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Navy Federal Mortgage Review: Rates Appear Low and They Keep Your Loan


One of the larger and oldest credit unions in the nation, Navy Federal FCU, happens to be a big player in the home loan space.

Instead of just offering the same mortgages every other bank has readily available, they go a step further with their own unique offerings.

This includes a zero down loan option, conforming and jumbo loans, and even an interest-only option if you’ve got some home equity.

Let’s learn more about this company to see if they’re the right fit for your home loan needs.

The one caveat with Navy Federal is that not everyone is eligible for a membership.

You or a family member must have some affiliation with the Armed Forces, DoD, Coast Guard or National Guard.

The good news is that’s a lot of people because Navy Federal has over eight million members nationwide, up from just seven (7 people) when they began all the way back in 1933.

Navy Federal Home Loan Options

  • They offer conforming, government, and jumbo loans
  • Including home purchase, refinance, and home equity loans
  • In both fixed and adjustable-rate varieties
  • For primary, 2nd homes, and investment properties

The company offers a wide variety of mortgage loan programs, including typical fixed-rate offerings like the 30-year fixed and 15-year fixed, along with a number of different adjustable-rate mortgages.

They actually don’t offer common fixed-rate loan programs like the 10-year and 20-year fixed, but do allow homeowners to amortize their loan over terms between 10-30 years.

For example, you could choose a 13-year term, but you’d be subject to 15-year fixed pricing. Or you could choose a 22-year term and be subject to 30-year fixed pricing.

When it comes to ARMs, they have lots of them, including:

  • 3/1 ARM
  • 5/1 ARM
  • 2/2 ARM
  • 3/5 ARM
  • 5/5 ARM
  • 7/1 ARM
  • 10/1 ARM

You can get all these ARMs in jumbo loan amounts too other than the 2/2 ARM.

The more unusual of the bunch include the 2/2 ARM, 3/5 ARM, and the 5/5 ARM, while the others are more run-of-the-mill.

They’ve got conventional loan products along with government loans including FHA loans and VA loans. I don’t think they offer USDA loans.

Anyway, that means veterans and active duty can get zero down financing, and others can do the same via their  loan program.

Navy Federal’s zero down home loan program, which appears to be a VA loan, is known as “100% Financing HomeBuyers Choice.”

So the typical VA guidelines likely apply, including a funding fee and max loan amounts by county and entitlement.

The good news is they will allow up to $1 million loan amounts in certain areas, and seller contributions of up to 6%.

It only comes in a 15-year or 30-year fixed – no ARMs are available.

Like most other mortgage lenders, they offer home purchase loans, rate and term refinances, and cash out refinances.

Navy Federal also has four different types of home equity loans/lines available if you want to tap into your available home equity without disrupting your first mortgage.

They also offer interest-only financing with a minimum down payment of 20%, but do not advertise those mortgage rates on their website.

Aside from providing mortgages on primary residences, they also have options for those financing a second home or an investment property.

For second homes, you have the option of a 30-year or 15-year fixed, with investment properties limited to 15-year fixed mortgages.

Finally, Navy Federal gives you the option to avoid private mortgage insurance or pay upfront mortgage insurance, assuming it’s required on your loan (generally when putting down less than 20%).

Navy Federal Mortgage Rates

  • They advertise most of their mortgage rates on their website
  • Including discount points needed to obtain the associated rate
  • Rates appear to be very competitive/lower than the competition
  • Especially their ARM rates

I always appreciate a lender that openly advertises its mortgage interest rates, and Navy Federal checks that box.

You can always find their daily mortgage rates on their website for most of their home loan products, including any discount points that must be paid to acquire said rate.

They seem to have competitive fixed rates and really low ARM rates, so if you’re looking at an ARM, consider Navy Federal.

Just note that they tend to charge a 1% loan origination fee on all their products.

Of course, you can and should always negotiate regardless of what they’ve got posted on their website.

They appear to offer a free biweekly mortgage payment option, but they also note in the fine print if you choose to do that, it remains the payment arrangement for life.

In other words, you better make sure you want to make larger-than-necessary monthly payments until you sell your home or refinance your mortgage.

