USAA Mortgages | The Important Stuff

There are many ways for you to afford a house with USAA as your financial backer, so today’s blog is about four different mortgages available to USAA members. Whether you’re a first-time home buyer wanting to put less money down, or you need a loan with no PMI, USAA will have you covered. Once you read the “How-To-Guide: USAA Mortgage blog, you’ll be ready to figure out what type of loan you’d like and how much money you need for the home you want.

*For the best loan options outside of USAA read, “VA Home Loan Guide.”

What is PMI?

Private Mortgage Insurance (PMI) is a monthly insurance payment that you have to make if you can’t put down 20% on a house. PMI insures the mortgage for the lender if the borrower defaults, which is normally around $100-200 per month.

PMI is one of the most overlooked costs associated with buying a house that new homeowners don’t think about until it’s too late. I urge you at all times, if you can afford to put 20% down, then you should put the money down without a second thought. PMI is not something you can recoup, so if you pay it, you’ll be out of the money each month that you put into it.

How Do I Avoid Paying PMI?

There are 2 ways to avoid paying PMI, which are applying for a VA loan or putting down 20% of the total cost of the house as cash. This can be unattainable for most of us because if you buy a $300,000 home, you’d have to put $60,000 down as cash.

This predicament is also an indication that you might want to look at another house that you can comfortably put the cash down. If you don’t have a healthy cash flow for whatever reason, you should focus on applying for and receiving a VA loan through USAA.

USAA VA Home Loan

There are 3 ways to get a VA home loan through USAA, depending on the length of the loan, which can be a 15-year, 30-year, or a VA 5/1 Adjustable-Rate Mortgage Rate and APR. The most important aspect of a VA loan is you don’t have to put a down payment or pay PMI. The VA not only certifies the loan through the lender, but the power of the federal government backing the loan is enough to avoid PMI. Something to think about. However, if you don’t put a down payment on your home, the monthly payments will be higher.

How Do I Apply For a USAA VA Home Loan?

There are 2 ways to start the application for the USAA VA Home Loan, and chances are you are already logged into your online account. If you’re not logged in yet, click here to get started with finding the purchase rate and different options available to you.

Once you figure out what rate you’re qualified for, you should use the USAA Mortgage Calculator to see how much home you can afford with the expected rates and fees. If you are reading this on your phone and just want to call USAA’s Mortgage Team, here it is.

What Are USAA Home Loan Points?

A conventional loan has similar interest rates and APR, but they have a point system to help you with either closing costs or interest rates. Each point costs 1% of the overall loan amount that can be either sold to get your closing costs lower or you could buy a point for 1% of the loan amount.

For example, if you want to buy a point to lower your interest rate with a house that costs $250,000 and an interest rate of 3.625%, your monthly payment could be reduced from $912.10 to as low as $843.25.

First-Time Home Buyer with USAA

The 1st-time homeowner who has not owned any private residential property (in the last 3 years in some states) qualifies for the benefits of being a new homeowner. This one-time option will allow you to put down as little as 3% cash on your home with a higher interest rate and APR. Similar to the VA loan, you won’t pay PMI.

However, this loan needs to be used as your primary residence. If you don’t have a lot of cash, don’t qualify for a VA loan, and this is your first home in the last 3 years, a First-Time Homebuyer Loan is great for you. However, Let me be as clear as possible, if you qualify for a VA Loan, take it! 

*Be as prepared as possible with your research by researching all competitors, such as Quicken Loans and Lending Tree

USAA 5/1 Adjustable-Rate-Mortgage

an adjustable-rate mortgage (ARM) is when the interest rate of your loan is only guaranteed by the number ratio presented (5/1, in this case). The interest rates given are almost always lower with an ARM. After 5 years for the USAA loan, your interest is dependent on how the economy is performing as a whole.

For Example, if we go through another recession (highly unlikely), the banks will be hit harder, and therefore after 5 years, your loan would increase to whatever they wanted. However, if the market is performing better than it was 5 years before, you could receive a lower interest rate. I would only do this if I were still on active duty and thought I might move before 5 years because the interest rate would be in my favor if I PCSed before the rate changes.

USAA VA Jumbo Loan

A Jumbo Loan is any loan that exceeds $510,400 when purchasing a home, presumably your forever home if you’re spending half a million dollars. If you’re buying in an incredibly expensive area, such as New York City, Los Angeles, or San Francisco, a high-balance conforming loan will most likely be what you’re looking for. If you’re interested in this type of loan, call, 800-531-0341 and the USAA loan officers will guide you through your best choices.