment period.” The HELOC is a 30-year loan with both a 10-year draw period and a 20-year repayment period. You are not permitted to take out additional loans after the draw period.
How to be eligible for a HELOC
The Home Equity Line of Credit (HELOC) from the Bank of America application is no different from applying for something such as a credit card in that you must first be eligible. Prior to submitting an application for the Bank of America Home Equity Line of Credit (HELOC), you must have a credit score. The minimum credit score needed to qualify for Bank of America’s HELOC is not specified.
You would have to have accessible equity in your house, which means that the balance owed on it must be lower than its market value. Generally speaking, one could borrow up to 85% of the value of your property minus any outstanding debt. Most of the things that are considered are your credit score and history, job history, regular income, and monthly debts.
An index rate is used to settle your rate. They’ll add a markup after that. This markup, nevertheless, is determined by your credit history. For example, if your credit score is good, your markup would be lower, as well as the opposite.
How Does Paying Back HELOC Work?
A HELOC functions very similarly to a credit card. You’ll have a set credit limit that you can use to make purchases, but you’ll have to pay those purchases back later.
You are usually only required to pay interest during the draw period, which usually lasts between 10 years.
Advantages of Bank of America HELOC
- There are no application fees, closing costs, or yearly fees when using a Bank of America HELOC.
- Fixed-rate options.
Disadvantages of Bank of America HELOC
- If you terminate your account before three years have passed, you will be charged a $450 fee in addition to any closing costs which Bank of America paid on your part.
- Despite having competitive rates, Bank of America’s quoted low APR is predicated on great credit.
- Bank of America has a high minimum line amount of $25,000. This may be more than what you desire or require to borrow.
Application Procedures for the Bank of America HELOC
Utilizing the bank’s online application, you can apply for a Bank of America HELOC. It should take around 15 minutes to complete the process. You will be instructed on how to upload any necessary papers and check the status of your loan application after responding to the initial questions.
If you require help completing the application or have any problems, you can make an appointment with a specialist. Call them, or communicate with them online. Additionally, you have to go to a financial center to close your HELOC.
For additional details on its HELOC program; Visit the Bank’s website.