A company that provides financial services to current military personnel, veterans and their family members can play an important part in the lives of the people it serves. USAA, founded the United Services Automobile Association, began as a company that provided automobile insurance policies to active duty military officers. It has expanded to serve active and retired military personnel and their family members not only with insurance products but also with investment and banking services including home mortgage loans. USAA mortgage rates are an important aspect of their banking services.
What Is USAA?
USAA is a member-owned company. Membership is available to any active duty service member or retired service member and his or her family. Membership also is available to children of members and may continue on through generations. Because of this, many USAA members do not have a direct military connection and do not qualify for VA loans, but USAA offers a selection of conventional loans to these members, A simple application process is available on the USAA website at usaa.com. The website details the extensive list of USAA services.
Excess revenues are returned to members who have purchased or used USAA services in the form of discounts on insurance premiums and Subscriber Savings Accounts. These features encourage members to take advantage of multiple USAA services. The broad offering of products is especially helpful to active duty military personnel who move frequently and may be deployed out of the country, giving them a single source for a large variety of financial products.
What Are USAA Services?
USAA now offers not only automobile insurance but also home and property insurance, life and health insurance products. Their investment services include retirement accounts, mutual funds and self-directed investment accounts. Their banking services include checking and savings accounts, credit cards, auto loans, personal loans and home mortgage loans.
USAA is a full service home mortgage lender, working with clients to determine the best options for financing their home purchase. These include conventional mortgages, VA mortgages, first-time buyer’s mortgages and jumbo mortgages.
USAA Mortgage Options
USAA mortgage rates include fixed-rate and adjustable-rate mortgages in two main categories: conventional home mortgage loans and VA mortgage loans. Jumbo loans and high-balance conforming loans are available in both categories.
A VA loan is available to current service members, veterans and eligible surviving spouses and is backed by the U.S. Department of Veterans Affairs. 65% of USAA’s home loans are VA loans. VA loans offer significant benefits especially to first home buyers. No down payment is required and no private mortgage insurance (PMI) is required.
This VA benefit can be reused to purchase a future home. A VA loan also can be refinanced. As of December 2018 USAA mortgage rates are 4.5% (4.794% APR) for VA loans. APR is Annual Percentage Rate and is the actual interest paid calculated on an annualized basis. Mortgage rates fluctuate and homebuyers need to get current quotes.
To be eligible to apply for a VA loan, the veteran must have received an honorable discharge from the service and must meet certain qualifications for minimum service. Surviving spouses of veterans or prisoners of war may also qualify for VA loans if they meet VA requirements.
Conventional loans require a down payment that varies depending on the size of the loan and private mortgage insurance (PMI) may be required. USAA mortgage rates as of December 2018 are 4.65% (4.841% APR) on conventional loans. APR is Annual Percentage Rate and is the actual interest paid calculated on an annualized basis. Mortgage rates fluctuate and homebuyers need to get current quotes.
Conventional 97 loans are available to first time home buyers. These loans only require a 3% down payment and PMI. Other conventional loans require a 5% down payment and PMI. With a down payment of 20% the PMI requirement is waived.
Fixed Rate Mortgages
A fixed rate mortgage is just what it sounds like. The interest rate set at the beginning of the loan remains the interest rate for the term of the loan, typically 15 or 30 years. When interest rates are low, this is an attractive type of mortgage loan because a low interest rate is locked in over a long period of time when rates may increase. This is also a good choice for someone who anticipates living in the home for more than five years.
Adjustable Rate Mortgages
Adjustable Rate Mortgages start out at one rate and then after a period of time, often 5 years, the interest rate will be reset based on the interest rate prevailing at that time. This is a suitable loan for people who don’t expect to be in the house longer than the initial term of the loan. The possibility of a higher interest rate isn’t really a threat to them.
Often people can get into the Adjustable Rate Mortgages at a lower rate of interest and thus have a lower monthly payment than is available on a conventional mortgage loan or VA loan. For example, at a time when the APR on a USAA Adjustable Rate Mortgage is 4.702%, the VA loan rate has an APR 4.794% and the conventional loan has an APR of 4.841%.
USAA Jumbo Mortgage Loans are available for homes starting at $$ . This number is set by the Federal Housing Finance Agency (FHFA) annually Jumbo loans are available on homes up to $$$ million. USAA mortgage rates are available for VA and conventional jumbo loans.
The VA loan offers a formula for calculating the required down payment that reduces the amount of the mortgage that the percentage is calculated on. As of December 2018 the USAA mortgage rates on jumbo loans are 4.5% for VA loans and 4.625%
High Balance Conforming Loan
A High-Balance Conforming Loan is a type of mortgage loan available for areas with high home prices. The availability of this loan is determined by the home’s ZIP code and it is currently used for mortgages between $ and $$. Limits are published annually by the Federal Housing Finance Agency (FHFA).
USAA mortgage rates are affected by points. Points are a form of pre-paid interest. One point equals one percent of the loan amount. By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the stated interest rate. As of December 2018 USAA mortgage rates for VA loans charged .75 points and on conventional mortgage loans 1.0 points.
How To Qualify For USAA Mortgage
To qualify for a USAA mortgage, it is first necessary to be a USAA member. The application process is simple and free and can be done online or by phone. The applicant must either be an active duty service member or honorably discharged former service member or a surviving spouse. Immediate family members of USAA members qualify for membership regardless of military service.
A minimum credit score of 620 is required to apply. It is possible to apply online or by phone and to become pre-qualified before you begin your house hunt. The minimum USAA mortgage is $$.
USAA Mortgage Rates Trend
Comparison studies of mortgage rates show USAA mortgage rates are slightly higher than the lowest rates available. Studies also revealed comments from people who had worked with USAA that complained about slow service in processing the applications. These complaints were more common than criticism of USAA mortgage rates. This is somewhat surprising in that the USAA organization prides itself on customer service and these studies may well have been taken to heart.
USAA is a major source of VA mortgage loans because of the organization’s close connection to military and former military personnel. USAA mortgage rates, as is typical of other banks and mortgage lenders, follows the Federal Reserve interest rates and fluctuate accordingly. A prospective borrower must always check for current interest rate quotes because interest rates are subject to change.
Many USAA members take advantage of the full range of products and services offered by the organization. For many of these people a slightly higher interest rate is not a big issue compared to the convenience of dealing with one company for a home mortgage, other banking services, homeowner’s insurance and more.
USAA offers a Real Estate Rewards Network that helps connect members with a local realtor for buying or selling their home. The member receives savings anywhere from $ to $$ depending on the price of the home. This service is available to members regardless of where they obtain their mortgage, but it is another plus for USAA as a member considers a mortgage source. The eventual rewards of member benefits as the organization prospers is incentive for some members to work with USAA for their home mortgages.
USAA mortgage rates are an important element in the biggest financial transaction in most people’s lives. The organization offers expertise in VA loans which make up a large portion of their home mortgage lending. The complete range of banking and insurance services that USAA also offers make dealing with this company a good option for those who qualify for membership.