How much does Bank of America charge to refinance a mortgage?
Bank of America mortgage refinance pricing
Refinance closing costs commonly run between 2% and 6% of the loan principal. For example, if you're refinancing a $225,000 mortgage balance, you can expect to pay between $4,500 and $13,500. Like purchase loans, mortgage refinancing carries standard fees, such as origination fees and multiple third-party charges.
Product | Interest Rate | APR |
---|---|---|
20-Year Fixed Rate | 6.82% | 6.88% |
15-Year Fixed Rate | 6.47% | 6.55% |
10-Year Fixed Rate | 6.40% | 6.49% |
5-1 ARM | 6.51% | 7.86% |
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Closing costs | Fee |
---|---|
Application fee | $75-$500 |
Origination and/or underwriting fee | 0.5%-1.5% of loan principal |
Recording fee | Cost depends on location |
Appraisal fee | $300-$400 (more for a larger property) |
A refinance is often far less expensive than a home purchase loan. That's because you're not paying for homebuying closing costs like prepaid homeowners insurance or a settlement attorney. In many cases, you're also only refinancing the remaining, lower balance of your original mortgage.
If you're looking for an opportunity to change your loan terms, lower your monthly mortgage payments or tap into your home equity, you might benefit from a mortgage refinance. But, like financing a new home purchase, one of the requirements for refinancing is that homeowners pay closing costs on the new loan.
You can't get a lower interest rate: If your goal is to reduce your interest costs, right now isn't the best time to refinance. You're likely to end up with a higher rate, plus you'll need to cover closing costs on your new mortgage.
If your current lender offers the best deal or is willing to match the best deal you find with another financial institution, the refinancing process could be easier and you won't lose any money by staying. It could also make your life a bit easier in the long run to keep the same lender.
Legally speaking, there's no limit to how many times you can refinance your mortgage, so you can refinance as often as it makes financial sense for you. Depending on your lender and the type of loan, though, you might encounter a waiting period — also called a seasoning requirement.
What credit score do I need for a refinance?
A rate-and-term refinance for a conventional mortgage loan typically requires at least a 620 credit score — that is, as long as your loan-to-value ratio is 75% or less, you have at least two months of cash reserves in the bank, and your debt-to-income ratio is under 36%.
Shop around. Get rate quotes from at least three mortgage lenders, ideally on the same day so you have an accurate basis for comparison. Lenders determine your interest rate based on your credit score, debt-to-income (DTI) ratio and other factors. Compare the interest rate and APR.
You can usually refinance with the same bank or lender that you originally got a loan through. But keep in mind, your mortgage lender is the institution that originated your loan, and that may be different from your current servicer.
Always compare quotes from multiple lenders
Comparing upfront fees and interest rates can help you save money. And if you find a lender with a cheaper loan origination fee, application fee, or underwriting fee, this sways the negotiating power in your favor.
How Much Does It Cost To Buy Down An Interest Rate? The cost for each discount point depends entirely on the amount you, as the borrower, take out on the loan. Each point that a borrower pays is equivalent to 1% of the loan amount.
Product | Interest Rate | APR |
---|---|---|
30-Year Fixed Rate | 6.88% | 6.93% |
30-Year Fixed-Rate VA | 6.92% | 6.96% |
30-Year Fixed-Rate FHA | 6.75% | 6.80% |
30-Year Fixed-Rate Jumbo | 7.01% | 7.06% |
Refinancing doesn't necessarily have to affect the equity in your home, but in certain cases it definitely can. Factors that determine the equity in your home include the balance owed on your mortgage and how much your home is worth. The difference between these two figures is your home equity.
The main benefits of refinancing your home are saving money on interest and having the opportunity to change loan terms. Drawbacks include the closing costs you'll pay and the potential for limited savings if you take out a larger loan or choose a longer term.
Conventional refinance: For conventional refinances (including cash-out refinances), you'll usually need at least 20 percent equity in your home (or an LTV ratio of no more than 80 percent).
You don't need a down payment to refinance, but you'll likely have to come up with cash for closing costs. Some lenders let you roll closing costs into the mortgage to avoid upfront expenses. You can also try negotiating with the lender to waive them.
Will interest rates go down in 2024?
Inflation and Fed hikes have pushed mortgage rates up to a 20-year high. 30-year mortgage rates are currently expected to fall to somewhere between 6.1% and 6.4% in 2024. Instead of waiting for rates to drop, homebuyers should consider buying now and refinancing later to avoid increased competition next year.
While most people would like to negotiate lower closing costs, not everyone is sure about the best way to ask their loan officer to waive fees or grant discounts. Fortunately, negotiating closing costs on a refinance is possible, and borrowers can save hundreds of dollars or more with just a little extra effort.
Product | Interest Rate | APR |
---|---|---|
20-Year Fixed Rate | 6.64% | 6.69% |
15-Year Fixed Rate | 6.38% | 6.45% |
10-Year Fixed Rate | 6.30% | 6.39% |
5-1 ARM | 6.37% | 7.69% |
Refinancing will hurt your credit score a bit initially, but might actually help in the long run. Refinancing can significantly lower your debt amount and/or your monthly payment, and lenders like to see both of those. Your score will typically dip a few points, but it can bounce back within a few months.
A refinance takes 30 to 45 days to complete in most cases, but it could always require more or less time depending on a variety of factors. For example, appraisals, inspections and other services that third parties handle can slow down the process.
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