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Based in Vienna, Virginia, the Navy Federal Credit Union was founded in 1933 and today has over 10 million members with 344 branches worldwide. It received an above-average rating in JD Power’s 2020 US Primary Mortgage Granting Satisfaction Study and offers a full range of banking services to its members including mortgages, loans automobiles, checking and savings accounts, student loans, etc.
Some of the Navy Federal home loans come with zero down payment, no private mortgage insurance, and benefits for military personnel and their families. But you will need to join the credit union before you apply for a mortgage. To become a member, you or a member of your family will need to be associated with the armed forces, the National Guard or the Ministry of Defense. If you qualify, here’s what you need to know about the lender.
Pros and Cons of Navy Federal Credit Union
Specializes in providing services and advice to the military community
Offers mortgages with no down payment
Has flexible credit requirements
Does not charge private mortgage insurance
Best scores obtained for customer service
You can lock in your interest rate and re-lock it twice if rates improve
Membership is limited to military personnel, veterans and certain government contractors
The credit union does not offer FHA and USDA loans
You will need to request a personalized quote
Navy Federal Credit Union: Types of Loans and Products
Navy Federal Credit Union loans are intended for military, veterans, and certain government employees. In fact, Navy Federal issued over $ 11.6 billion in Department of Veterans Affairs mortgages (VA loans) in 2020 alone, making it the sixth largest lender by volume for this type of mortgage. But it also offers other types of home loans, including:
The Navy does not offer Federal Housing Administration mortgages (FHA loans), US Department of Agriculture mortgages (USDA loans), home improvement loans, reverse mortgages, and other niche products. .
One of Navy Federal’s specialty loans is the Homebuyers Choice program, which is aimed at first-time home buyers. The loan does not require a down payment or private mortgage insurance, and borrowers may be able to include the financing costs in the mortgage or forgo it in exchange for a higher interest rate.
Another product, the Military Choice program, offers special pricing on mortgage interest rates and no down payment for active duty borrowers and veterans. The standard 1% loan origination fee and 1.75% finance charge can be built into the loan or waived in exchange for a higher interest rate.
Navy Federal also offers a free service called RealtyPlus, which connects members with real estate agents and provides close cash back when property is bought or sold through the referred agent. Depending on the purchase price of the home, the cash back amount can range from $ 400 to $ 8,000. The program is not available in Iowa, and residents of certain states may receive a MasterCard gift card or commission reduction at close instead of direct cash back. Borrowers in Arkansas, Louisiana, and Oklahoma are not eligible for cash back, but can still receive personalized service from a RealtyPlus coordinator and be matched with an agent.
If you choose to get an Adjustable Rate Mortgage (ARM), you can choose between the terms 5/5 and 3/5. With an ARM, your interest rate stays fixed for a number of years – in this case, five or three years – then it can go up or down for the remainder of the loan term.
Transparency of Federal Navy Credit Unions
The Navy Federal website is easy to use and has a range of guides that explain the process of buying a home and the different types of mortgages, calculators to help you determine how much you can afford to buy. a house and a blog devoted to other topics related to the house.
The lender lists the types of mortgages they offer, but does not advertise minimum credit score and debt-to-income ratio requirements. It signals the minimum down payments, which range from 0% to 15% depending on the type of home loan you get. Keep in mind that you may still have to pay financing fees and origination fees.
To get a mortgage loan, you can apply online, by phone or in person at any of 344 branches around the world, including 26 international branches and 184 branches on or near military installations.
Before you start to visit the houses, consider getting a mortgage pre-approval. This letter tells you how much you can borrow, based on details like your income, credit history, and monthly debt repayments. Pre-approval can help you buy homes within your budget, and it shows sellers that you are serious about your offer because you’ve been reviewed by a lender.
Navy Federal has also streamlined the process online with a digital app platform called HomeSquad. Applicants can set up a personalized portal where they can get pre-approved, upload documents, connect their bank accounts to verify their assets, receive notifications when they reach milestones, work with a personal mortgage advisor, and check status. of their loan.
