USAA vs. NFCU: VA Loan, post-housing bubble Edition

[Tycho_Brohe]

Now that it's a given I'll be in Jax for at least four years, I'm looking at buying my first house. I've plumbed the threads on here for info on the VA loan from either NFCU or USAA, and am now more confused than when I started. Since a lot of them were either locked or written in an entirely different housing climate, I thought I'd make a new one to see what people's experiences have been with getting a mortgage, especially those in the past seven years.

Half the posts I found were talking about ARM's, and even a few on balloon payments. Nowadays, unless you're trying to flip the house or otherwise sell it within a few years of buying it, I can't imagine why you'd take an ARM over a fixed-rate mortgage. Rates are still very low for the time being, so I'm looking at a 15-year fixed. The APR (which is the "apples-to-apples" number for comparing loans) looks like this.

NFCU: 3.224%
USAA: 3.556%

But on top of that, USAA offers something called MoversAdvantage, which includes among other things a reward for buying (or selling) a home. I'm looking at the 200-250k range, so this reward would be $950. If anyone here has used the MoversAdvantage program, I'd be very interested to here your experiences with that.

I found a lot of mixed reviews on mortgages from NFCU and from USAA. The online reviews for the MoversAdvantage are very high, but I have to imagine that having physical locations makes this process a lot easier, and NFCU has a branch right outside the gate. So anyone with some sea stories on getting a mortgage from either company, especially recently, would be greatly appreciated.

 

[Brett327]

I'm generally a big fan of USAA and do my insurance and banking with them, but their mortgage division is a complete pain in the ass to work with. When I bought my house 6 months ago, I initially started the process with USAA then went with another firm and was very happy. I used Southwest Direct, but there are plenty of good options out there.

My advice to you: Don't feel beholden to a "military friendly" lender like USAA or NFCU - anyone can package a VA loan for you. Second, put as much into your down payment as you can, even though your VA loan will give you more leeway in that figure. 10% is good, 20% is better.

 

[azguy]

My advice to you: Don't feel beholden to a "military friendly" lender like USAA or NFCU - anyone can package a VA loan for you.

+1

As of a few years ago when I shopped around, USAA and Navy Fed weren't even in the same ballpark as a most other lenders. I bank with USAA and am a very satisfied customer, but if I had blindly taken out a mortgage with them it would have cost me a shitload of money.

 

[Flash]

I just got done refinancing through the National Bank of Kansas City, which for some reason does a lot of VA Loans, and gave me a better rate than anywhere else, period. They were very easy to work with, PM me if you want more info.

 

[CAVU]

Now that it's a given I'll be in Jax for at least four years, ... So anyone with some sea stories on getting a mortgage from either company, especially recently, would be greatly appreciated.

Add PenFedCU to your list. I've tried twice to do a mortgage through USAA and it is not easy so I ended up with a commercial company on one and NFCU on another (to include 3 refinancings with NFCU)

For me its between PenFed and NFCU. However, there always seems to be 1 or 2 decent low fee brokers in military concentration areas that can beat NFCU's rates and fees. I was looking at buying a house 2 years ago and had I pulled the trigger, i would have gone with that local broker. However, with NFCU being member owned, I feel like I don't get the run around I would with a commercial bank's mortgage department. NFCU's advantage is that they have brought back the military friendly active duty loans with no PMI so VA makes absolutely no sense because the money you will give VA upfront (basically prepaying PMI) could have gone towards the NFCU loan, albeit, the interest rate is slightly higher than paying 20% down.

The lending process has gotten so much harder than the past. No matter who you are dealing with, write down names, dates, times and get them whatever they need with your name and mortgage application number on everything. Record how it was sent to them and get proof of mailing and receipt, to include copies of fax confirmed sent pages. Be prepared to ask for a supervisor and a different mortgage technician if they drop the ball. Your the customer, not them. I have a bunch of seas stories based on the advice I just shared, but I'll not bore you.

 

[snake020]

IMO, USAA offers great rates for insurance, but their banking isn't always as competitive. When I did a re-fi in 2012, NFCU offered the best rate and locked me in at 3.00%.
However, USAA did offer me the best terms for a late model auto loan. For new cars though, PenFed was the best at the time.

Like anything else, shop around.

 

[NUFO06]

If he has the money to put 20% down, what is the advantage to a VA?