The company also recently launched its No-Refi Rate Drop, which allows you to lower your rate in the future for just $250 after signing a single document, assuming mortgage rates come down.

Navy Federal Mortgage Rate Match

  • Navy Federal appears to be confident that they offer some of the lowest rates around
  • That’s why they offer a $1,000 rate match guarantee
  • If you find a lower mortgage rate and Navy Federal is unable to match it they may compensate you
  • But you have to prove it with documentation and jump through some  hoops to qualify

One neat perk the company offers is its so-called “Mortgage Rate Match,” which as the name implies will match the interest rate of a competitor.

So if you’re able to find a lower mortgage rate while comparison shopping, Navy Federal will match that rate or give you $1,000.

Of course, the typical restrictions apply and you’ll need to lock your rate with Navy Federal before submitting the rate match request.

Additionally, you’ll need to provide a Loan Estimate from a competing lender within three calendar days of locking your rate, and the terms have to be identical.

In other words, there are probably a lot of outs for Navy Federal, but if you’re able to muster all that and they can’t/won’t go any lower, you might be able to snag $1,000.

Speaking of locks, Navy Federal also offers a “Freedom Lock Option” for home purchase loans that lets you lower your rate up to 0.25% if rates improve up to 14 days prior to closing.

It’s basically a free one-time re-lock option offered on all loan types.

Navy Federal HomeSquad

In mid-2019, they launched “HomeSquad,” which is essentially their take on the digital mortgage that has been becoming more and more mainstream with mortgage lenders these days.

It allows borrowers to generate a quick pre-approval and to check loan status 24/7 via their mobile phone once they are approved.

During the loan process, borrowers can upload key loan documents like pay stubs, tax returns, letters of explanation, and so on.

You can also connect bank accounts for automated asset verification, and notices are sent straight to your preferred device as milestones are met.

This technology better aligns them with the likes of Quicken Loan’s Rocket Mortgage, and makes them really hard to beat given their low rates and quality customer service.

Why Choose Navy Federal for Your Mortgage?

  • Competitive mortgage rates
  • Free re-lock option if rates fall after you lock
  • Biweekly mortgage payment option
  • They service your home loan for life

Aside from the many perks and options mentioned, their home loan products are available nationwide.

So as long as you’re eligible for a Navy Federal membership, they’re probably worth at least checking out no matter where you are in the country.

Assuming their interest rate and lender fees are competitive, they offer a few more advantages to borrowers.

They claim to offer personal guidance from start to finish, so ideally their loan officers are top-notch relative to other big bank officers.

Additionally, once your loan funds, they’ll actually hang onto it for the life of your loan. That means Navy Federal is not only your lender, but also your loan servicer.

This can be convenient and less confusing as many lenders simply originate home loans and quickly sell them off to a differ ent entity, creating more paperwork and potential headaches.

Knowing your loan will stay with the company may also lead to a more transparent and friendly experience.

With Navy Federal, you can rest assured that you’ll be a borrower for life with them, so they’ll probably want to take good care of you along the way.

(photo: Dave Lawler)

2 thoughts on “Navy Federal Mortgage Review: Rates Appear Low and They Keep Your Loan”

  1. I am wondering what incentive NFCU has to refinance me at this time. I began a refi around March 6, 2020 and got in at 2.5% fixed 30yr VA. My rate is only good until May 3, 2020 and my processor seems to be stalling. She asks for this and that and when I give it to her I wait a week and she asks again for the same thing. The latest thing she asked for was which Title Company I am going to use. I along with my Title agent have emailed my processor the information she needs and still she asked for the same info. Now it is nearing my rate lock expiration and I am beginning to be worried that I will lose my rate. I feel the bank is doing this on purpose because I currently have a 4% rate. In conclusion, what incentive does your bank have to really try to lower your rate?

  2. Andrew,

    Lenders make money in a variety of ways, whether it’s selling the loan off to an investor or earning money over the long-term via loan servicing. If the loan is already with NFCU and the refinance will be with them too, I’d guess they’d make money via servicing and customer relationship cross-promotions, etc. They may also assume you’ll refinance elsewhere if they don’t, thus losing everything. Stay on them to ensure the loan gets closed on time!

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