Navy Federal Credit Union: Fees and Charges
Navy Federal Credit Union advertises daily refinance and buy rates for each type of loan it offers over 15 and 30 year terms, although you cannot find custom rates based on your credit score or credit score. other factors before applying. These rates can change daily and may include discount points, which are optional fees that you can pay in exchange for a lower interest rate.
And while the website doesn’t list a minimum credit score for borrowers, one representative said the lender looks at the applicant’s entire financial profile when taking out the loan.
Navy Federal does not charge prepayment penalties, and borrowers can avoid paying a down payment and private mortgage insurance. But the lender may charge a set-up fee and a finance charge which can be built into the loan principal. Be careful here. While the mortgage rollover costs can minimize your upfront costs, it could be more expensive in the long run since you will end up paying interest on these costs.
According to a representative, borrowers will pay closing costs which vary by location and are typically 2% to 4% of the purchase price of the home. Some of these may include appraisal fees, property taxes, mortgage insurance, and title fees.
Borrowers can lock in an interest rate for free, then re-lock twice if rates improve, as long as your loan is closed within 60 days of the initial lock.
Refinancing with the Navy Federal Credit Union
Homeowners with existing mortgages can refinance into a new loan, and Navy Federal offers the following options:
- Rate and term refinancing, in which you take out a new mortgage with a new interest rate, a different loan term, or both.
- Refinancing of collection, which allows you to get a higher mortgage than what you currently owe and use the extra money for whatever you need.
- VA Interest Rate Reduction Refinance Loan (IRRRL), which allows VA loan borrowers to lower their interest rate or switch from a variable rate to a fixed rate.
Navy Federal Credit Union versus other mortgage lenders
|Federal Navy Credit Union||Fairway Independent Mortgage Corp.||New American funding|
|Minimum credit score||Not provided||620 for conventional loans; 660 for jumbo loans; 600 for FHA loans; 600 for VA loans||580|
|Minimum deposit||0%||0% to 5%||0% to 5%, depending on the mortgage program|
|Where does the lender operate?||The 50 states and the District of Columbia||The 50 states and the District of Columbia||Washington, DC and all states except New York and Hawaii|
|Main types of loans||Conventional, jumbo, VA, adjustable rate, fixed rate, refinancing, cash-out refinancing, second home financing, investment real estate loans||Conventional, Jumbo, VA, FHA, USDA, Various Home Improvement Loans, Variable Rate, Fixed Rate, Refinance, Refinance With Withdrawal, Reverse Mortgages, Home Equity Loans, Home Equity Lines of Credit||Conventional, Jumbo, VA, FHA, USDA, Home Improvement Loans, Variable Rate, Fixed Rate, Refinance, Refinance With Withdrawal, Reverse Mortgages, Home Equity Lines of Credit|
How to Shop for the Best Mortgage Rate
Gathering multiple mortgage quotes is the best way to compare offers and find the best mortgage at the cheapest cost.
Start by comparing the best mortgage lenders, submit mortgage applications to at least three companies, and request a loan estimate. These apps can create tough demands, but credit rating companies know consumers love to shop. FICO says its credit scores will treat all mortgage applications as one application if submitted within 15 to 45 days. So in general, shopping around for a mortgage in a short period of time can minimize the impact on your credit.
Once you have your loan estimates, compare the closing costs, the interest rate, and any fees you will need to pay.
Choosing a loan with a lower rate, even if it’s a small difference, could save you hundreds or thousands of dollars over the life of the loan. For example, on a mortgage of $ 200,000 over 30 years, lowering the interest rate of just 0.25% saves the borrower $ 7,920 over the life of the loan. An online mortgage calculator can help you determine your monthly savings.
With an excellent customer service record, expertise in the military community, and low cost mortgage options, Navy Federal Credit Union is a good option for eligible borrowers. To apply for a home loan from this lender, you (or a member of your family) will need to be associated with the armed forces, the Department of Defense, or the National Guard. If you are not eligible for membership or are looking for an FHA loan, USDA loan, or home equity product, your best bet is to look elsewhere. As with any financial product, it’s always a good idea to shop around when looking to take out a home loan.