 

[CAVU]

If he has the money to put 20% down, what is the advantage to a VA?

Absolutely none and hopefully the bank's mortgage application department would not let an applicant go VA. The funding fee which is paid up front and often rolled into the principal is basically about 3-6 years PMI paid to VA in advance.

I'll offer some unsolicted advice to you would be homeowners. If you have scraped together the 20%, make sure you have your Crap Happens savings account fully funded and a few thousand extra for "moving into the new house" expenses.

 

[pourts]

USAA also has some bullshit $100 fee or something like that to get pre-qualified, that no other bank or mortgage broker does as far as I know. You get it back at the end of the purchase, but its still lame. I have purchased 4 houses in the last 2 years, 2 to live in and 2 as investments. I have used 4 different bank for the loans, and none were that great that I am willing to recommend them. They all had great rates, or met a certain need of mine at teh time, but each transaction was a pain in the ass. Take a spin on bankrate.com to get an idea where other banks rates are-- but in some ways those rates aren't 100% accurate and more like teaser rates. I have never used USAA for a mortgage and probably never will, though I use them for banking and insurance.

I have also used USAA Movers Advantage without getting a USAA mortgage. In a large military town, you can find an agent you like, and ask if they are part of USAA movers advantage. Then, you apply to the mover's advantage program and request to get put with the agent that you have already screened. This worked for me. In large military towns tons of real estate agents will be part of the Mover's Advantage program. I recommend using that, its free money basically. The "mover's advantage coordinator" will call you incessantly with inane questions about how things are going. For me, it was more annoying than anything, especially since it was my 4th purchase in about 1.5 years and I kind of knew the process. For someone with a different personality or who was doing it for the first time, that extra attention might be welcome.

 

[SynixMan]

I did movers advantage in 2012 with USAA into a mortgage with them. Ease of the process was right for me at the time. Happy with my rate (3.75), although I've shopped ReFinance and found it tough to beat that without silly fees.

The Movers Advavtage is just USAA throwing the realtor referral cut back to you, which is nice. The $1000ish check was nice to help with the inevitable money you'll drop at Lowes when you get a new place. Our realtor was okay, but I didn't have time on house hunting leave to find another one even if I did dislike them.

 

[CAVU]

...Rates are still very low for the time being, so I'm looking at a 15-year fixed. The APR (which is the "apples-to-apples" number for comparing loans) looks like this.

NFCU: 3.224%
USAA: 3.556%

...If anyone here has used the MoversAdvantage program, I'd be very interested to here your experiences with that.

A couple of thoughts.

Rates are important but you also need to include the points.

I've seen too many home buyers focus on the rates (that drives the ultimate payment), but not focus on closing costs:
- There are prescribed (no choice) costs and how those are divided can be prescribed or customary (can be negotiated as to how it is divided at closing).
- Reconciliation of insurance, homeowners association dues, etc
- Then there are the closing costs associated with your lender, the closing company, etc. Legitimate but often negotiable. You can pick the title company (they all do not charge the same) and whether or not you buy a owner's policy at the same time which is cheaper than trying to buy one later on.
- Then there are the "junk" costs...read this as Additional Profit going into someone's pocket. E.g. Overnight mail fees, notary fees, etc.

USAA Mover's Advantage program. That money comes from somewhere and it comes from the agent and agency that USAA has an agreement with. It comes out of their end of the commission. Everyone has to make a living and they have to make the sale. In speaking with a few agents I've gotten to know whose agency's signed up with USAA I've learned that sometimes, when the sale is starting to hinge on a few hundred, or maybe a thousand dollar issue, the two agents will split the difference and cover it at closing...TO MAKE THE SALE. The buyer's agent will have less of an incentive to pitch in to close the deal because in a sense, they have already given at the office. Just something to think about. I had a direct conversation with my last agent that I made the decision to not use Mover's Advantage and in exchange I expected her absolutely best effort. She was grateful and worked very hard.

Lastly, when you find the house, tell your agent you want them to be your Buyer's Agent before you offer. Ask them to explain any fees, etc. In most states there is not fee and it requires that they represent your interests.

 

[squorch2]

Echoing what others said - don't blindly use USAA for anything - insurance, banking, loans - anything. If you've been with them a while, shop around, as you can save a nice chunk of change by, say, switching to a different auto insurance company or going with one of the companies that sells flood insurance through Lloyd's of London.

