USAA for Mortgages?

[DeadCactus]

I know USAA is good at some things and bad at others. Anyone use them for mortgages? Is it one of their stronger programs or one of their lacking offerings?

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[Gastrapathy]

I know USAA is good at some things and bad at others. Anyone use them for mortgages? Is it one of their stronger programs or one of their lacking offerings?

Painful experience and not able to meet market rates in my neck of the woods. I'd stay clear (look at the reviews on their own website, those experiences are similar to mine). Insurance is solid although not as good as it used to be, car buying service rocks, mortgage processor was garbage.

 

[J-Rad]

I know USAA is good at some things and bad at others. Anyone use them for mortgages? Is it one of their stronger programs or one of their lacking offerings?

Twice. Neither time was a good experience. Fired them the last time for their absolute stupidity. Will never use them again and tell everyone who asks me to avoid them for mortgages (I like their banking, however). Living in an area in which a lot of people have used USAA for mortgages, I can tell you that my and Gastrapathy's experience are not uncommon.

I think some people here have had good experiences with Naval Federal Credit Union for mortgages.

 

[primadonna22274]

Oh my goodness.
Last mortgage processed in May 2011 in SC. First and last time with USAA. Closing was delayed THREE TIMES because they didn't have documents ready. Twice that was in the lawyer's office literally half an hour into the meeting...great for everyone's schedule of course (in SC you have to close with a real estate attorney). Processor wouldn't return calls or emails. Had to resubmit documents multiple times because they got lost. In the end it got done then didn't fund for 5 days afterwards...and it was not a holiday weekend either!

 

[NavyFP]

Have used them twice without incident. I suppose I could be an exception.

 

[DeadCactus]

Good to know, thanks all.

 

[Homunculus]

i echo the majority.

tried using them for a VA loan. i'm not sure what the issue is with mortgages, but their service really lags behind how they are in other areas. i had a much better/faster/more personalized experience with a local bank with a better rate to boot. i can't imagine trying to get a document or something time-sensitive. my advice is to look elsewhere.

--your friendly neighborhood home owning caveman

 

[DrMetal]

i echo the majority.

tried using them for a VA loan. i'm not sure what the issue is with mortgages, but their service really lags behind how they are in other areas. i had a much better/faster/more personalized experience with a local bank with a better rate to boot. i can't imagine trying to get a document or something time-sensitive. my advice is to look elsewhere.

--your friendly neighborhood home owning caveman

Can i ask how long ago this was? I just applied for a VA via usaa. They seemed to pre-approve quickly, altho that probably doesnt mean squat.

 

[Homunculus]

Can i ask how long ago this was? I just applied for a VA via usaa. They seemed to pre-approve quickly, altho that probably doesnt mean squat.

spring 2011. the "pre-approval" was easy. it was having them draft personal fully qualified buyer support memos (or something similar-- these esentially ease the fears of sellers/agents that don't deal with VA funding sources much) and their poor accessibility that made us look elsewhere. it's hard for a company that big to compete with joe/jane banker down the street who can call the selling agents in person and explain the process.

right or wrong, people are spooked by VA loans. it's hard enough without having USAA making it more difficult. i have a sneaking suspicion we lost out on a house due to unfamiliarity with the process (ie, certain inspections and other requirements) which still sticks in my craw a bit but it all worked out in the end. to me money is money, but some sellers get suspicious when the gubment gets involved.

--your friendly neighborhood VAing it up caveman

 

[bleeker10]

right or wrong, people are spooked by VA loans. it's hard enough without having USAA making it more difficult. i have a sneaking suspicion we lost out on a house due to unfamiliarity with the process (ie, certain inspections and other requirements) which still sticks in my craw a bit but it all worked out in the end. to me money is money, but some sellers get suspicious when the gubment gets involved.

--your friendly neighborhood VAing it up caveman

When you say people are spooked by VA loans, are you referring to the sellers? I'm looking at a VA loan but am pretty new to the whole process. I'm trying to learn as much as I can. I'm cautious about going through with it since it is quite an investment for many years.

