Bank of America just unleashed new home and auto loan perks | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

My home is easily the largest purchase I’ve ever made. My beloved Subaru Forester is a distant second, but that price wasn’t anything to sneeze at, either. As a result, the two most significant loans I’ve ever taken out have been my mortgage and my car loan.

I had already been editing and reporting on loan content for a while when I applied for these loans, but my vast knowledge of how the processes worked didn’t make handing over the money any easier.

Back then — just four or five years ago — I wouldn’t have been eligible for Bank of America’s Preferred Rewards program that offered discounts on home and auto loans. But on May 27, Bank of America launched its new BofA Rewards program.

It’s much easier to qualify for the new rewards program than the old one, with 30 million existing clients now eligible for benefits. These customers can receive discounts on interest rates and mortgage closing costs.

The BofA Rewards programs also offers incentives for credit cards, bank accounts, and investment accounts, but I want to specifically look at how this program affects people taking out loans. And it offers perks for two types of loans: home and auto.

So, does the new-and-improved program offer enough incentive to borrow from Bank of America?

How is the new BofA Rewards program different?

The Bank of America Preferred Rewards program had five tiers, and you needed a minimum of $20,000 in an eligible BofA bank account or Merrill Lynch investment account to qualify for the lowest tier.

The new BofA Rewards program does not require any minimum balance to qualify for the bottom tier. All you need is an open, active Bank of America personal checking account. If you don’t have a checking account yet, you can open one with a $25 deposit.

You don’t need to take any action if you’re already a member of the old Preferred Rewards program. You’ll automatically transfer into your new category. Preferred Rewards Gold and Platinum members will become Preferred Plus members. Platinum Honors will change to Preferred Honors members. Diamond Honors will be Premier members.

You’ll be eligible to move up a tier if your balance increases, though it will take up to 30 days for the new benefits to take effect. If your balance drops enough for you to move down a tier, you’ll maintain your current status until your next BofA anniversary date.

What the new BofA Rewards program offers borrowers

Now that you know which BofA Rewards program tier you qualify for, let’s find out what kind of perks you can receive on home and auto loans. First up: mortgages.

New Bank of America home loan discounts

You’ll receive a discount on closing costs at every tier. Members get a $100 closing cost discount, Preferred Plus members get $300, and Preferred Honors members $600. If you’re at the Premier tier, you receive a 0.375% reduction on these mortgage fees.

“The mortgage loan discounts are offered on new purchase or refinance loans,” Roger Boschulte, head of home and auto products at Bank of America, told TheStreet.

More on mortgage loans:

“A borrower does not need to hold an existing mortgage with Bank of America to receive a discount when refinancing with Bank of America,” he continued. You can refinance a mortgage from a different lender with Bank of America and still use the discount.

Preferred Plus, Preferred Honors, and Premier members also receive rate discounts on home equity lines of credit (HELOCs) — 0.25%, 0.375%, and 0.625%, respectively. Those in the Member tier do not have access to HELOC discounts.

New Bank of America auto loan discounts

The rules for auto loans are more standard and easier to follow. The higher your tier, the bigger rate discount you’ll receive.

Members get a 0.10% rate reduction on auto loan. You’ll receive a 0.25% discount with the Preferred Plus tier, 0.35% with Preferred Honors, and 0.50% with Premier.

How to get the best deal on a home or auto loan

Bank of America’s more lenient qualifications to join its new rewards program definitely helps it benefit more people. But the question remains: Should you get a mortgage, HELOC, or auto loan with BofA’s discount or look elsewhere?

Shopping around for lenders is always a good idea, even if you end up using Bank of America in the end. Regarding home loans, Freddie Mac data shows that getting quotes from two lenders could save homebuyers an average of $1,500 over their loan term, and six quotes saved them an average of $3,000.
Just because Bank of America is offering discounted rates doesn’t necessarily mean they offered the lowest rate to begin with. Compare rates among several home and auto lenders.
A mortgage closing cost discount is a nice incentive, but again, not all lenders charge the same mortgage fees. When shopping for lenders, you should also look at what they charge for mortgage fees compared to what BofA charges with its discount.
Other than rate and fee discounts, consider what you want from a car or mortgage lender. Is strong customer support important to you? How about loan term options? Make a list of priorities so you can see how Bank of America stacks up against competitors.