 

[MIDNJAC]

Absolutely none and hopefully the bank's mortgage application department would not let an applicant go VA. The funding fee which is paid up front and often rolled into the principal is basically about 3-6 years PMI paid to VA in advance.

I'll offer some unsolicted advice to you would be homeowners. If you have scraped together the 20%, make sure you have your Crap Happens savings account fully funded and a few thousand extra for "moving into the new house" expenses.

Yeah, my wife will probably roll her eyes and say something snarky, but I get real uncomfortable if our oh shit fund isn't somewhere comfortably in the 5 digit range. As a homeowner now, I guess doubly so.

 

[pourts]

A couple of thoughts.

Rates are important but you also need to include the points.

I've seen too many home buyers focus on the rates (that drives the ultimate payment), but not focus on closing costs:
- There are prescribed (no choice) costs and how those are divided can be prescribed or customary (can be negotiated as to how it is divided at closing).
- Reconciliation of insurance, homeowners association dues, etc
- Then there are the closing costs associated with your lender, the closing company, etc. Legitimate but often negotiable. You can pick the title company (they all do not charge the same) and whether or not you buy a owner's policy at the same time which is cheaper than trying to buy one later on.
- Then there are the "junk" costs...read this as Additional Profit going into someone's pocket. E.g. Overnight mail fees, notary fees, etc.

USAA Mover's Advantage program. That money comes from somewhere and it comes from the agent and agency that USAA has an agreement with. It comes out of their end of the commission. Everyone has to make a living and they have to make the sale. In speaking with a few agents I've gotten to know whose agency's signed up with USAA I've learned that sometimes, when the sale is starting to hinge on a few hundred, or maybe a thousand dollar issue, the two agents will split the difference and cover it at closing...TO MAKE THE SALE. The buyer's agent will have less of an incentive to pitch in to close the deal because in a sense, they have already given at the office. Just something to think about. I had a direct conversation with my last agent that I made the decision to not use Mover's Advantage and in exchange I expected her absolutely best effort. She was grateful and worked very hard.

Lastly, when you find the house, tell your agent you want them to be your Buyer's Agent before you offer. Ask them to explain any fees, etc. In most states there is not fee and it requires that they represent your interests.

Sounds like you let your buyer's agent effectively negotiate a higher commission for herself. Not the way I would do it, but whatever floats your boat. Do you think the extra $900 in commission for your buyer's agent made her put the hard sell on the seller's agent, who in turn pressured their client into accepting a lower offer? That's a bit of a logical stretch. There are seller's agents out there who will list for 5% commission instead of the customary 6%. Are you the kind of guy who will list with the 6% agency only because they will have an greater incentive to market your house and ultimately get you enough extra profit to come out ahead? In my experience, that's not how it works. It is the ability and caliber of the agent-- with management and supervision from the client-- that gets the results.

I recommend looking in the county records and seeing how many homes your agent is buying/ selling each month. Are they motivated, or are they just doing this part time for spending money? Are they listing homes that basically sell themselves or do they really market them well? Are they taking iPhone photos and slapping them up, or do they put up professional photos that have good editing? Most of this is far more important for a seller's agent than a buyer's agent, but I figured I would mention it anyways. I am usually a big believer in capitalism and incentives, but sometimes a larger commission doesn't necessarily translate into a higher sales price.

 

[CAVU]

Sounds like you let your buyer's agent effectively negotiate a higher commission for herself.

It was simply a business decision on my part prior to meeting the agent and her team who all had excellent references from prior sellers and buyers known to me. To be clear there was no negotiation. Turns out she was the sister-in-law to a prior EA of mine which I did not know until after we had been on a few house viewings. In the end, I went a different direction housing wise and rented. The agent did work very hard for no sales commission but they did get the rental commission. They have also benefited from excellent references from me. Just suggesting that folks look at a bigger picture before making their decision.

When it comes to selling, I've always ended up with 5% due to asking and working with agents I know. When selling our first home I needed to move the house very quickly and after 3 weeks on the market with no contract, I asked my selling agent to put a $300 bonus (1999) to the buying agent if a contract was signed within 10 days. The foot traffic increase was significant and we had a contract in three days. Some might say that I spent more than I had too, but I would say that in this case I needed to spend 5% + $300 to meet my immediate needs.

I offered the Mover's Advantage story as something I did for others to think about as they deliberate their situation.