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If you’re looking to renovate or upgrade your home, a home improvement loan from Bank of America can provide financing to make it happen Whether it’s a kitchen remodel, bathroom update, new roof, or energy-efficient upgrades, Bank of America offers several borrowing options
In this comprehensive guide, we’ll cover:
- Benefits of Home Improvement Loans
- Types of Home Improvement Loans at Bank of America
- Loan Amounts, Rates, and Terms
- Qualification Criteria and Documentation
- Tips for Getting Approved
- Using Loan Funds and Making Payments
Understanding your home improvement financing options will help you choose the best loan for your project budget and needs
Why Get a Home Improvement Loan?
Here are some of the top reasons to use financing for home remodeling or renovations:
- Pay over time – Repay interest-only or principal plus interest in manageable monthly payments vs all at once
- Conserve cash – Preserve money in your bank accounts and investments
- Leverage home equity – Tap into your available home equity to fund projects
- Enjoy upgrades now – Make improvements without waiting years to save up cash
Loans allow you to proceed with upgrades immediately while spreading repayment over months or years.
Types of Home Improvement Loans from Bank of America
Bank of America offers several borrowing options to finance home renovations or upgrades:
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) uses your home’s equity as collateral. It works like a credit card with an open-end credit line you can draw from as needed.
Benefits:
- Interest-only payments during 10-year draw period
- Variable rates often lower than other financing
- Flexible access to approved credit line as you need it
Considerations:
- Rates and payment adjust over time
- Home equity required
Home Equity Loan
Home equity loans provide fixed amount financing with predictable fixed monthly principal and interest payments.
Benefits:
- Fixed interest rate and payment
- Know your exact monthly payment amount
Considerations:
- Less flexible than a line of credit
- Home equity required as collateral
Personal Loans
Personal loans can provide fixed-amount financing without using home equity as collateral.
Benefits:
- Fixed monthly principal and interest payments
- May require less home equity than a HELOC
Considerations:
- Generally higher interest rates than home equity options
- Less flexibility than a HELOC
Next, let’s compare loan amounts, rates, terms, and fees across these products.
Home Improvement Loan Amounts, Rates, and Terms
Here’s an overview of key loan details offered by Bank of America:
| Loan Type | Amounts | Rates | Terms | Fees |
|---|---|---|---|---|
| HELOC | Up to $100k+ | Variable starting at 7.74% | 10-yr draw, 20-yr repay | None |
| Home Equity Loan | Up to $500k | Fixed from 7.99% | 5-30 years | Origination fees 1%+ |
| Personal Loan | $3k-$50k | Fixed from 11.99% | 2-7 years | Origination fees |
HELOCs provide flexible access to approved revolving credit at generally lower variable rates compared to other options. Home equity loans offer predictable fixed rate financing for larger projects. Personal loans have higher rates but smallest home equity requirements.
Now let’s review the application documentation and eligibility criteria.
Qualifying for a Bank of America Home Improvement Loan
When applying for home improvement financing, here are key qualifications lenders evaluate:
Credit History and Score
- HELOCs generally need 680+ credit score
- Home equity loans look for 620+ score
- Personal loans may accept 580+ credit score
Income Verification
- Tax returns, pay stubs, and/or bank statements to confirm income
Debt-to-Income Ratio
- HELOC/Home Equity: 43% or lower recommended
- Personal Loans: Varies by lender but lower ratios preferred
Home Appraisal and Equity
- HELOCs and home equity loans require sufficient home equity
- Personal loans may only review home value
Ongoing Employment
- Steady work history helps demonstrate repayment ability
Down Payment
- Generally not required on home improvement loans
Preparing these items in advance will help your application get processed faster.
Tips for Getting Approved for a Bank of America Home Improvement Loan
Here are some tips to improve your chances of getting approved:
- Have a good credit score – Take time to improve your score before applying if below 680
- Lower your debt-to-income ratio – Pay down existing debts to lower your DTI
- Clean up credit report issues – Dispute and fix any errors on your credit reports
- Document sufficient income – Have 2 years of stable income history with tax returns
- Explain any credit problems – Be ready to provide context for late payments, collections, or other issues
- Use co-signers if needed – Add a co-signer with better credit to strengthen the application
Also be prepared to explain the details of your renovation project, provide contractor estimates, and outline project timelines. This will help the lender understand your funding needs.
Getting Approved: Next Steps and Using Loan Funds
If approved, you’ll need to complete loan documents and determine how you want to access the financing:
HELOC: After closing, you can draw directly from the open credit line as needed via checks, account transfers, or cards. You only owe interest on amounts used.
Home Equity Loan: The lump sum is typically sent directly to you in a check at closing to use for project costs.
Personal Loan: Approved loan funds are deposited to your bank account as a lump sum to use for your project after closing.
Be sure to carefully plan your project budget and timeline before using loan proceeds. Stick to only withdrawing amounts needed for materials and labor to avoid unnecessary interest charges.
And make sure to make all loan payments on time. Setting up autopay can help avoid missed payments and credit score damage. Use loan funds responsibly to successfully complete renovations so your upgraded home provides enjoyment and benefits for many years to come.
Summary
- Home improvement loans from Bank of America offer affordable financing solutions for remodeling projects.
- HELOCs, home equity loans, and personal loans provide flexible options to fund upgrades.
- Each loan type has different eligibility requirements, rates, terms and uses.
- Good credit, sufficient income, and home equity facilitate approval.
- Planning your project budget carefully is key to using loan proceeds successfully.
Renovating or upgrading your home can provide enjoyment and increase property values. With the right home improvement loan, you can take on projects large and small. Just be sure to review financing options, qualification criteria, and costs to pick the loan that best fits your needs and budget.
Frequently Asked Questions
What types of home improvement loans does Bank of America offer?
Bank of America offers home equity lines of credit (HELOCs), home equity loans, and personal loans to finance home renovations and upgrades. Each has different rates, terms, requirements and uses.
What credit score do you need for a Bank of America home improvement loan?
HELOCs generally require a 680+ credit score. Home equity loans look for 620+ credit. Personal loans may accept 580+ credit scores but will have higher interest rates.
How much money can you borrow with a home improvement loan?
HELOCs provide revolving credit lines typically up to $100k+. Home equity loans allow fixed amount financing up to $500k. Personal loans range from $3k up to $50k.
Do you need home equity to get a home improvement loan?
Yes, HELOCs and home equity loans require sufficient home equity to tap into as collateral. Personal loans generally require much lower home equity amounts in comparison.
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FHA 203(k) rehab loans Lightbulb
Bankrate’s take: Good for buying and renovating your house in one go.
An FHA 203(k) rehab loan can make both the purchase and renovation of your home possible, especially if you have less-than-perfect credit.
Supported by the Federal Housing Administration, an FHA 203(k) rehab loan is a financing option that combines both the cost to purchase the home and the cost to remodel or repair it. This single loan essentially does the job of two: it’s a mortgage and a home improvement loan.
Rates are based on your creditworthiness and income, and you can choose either a 15- or 30-year fixed-rate mortgage or an adjustable-rate mortgage (ARM). Borrowers with poor credit can often qualify for these loans since FHA credit score standards are more lenient than other home equity options.
When you apply, you will have two options. The limited 203(k) loan is meant for projects valued at $35,000 or less and has a simpler application process. The standard 203(k) loan has a more involved application but allows you to finance projects larger than $35,000.