Bank of America Home Loans – Among the Most Popular

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate

Home loans from Bank of America are among the most popular in the country. BofA mortgage loans, together with those of Wells Fargo and Chase, accounted for 56 percent of all U.S. mortgages written in 2010.

BofA offers many kinds of loans. Just talk with a mortgage loan officer, and he or she will help you choose the type of loan that best fits your needs and financial circumstances.

1.   Fixed Rate Loans
The monthly payment amount remains the same over the entire life of the loan.

2.   Adjustable Rate Mortgage Loans
The monthly payment amount changes every 6 months or 12 months. The rate adjusts every adjustment period based on market rates.

3.   Hybrid ARMs or Fixed-Period ARMs
The monthly payment amount is fixed for a period of 1, 3, 5, 7 or 10 years, and then changes once a year for the rest of the term.

• A 5/1 ARM loan means the monthly payment amount is fixed for the first 5 years, and then changes once a year from the sixth year.
• A 7/1 ARM means the monthly payment is fixed for the first 7 years, and then changes once a year from the eighth year.

4.  Government Loans
VA loans are for military personnel only while FHA loans are for other borrowers who can’t afford higher down payments.
4.  Specialized Loans

• Affordable – Offers flexible down payment systems
• Bond – Available in certain regions on a first-come first-served basis
• Affordable Housing Programs – Includes Section 8, employer-assisted, mortgage revenue bond, closing-cost- and down-payment-assisted, and mortgage credit certificate
• 10/20 Fixed-Rate Interest-Only – Only the interest is paid monthly for the first 10 years of the loan. This results in what is called payment shock when the 11th year starts, as the monthly payment shoots up to a substantially higher amount.
• Jumbo – Involves substantial loan amounts.
• Combination – Consists of a first mortgage and a home equity mortgage with one down payment.

These are the steps you’ll go through when you apply for your first BofA home loan:

1.    Submit the following documents:

• Tax returns for the last two years
• Recent pay stubs
• W-2 statements for the last two years
• Recent bank statements
• Home purchase contract
• Information on sources of down payment and reserve funds
• Information on rent
• Divorce and bankruptcy papers, if applicable
• Gift letter, if applicable
• Other financial documents required by BofA

2.    Fill out the mortgage application form. You will be asked about your financial and employment history.
3.    The bank officer will obtain your credit report.
4.    If you’re approved, you can lock your interest rate.
5.    BofA gives you three documents:

• Clarity Commitment –  a one-page summary of your loan, at the start of the loan process, and another at closing.
• Truth-in-Lending Statement
• Good Faith Estimate (GFE) – a list of fees and closing cost estimates

6.    You’ll also receive the HUD-1 Settlement from your settlement agent the day prior to closing or on the day of closing, so you can compare it with your GFE.

Bank of America has lots of home ownership guides on its website, including an interactive home loan guide and mortgage calculators.