 

[DeadCactus]

Speaking of VA loans - the main benefit is not needing a down payment, correct?

 

[colbgw02]

When you say people are spooked by VA loans, are you referring to the sellers? I'm looking at a VA loan but am pretty new to the whole process. I'm trying to learn as much as I can. I'm cautious about going through with it since it is quite an investment for many years.

Yes, the sellers. We lost a house to a lower bid because we had a VA loan and they had traditional financing.

It turned out their fears were fully justified. On a different house, the VA brought in a appraiser who was completely unfamiliar with the area (a common occurrence) who totally screwed up the whole process. The appraiser ended up being suspended, but his appraisal stayed with the house for 6 months as far as the VA is concerned anyway. As a result, our contract fell apart six days before closing.

The VA loan option can be a great tool, particularly in a buyers' market, but in many instances you can expect to get less for your money than with a traditional loan, since sellers will factor in the red tape and uncertainty of the VA loan into their price/negotiations.

 

[Homunculus]

Speaking of VA loans - the main benefit is not needing a down payment, correct?

no down payment up to the VA max approved for your area. for the DC metro depending if you are MD or DC or VA it can be 750k+. over that amount, you can finance a % of each dollar over the max.

there is also no PMI, but they do have a fee called a "VA funding fee" which is cheaper but still an additional fee. i can't remember if we rolled that into the financed amount, but we paid a good chunk down.

there are also mandatory things the seller must do-- who pays for it i think is not definite but a termite inspection has to be done and a VA approved appraisal has to happen-- which in the current market has some risks as well if the property comes in low.

Yes, the sellers. We lost a house to a lower bid because we had a VA loan and they had traditional financing.

It turned out their fears were fully justified. On a different house, the VA brought in a appraiser who was completely unfamiliar with the area (a common occurrence) who totally screwed up the whole process. The appraiser ended up being suspended, but his appraisal stayed with the house for 6 months as far as the VA is concerned anyway. As a result, our contract fell apart six days before closing.

The VA loan option can be a great tool, particularly in a buyers' market, but in many instances you can expect to get less for your money than with a traditional loan, since sellers will factor in the red tape and uncertainty of the VA loan into their price/negotiations.

we sweated our appraisal too. apparently those people run the gamut on skill/experience, and it is a "next up" rotation that can't really be gamed. luckily we had someone familiar with the area.

we also had the VA bias happen to us in an escalation situation. we had an escalation clause that maxed out higher than the winning contract, but theirs was, no lie, supposedly a cash offer. right.

anyway, the two things we were fortunate with in our process was 1) a lender who was comfortable/familiar with the VA loan process and local market, to the point they knew names and had previous sales to discuss and the lingo that selling agents 2) an agent who knew her stuff and had also been through the process before. we had to be very pro-active in our offers and this is where USAA was really a weak link. that being said, they also weren't great my first housing purchase with a traditional loan. same issue, only that time it was more that they couldn't match a local rate.

bottom line, i would avoid USAA for mortgages, and if you are doing a VA do it local and find someone who does them often.

--your friendly neighborhood armchair realtor caveman

 

[DeadCactus]

So I should have roughly 20% toward a down payment in the markets I'm looking into. It would cut into my emergency fund but not drain it dry. Still enough to cover a reasonable emergency but not enough to meet the classic "6 months of pay" guideline (which I'm not sure really applies to residents).

Would you guys recommend using the VA loan to get a 0% down mortgage or to still pay off the 20% if I can? Also, I get the impression a VA loan might not be the best option if you can swing a down payment. True?

And is it actually reasonable to find a lender familiar with both residents and VA loans? I assume in larger city's it should be feasible...

 

[colbgw02]

So I should have roughly 20% toward a down payment in the markets I'm looking into. It would cut into my emergency fund but not drain it dry. Still enough to cover a reasonable emergency but not enough to meet the classic "6 months of pay" guideline (which I'm not sure really applies to residents).

Would you guys recommend using the VA loan to get a 0% down mortgage or to still pay off the 20% if I can? Also, I get the impression a VA loan might not be the best option if you can swing a down payment. True?

