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A Navy Federal Credit Union (NFCU) mortgage is a great fit for borrowers with a military or Department of Defense affiliation. Fees are competitive, and its rate match guarantee means you don't have to worry about overpaying for your loan. It provides mortgage loans in all 50 states, is a top-five VA lender, and has physical branches worldwide in locations that serve its military and government clientele.
NFCU is a long-time consumer favorite for all its products -- and its mortgage department does not disappoint. It scores high customer survey marks in both mortgage origination and mortgage servicing. Learn more in our NFCU review below and find out if it’s the right lender for you.
|Lender||Credit Score Required||Minimum Down Payment|
|Navy Federal Credit Union||n/a||Zero|
Rate and fee transparency: NFCU shows today's mortgage rates right on its home page. Its detailed rate and fee sheet is public and extremely informative. Their transparency can be very helpful for borrowers who are doing early research. (Although it's important to remember not all applicants will qualify for the best rates.)
Rate lock: Navy Federal offers a free rate lock called Freedom Lock for purchase and refinance applications. If rates go up, yours stays the same. If rates go down, you can relock at the lower rate within 60 days. A purchase contract is required, limits apply, and the VA loan is not eligible.
Rate match guarantee: NFCU promises that if you find a better rate with another lender, it will match it or give you $1,000.
Affordable closing: NFCU offers several ways to help with closing fees (either now or in the future). The 1% mortgage origination fee can be rolled into the loan so that you are responsible for less cash out-of-pocket at closing. Or you can eliminate the fee by opting for a 0.25% interest rate increase.
Special loan for members of the military: Besides the VA loan, Navy Federal offers the Military Choice loan to active duty or veteran borrowers who have already exhausted their VA loan benefit. There is no down payment requirement and no private mortgage insurance (PMI).
100% financing loans with no PMI: NFCU offers the Homebuyers Choice Loan to first-time home buyers looking for mortgages with low down payments. This mortgage does not require a down payment or PMI. An additional one-time funding fee may be added to the loan balance, but the funding fee can be waived for a higher interest rate.
Cash back bonus: Navy Federal members in certain states who use a program-referred real estate agent can earn between $400 and $8,000 in cash back. The amount of cash back depends on the purchase/sale price of the home.
Mortgage servicing: Many lenders sell their mortgages to third-party loan servicers, leaving you to deal with a different company for the remainder of your loan term. Not Navy Federal. It services all of its mortgages. This is all the more important since NFCU is consistently highly rated when it comes to customer service. It has an unofficial five-power-circle rating ("among the best") on the JD Power Primary Mortgage Servicer Satisfaction Study.
|Fixed Rate||Adjustable Rate|
|10- to 30-year terms||3/5 and 5/5|
Members only: NFCU does not make mortgage loans to the general public. You need to be a member. That said, many people are eligible for membership. NFCU isn't only for those who are on active duty, retired, or veterans of any branch of the U.S. armed forces. Navy Federal is also open to families and members of those individuals' households. Department of Defense employees, contractors, retirees, and annuitants also qualify. "Family" includes grandparents and grandchildren in addition to the nuclear family.
Non-committal pre-approval: NFCU offers pre-approval without a commitment to lend. After you submit your financial information Navy Federal will tell you how much you'll be eligible to borrow pending approval. You can use this information to learn how much house you might be able to afford, or to show sellers you are serious about buying. During pre-approval, the terms are not set. It's only after you choose a property that NFCU performs a more comprehensive review of your application and makes a firm offer.
The online pre-approval is easy to complete, even if it does not put a firm loan offer in your hands. And it's a good first step toward securing your mortgage.
NFCU only offers mortgages to its members. If you are eligible, you'll need to join (online, by phone, or at a branch). Have your Social Security number, current home address, and driver's license or government ID ready. Also make sure you have a source of funds with which to open your new account.
Navy Federal is unusual in that it does not set strict cutoff points for your credit score or your debt-to-income ratio (DTI). "We do true underwriting, so we consider everything from earnings, debt, to history of repaying our loans; to determine if they are eligible for the home loan," says Kevin Parker, vice president of Field Mortgage at Navy Federal Credit Union.
Generally speaking, the lowest mortgage interest rates are reserved for applicants with a credit score of at least 740 and a DTI under 36%. DTI is the percentage of your gross income that you spend on required monthly debt payments, including housing.
When you're ready to get pre-approved, you can apply in person or in a branch. You can also use the HomeSquad application platform on the Navy Federal website.
"HomeSquad is our digital mortgage application tool that's been designed to make the home buying process simpler and easier for Navy Federal members. HomeSquad makes it easier to stay on track with the process and receive updates when key milestones are achieved. Members can link their various financial accounts to HomeSquad and upload important documents like tax returns, pay stubs, and other documents quickly and easily," says Parker.
If you are not eligible to join Navy Federal, check out these lenders who also offer good mortgage rates.
PNC Bank offers a wide range of mortgages and special homeownership grants for qualified applicants. PNC's pre-approval is also fully underwritten -- so if you are approved, PNC is making a firm commitment to lend under those terms. PNC Bank's applications are open to any borrower.
New American Funding is another great choice. Like PNC Bank, it's open to all applicants. This bank offers special loan options to serve a variety of borrowers. In addition, New American Funding actively seeks out those in underserved communities who might benefit from some extra guidance in the homebuying process. New American Funding supports all types of government-backed loans, including USDA loans.
You're a member of the armed forces or a Department of Defense employee. Navy Federal Credit Union caters to servicemembers and their families with special products and programs that promote homeownership. The wide selection of loans with low or no out-of-pocket costs, along with the free rate lock and rate match guarantee, make Navy Federal pretty hard to beat.
You should also look into NFCU if you're eligible for the VA loan but have exhausted your benefit. Many of the advantages and benefits of the Military Choice loan are not available with most mortgages.
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