Navy Federal Credit Unions Loan Options Are Standard
Despite being a military-focused credit union, Navy Federal Credit Union offers more than just VA loans. Members also have access to conventional and jumbo mortgages, plus options for refinancing.
Navy Federal offers several specialized loans
Navy Federal offers additional loans that members can take advantage of.
- Military Choice. A good option for service members who have already exhausted their VA loan benefit, this program requires no down payment and no PMI.
- Homebuyers Choice. Finance 100% of your mortgage with no PMI required potentially a good choice for first-time homebuyers.
- Second-home financing. The property must be a one-unit home that you occupy for a portion of the year.
- Investment property loans. Residential investment property financing using a 15-year conventional fixed-rate mortgage.
- Home equity loan. A fixed-rate loan that allows you to receive the money you need in a lump sum payment, with 5-, 10-, 15- and 20-year terms.
- HELOC. Allows you to borrow up to 95% of your equity with a 20-year draw period and 20-year repayment period. After your HELOC has been open for six months, you can convert it into a home equity loan with a fixed interest rate.
How Much Can You Borrow With A Navy Federal Home Equity Loans Home Equity Loan
A home equity loan allows homeowners to borrow money using their home as collateral . Loan amounts vary depending on the value of the home minus the balance of any mortgages or liens on the property.
Navy Federal Home Equity Loans allows borrowers to apply for home equity loans of up to $500,000. The actual maximum loan amount will vary depending on the value of the property, how much you owe on it, and your creditworthiness.
Land Loans Vs Traditional Mortgages
Banks and other lenders tend to view land loans with a wary eye, and consider them to be more of a risk than a standard mortgage. The reason for this is simple. Borrowers are much less likely to walk away from a home loan, particularly if the property is being used as a primary residence. Moreover, a house on a lot has greater value on the open market, and makes for a more secure form of collateral. Undeveloped land, on the other hand, doesn’t deliver the same degree of investment security for the creditor.
People are much more likely to walk away from a land loan than a mortgage, potentially leaving the lender with an unimproved parcel of land which they will have to sell to recoup their losses. Consequently, land loans can be more difficult to obtain, particularly if you don’t have a definite plan in place to improve the property and increase its value. Banks also tend to charge a higher rate of interest to offset the additional risk.
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How Much Higher Are Mortgage Rates For Investment Properties
Mortgage interest rates will always be higher on investment properties than on your primary residence.
How much higher? Technically, the answer to that question depends on the type of investment property, your credit-worthiness, and your down payment.
But as a rule of thumb, you can expect the interest rate on your investment property to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.
As a rule of thumb, you can expect the interest rate on your investment property to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.
For example, todays live 30-year fixed rate as of December 21, 2021 is 3.125% , so the investment property rate would be around 3.625% to 3.875% .
Lenders add this upcharge because they consider a rental or investment property mortgage to be a riskier loan product.
Mortgage borrowers tend to bail on rental properties before theyd bail on their primary residence if the going gets tough. Thus, these loans are more likely to default during hard economic times.
Research has shown that even good homeowners tend to stop paying their rental property mortgages if that residence becomes a bad investment. Lenders know that when you think of property as a business, youre less attached to it.
To protect themselves against theextra risk that comes with investment property financing,lenders charge a higher interest rate and have stricter qualification rules forborrowers.
How Do Mortgages Work
Mortgages are loans given by financial institutions for the purpose of purchasing or refinancing a property. The home youre buying with a mortgage loan serves as your collateral. If youre unable to make your mortgage payments, the bank will seize your property.
Financing your new home with a mortgage means that your lender is taking on a financial stake in the property. In some cases such as with conventional loans with less than 20% down payment lenders may require borrowers to have homeowners insurance to protect their investment.
If youre thinking about refinancing your home, check our mortgage refinance calculator and our list of the best mortgage refinance companies to get started.
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What Are Jumbo Loans
Jumbo loans are mortgages designed to finance luxury properties and homes in competitive real estate markets. They are different from conventional loans in that they exceed the limits set by the Federal Housing Finance Agency. Because they aren’t purchased or guaranteed by Freddie Mac and Fannie Mae, applicants generally need an excellent credit history, a lower debt-to-income ratio, and will have to provide a larger down payment. They may also need a greater number of tax returns and more liquidity in their bank account for the closing process, which tends to be longer because of the stricter requirements for a jumbo loan. Wells Fargo and New American Funding are examples of banks that offer jumbo loans.