And is it actually reasonable to find a lender familiar with both residents and VA loans? I assume in larger city's it should be feasible...

So much depends on your market. The VA loan ended up being bad for me because I was trying to buy in a still relatively healthy market in a very particular part of town. If you're in a down market and you're highly flexible, then the benefits of holding onto your down payment money may be worthwhile. Time value of money and all that.

That said, emergency funds don't quite mean as much to military folks, at least that's the advise I've received from my financial planner. You have and will have a job with essentially the full faith and credit of the U.S. government behind it for as long as you want it (and often times for longer than you want). Even an unexpected discharge will take months to adjudicate. I'm not saying to put all of your money into stocks or index funds; I'm just saying that you shouldn't feel too worried about not having 6-months worth of cash on hand.

 

[Homunculus]

So much depends on your market. The VA loan ended up being bad for me because I was trying to buy in a still relatively healthy market in a very particular part of town. If you're in a down market and you're highly flexible, then the benefits of holding onto your down payment money may be worthwhile. Time value of money and all that.

That said, emergency funds don't quite mean as much to military folks, at least that's the advise I've received from my financial planner. You have and will have a job with essentially the full faith and credit of the U.S. government behind it for as long as you want it (and often times for longer than you want). Even an unexpected discharge will take months to adjudicate. I'm not saying to put all of your money into stocks or index funds; I'm just saying that you shouldn't feel too worried about not having 6-months worth of cash on hand.

agree. even in a relative buyers market we had issues but ended up very satisfied with a house where our BAH doesn't evaporate into rent, and even if we PCS should be readily rentable.

another option if you are in an expensive market is to add a portion of your saved "down payment" toward extending over the VA max (probably not recommended by financial planners but we did it to increase our purchasing power a bit and our BAH more than covers the difference). you can also do the zero down VA and use the down payment you saved for renovations-- which means you could buy a little more of a fixer upper and get into a place that you wouldn't have access to if it were fixed up/move in ready. we looked seriously at a a couple of places that people had avoided that would have appreciated in value easily with a few straighforward renovations. it makes house shopping much more fun knowing you have some resources to change the place.

--your friendly neighborhood lord of his own land caveman

 

[bleeker10]

I will be in residency for 5 years, with hopes of owning a place for that time. I'm ideally wanting a situation where BAH covers the mortgage, utilities, HOA fees (if applicable) and any other home-related fees with a little bit of money left over. It's not vital I have extra money from BAH but I don't want to pay more than BAH when factoring in everything. I know after 5 years I have a very good chance of PCSing to an entirely different locale.

So my question is: Is it naive or wrong of me to not be overly concerned about not being able to sell it after 5 years?

My thinking is even if I can't rent it, I will be making more money and will have one mortgage payment that comes out of my BAH and one that comes out of my salary. I will be in a similar situation to every other non-military physician in America, albeit making less money, when it comes to paying a mortgage out of my salary. I have around 60k in undergrad loans which I hope to pay a large amount of during residency. I have a car payment which will be paid off in three years. I have about $3500 in credit cards ($3100 on the Star Card and $400 on a MC) and am aggressively paying those off ASAP. I've always used debit/cash rather than credit cards and don't plan on using credit cards for anything other than big purchases. I don't want to own more than one house so if I bought during residency, I'd probably just rent until I can sell that place.

I don't think I would have too difficult of a time renting it out since there is a medical school in town as well as a local university. Plus I've heard I can rent out my place for a week during the golf tournament affectionately known as "a tradition unlike any other" for at least my mortgage, if not more. I'm not going to bank on this happening, but it's just an option.

 

[colbgw02]

The experience of owning a home varies so widely, so I always hesitate to advice others based on what happened to me. I will say that this though: if the Great Recession taught us nothing else about home ownership, it reminded us that it's intended to be a long-term investment.

In your case, I would say that means you should only buy now if you fully intend to keep the property at the end of your residency. That means renting it, at which point you have to consider things like less than 100% occupancy and property management. To wit, if you're in Washington state or Korea, what are you going to do if your refrigerator in east Georgia breaks? Are you going to hire a manager? They'll take a cut, so how will that affect your bottom line? Also, what will your finances look like if you don't have tenants for a month? Three months? Six months?

Also, my understanding is that to the extent that the property is a rental property, the mortgage interest is not tax deductible because it can no longer be considered your primary home.

I'm not saying these issues are insurmountable; people do it all the time. I'm just saying that you need to recognize how much tolerance you have for these types of issues. If it doesn't bother you to bird-dog rental property issues from across the country, then more power to you.

The corollary here is that you should be willing to hold onto the home until it's an advantageous market. That means, to at least a degree, buying a home that will sell rather than the home that you want or need. For instance, you may want to buy a home that will - in toto - be covered by your BAH, but that may mean living in a home that won't be attractive to future buyers. What if it's too small or doesn't have enough bedrooms? What kind of neighborhood is it? The school district? The converse it true too, as evidenced by the realtor's axiom of "never buy the most expensive house on the block." This is where a good agent can really help you out by explaining what manner of home is likely to sell easily for a given neighborhood.

 

[DocArmy]

I am getting ready to start a 3 year residency soon. It will be in a high BAH area, and I've been thinking about buying a house. I'm looking into the VA loan or the Physician's loan ( vs local lenders).

My question is, if I am able to put ~$80,000 worth of equity into a home in three years, and then move and sell it, am I incorrect in assuming that, even if I don't get what I paid for it, it still makes financial sense? Meaning, buy a home for $500k, spend three years in it, PCS and sell the house. If I sell it for $470k, I take a $30k hit, but should still be able to walk away with $50k to put down on a new house at new duty station. Is this correct?

Sorry, I just spent the last decade worrying about becoming a doctor and, unfortunately, don't know diddly about finance. Any advice welcome.

 

[DeadCactus]

I am getting ready to start a 3 year residency soon. It will be in a high BAH area, and I've been thinking about buying a house. I'm looking into the VA loan or the Physician's loan ( vs local lenders).

My question is, if I am able to put ~$80,000 worth of equity into a home in three years, and then move and sell it, am I incorrect in assuming that, even if I don't get what I paid for it, it still makes financial sense? Meaning, buy a home for $500k, spend three years in it, PCS and sell the house. If I sell it for $470k, I take a $30k hit, but should still be able to walk away with $50k to put down on a new house at new duty station. Is this correct?

Sorry, I just spent the last decade worrying about becoming a doctor and, unfortunately, don't know diddly about finance. Any advice welcome.

Property tax, insurance, and various other fees will eat away at the $50k especially on a house that pricey...

 

[colbgw02]

I am getting ready to start a 3 year residency soon. It will be in a high BAH area, and I've been thinking about buying a house. I'm looking into the VA loan or the Physician's loan ( vs local lenders).

My question is, if I am able to put ~$80,000 worth of equity into a home in three years, and then move and sell it, am I incorrect in assuming that, even if I don't get what I paid for it, it still makes financial sense? Meaning, buy a home for $500k, spend three years in it, PCS and sell the house. If I sell it for $470k, I take a $30k hit, but should still be able to walk away with $50k to put down on a new house at new duty station. Is this correct?

Sorry, I just spent the last decade worrying about becoming a doctor and, unfortunately, don't know diddly about finance. Any advice welcome.

Sorry, but this is crazy talk. I know you're asking because you don't know, but I just need to convey how bad of an idea I think this is.

Over 3 years, your home's value would have to appreciate at an annual rate of 5% just to get the break even point versus renting. That means you'd have to sell your house at around $580K, and that doesn't even take into account the realtor's fee, which is substantial.

I'm making some assumptions about the rental market, but I think I'm very familiar with the market to which you're referring. I'm also assuming you're talking about an essentially zero-down loan (based on your VA or physician loan comment). Sure, you could pour your extra money to pay off loan principle, but that's a silly investment decision because 1) your rate of return is highly unlikely to be as good as it would be elsewhere and 2) paying off mortgage principle is a highly illiquid form of storing money.

 

[bleeker10]

Has anyone had experience using the Navy Federal Credit Union for mortgages?