What’s An Escrow Account
Find out how we calculate your escrow payments and get answers to your most frequently asked questions.
This article is intended to provide general information and shouldn’t be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
A fixed-rate loan of $250,000 for 15 years at 1.875% interest and 2.157% APR will have a monthly payment of $1,594. A fixed-rate loan of $250,000 for 30 years at 2.500% interest and 2.693% APR will have a monthly payment of $987. Taxes and insurance not included therefore, the actual payment obligation will be greater. All loans subject to credit approval. Jumbo Loans: Loan amounts greater than $548,250. In AK and HI, the Conforming loan limit is $822,375. The Jumbo rates quoted above are for loan amounts above $548,250 up to $2,000,000.
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Our Take On Navy Federal Credit Union
With its low and zero down payment home loans many of which dont require you to pay PMI Navy Federal Credit Union is worth considering. A majority of customers give glowing reviews of the credit union, and its rate match guarantee ensures youre getting the best rate available.
Navy Federal Credit Union has its share of negative reviews, mostly regarding a slow approval process. And in 2016, the Consumer Financial Protection Bureau ordered Navy Federal Credit Union to pay $28.5 million for making false threats about debt collection to its members and for unfairly restricting account access when members had a delinquent loan between 2013 and 2015.
Despite these actions, most customers have had great experiences with the credit union. All considered, we think its a strong option for most service members and their families.
What Kind Of Mortgage Does Navy Federal Credit Union Offer
The Homebuyers Choice Loan, which doesnt require a down payment or private mortgage insurance, is designed to help first-time homebuyers. Navy Federal also offers jumbo loans. Home equity loans and home equity lines of credit have been temporarily suspended. What Are Navy Federal Credit Unions Mortgage Terms, Fees and Discounts?
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Other Va Loan Lenders We Considered
When we looked at the VA lending industry, we found that many of the biggest or most talked-about lenders didnt necessarily offer the best products, though they might excel in other areas. Here is the list of the other VA lenders that we considered:
- Ample educational resources and clearly outlined qualification requirements
Navy Federal Credit Union Home Center
This is a resource page offered by the credit union specifically for home financing.
It includes a series of articles that explain the financing process, and also calculators to help you calculate monthly payments and determine property affordability.
The Home Center will walk you through the financing process, including letting you know the documentation you need to get in advance, how to get pre-approved, searching for a home, and making an offer.
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How We Chose The Best Va Mortgage Lender
Experience in VA Loans
We prioritized VA mortgage lenders that process many VA loans. The home buying and mortgage application processes can be complicated. Having a VA mortgage lender who is familiar with this process ensures that every step is taken care of in a timely manner.
Customer Service
We highlighted VA mortgage lenders that excel in customer satisfaction and provide first-time homeowners step-by-step guidance throughout the pre-approval, application, and loan closing process.
Pros And Cons Of Navy Federal Loans
Pros
- Solid rates. Loan rates are fairly solid when compared to traditional banks.
- No origination fees for student loans. Origination fees can be upwards of 5% depending on the lender. Not having one can potentially save you hundreds of dollars.
- Options upon options. Navy Federal has a wide breadth of choices when it comes to loan types, mortgages and credit offerings that rivals traditional banks.
- Membership includes benefits. Special discounts on insurance products and other deals are available to Navy Federal members.
Cons
- Limited membership. You must be a current or former member of the armed forces or an employee of the DoD to qualify for an account. Certain family members and household members may also qualify.
- Membership required. An existing membership is required to apply for a loan.
- Trouble with the Consumer Financial Protection Bureau in 2016. Navy Federal was found in violation of the Consumer Financial Protection Act of 2010 by the Consumer Financial Protection Bureau for uncouth debt-collection practices.
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Navy Federal Credit Union Full Review
Headquartered in Vienna, Virginia, Navy Federal Credit Union was founded in 1933 and now serves more than 10 million members with 344 branches worldwide. It received an above-average rating in J.D. Powers 2020 U.S. Primary Mortgage Origination Satisfaction Study and offers a full suite of banking services for its members, including mortgages, auto loans, checking and savings accounts, student loans, and more.
Some of Navy Federals home loans come with zero down payment, no private mortgage insurance, and benefits for service members and their families. But youll need to join the credit union before applying for a mortgage. To become a member, you or a family member will need to be associated with the armed forces, national guard, or the Department of Defense. If youre eligible, heres what to know about the lender.
What Are The Home Equity Loan Requirements Of Navy Federal Home Equity Loans
This lender’s maximum loan to value rate is 100%. That means the total debt secured by the property cannot exceed 100% of its value. Let’s say you own a property with a current market value of $100k, but you still owe $20k on your mortgage. Your equity would be $80k. In this scenario, if you have good credit, you may qualify for a line of credit of up to $80k.
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Why You Can Trust Bankrate
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more so you can feel confident when you make decisions as a homebuyer and a homeowner.
Navy Federal Credit Union
Navy Federal Credit Union is a credit union for armed forces members and their families, with more than 10.8 million members worldwide. It has 347 branches globally and throughout the U.S., and its offerings range widely, from banking and credit cards to loans. Its mortgage products include:
- Fixed-rate and adjustable-rate mortgages
- HomeBuyers Choice loans and Military Choice loans
- Refinancing
- Investment property loans
Navy Federal ranked highly on Bankrate’s list of best VA lenders, and also as a best jumbo lender. Like the other lenders on this list, Navy Federal offers preapprovals in record time, and doesn’t charge an application fee. It can charge a funding fee, though, depending on the loan product.
If you’re a member of Navy Federal and looking for a loan, your benefits include:
- 24/7 support
- Freedom Lock, which allows you two free rate relocks
- Mortgage Rate Match, in which the credit union either matches a competitor’s rate or you’re paid $1,000
- RealtyPlus, a cash-back incentive for working with an affiliate real estate agent
Some drawbacks, however: The credit union is limited to members, and it doesn’t offer FHA loans or USDA loans. Due to the pandemic, it has also suspended home equity lines of credit and home equity loans, so you’ll have to search for these options with another lender at this time.
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How To Compare Mortgage Lenders
Your first step to finding the best mortgage lender is to comparison shop. Borrowers who do more upfront research tend to save more money than those who go with the first lender they find. Its best to get quotes from three lenders, at minimum, so you know your options based on your credit and financial situation. Because rates fluctuate frequently, it’s best to get these quotes on the same day so you have an accurate basis of comparison.
As you compare loan estimates, look at the APR and interest rate quoted by each lender. Consider what’s important to you as far as experience, too. For some, how fast a lender can turn around a preapproval letter or close a loan is critical. If you have specific needs – for example, you want an FHA loan – you might also want to look for the best mortgage lenders who specialize in those products.
Once you determine what your needs and preferences are, get started by comparing mortgage rates and finding a lender in your area through Bankrate.
Benefits To Using Navy Federal Credit Union
Navy Federal Credit Union offers plenty of perks to eligible members: a variety of mortgage products, several 0% down and no PMI options and unique programs that help the credit union stand out from the crowd.
- 0% down and no PMI. Navy Federal Credit Union offers mortgages with no down payment and no PMI.
- RealtyPlus. Buy or sell a home with a RealtyPlus agent, and you can receive $400 to $8,000 in cash back after you close.
- Rate match guarantee. Navy Federal Credit Union will match a competitors better rate, or itll give you $1,000 after you close with the competing lender.
- Freedom lock. New applicants of purchase and refinance loans have the chance to relock their rate within 60 days at a lower rate and at no additional fee.
- Rate and fee transparency. Navy Federal Credit Union publishes its mortgage rates online and updates them daily. Its publicly available rates and fees sheet can be helpful for borrowers comparing lenders.
- Favorable customer reviews. Out of the thousands of reviews left by customers online, a majority are overwhelmingly positive.
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Second Homes And Investment Properties
If you decide to take out another mortgage to pay for a second home, lenders will look carefully at your debt-to-income ratio to determine whether you can manage two mortgage payments. A low DTI also works to your advantage because it helps you qualify for a lower interest rate on the loan. For second homes, lenders prefer a DTI below 36%.
If your DTI is high, you have several options. You can pay off more debt before buying another home, buy a less expensive home or increase the amount of your down payment. Some lenders want a down payment of 10-20% on second homes, potentially more if its purely an investment property.
When shopping for a second home loan, it makes sense to first talk with the lender who holds the mortgage on your primary residence. This is because youre already doing business together and have an established financial relationship. However, you may find a better deal with another lender.
While many second-home buyers consider their purchase an investment, whether its considered an investment for tax and loan purposes is another story. Think about why you want to purchase the home. Is it exclusively for personal use, or do you expect to rent it out part of the year? Whether its considered a second home or investment property could make a big difference in your tax situation.
