Even before you start looking at homes, the first step in the mortgage process is getting a preapproval letter from a lender, which provides documentation of how much money you’ve been initially approved to borrow for your home purchase.
- Home Search
Once you have your preapproval letter, work with your real estate agent to find the right home for you based on your specific needs. Once you’ve found your new home, provide the address or purchase contract to your loan officer along with your application.
Your processor will then prepare and submit your mortgage application for final review and approval. You may be asked to provide additional supporting information. During this time, your appraisal will be ordered for the home you’re hoping to buy.
The last step in the mortgage process is closing. This is where you assume ownership, your loan is funded and you get the keys to your new home.
It typically takes 30 days to close on your mortgage once you’ve submitted all required paperwork and documents. However, closing times vary based on many factors, so check with your home loan advisor early in the process to better understand when you can expect to close.
A Loan Estimate is an industry-standard form we’ll give you after you apply for a mortgage. It provides you with important information about your loan, including the interest rate, monthly payment and expected closing costs. Since these line items are estimates, certain costs may change between the original Loan Estimate and your closing date.
Yes, you can buy a home even if you have less-than-perfect credit. We can help you find the best option for your situation— for more information, call us at 1-888-842-6328.
It’s a good idea to use a real estate agent when you’re buying a home. Navy Federal can match you with a top-performing agent with expertise in your area through our RealtyPlus® program. You can also get rewarded cash back when you use this program to buy or sell your home.1
Mortgage Loans, Rates and Features
An interest rate is the cost you pay annually to borrow money, expressed as a percent. In contrast, APR includes the interest rate plus other costs, such as mortgage insurance, discount points and some closing costs and loan origination fees.
To demonstrate eligibility, you’ll need to provide a valid Certificate of Eligibility (COE). You can apply for your COE through the Department of Veterans Affairs, or your loan officer can help obtain it for you.
Navy Federal takes into account many factors to determine your mortgage interest rate, including, but not limited to, the following:
- Your credit score
- Debt-to-income ratio
- Type of loan you’re applying for
- Loan amount
- Loan term
- Property location
- Property type
- Market conditions based on the U.S. economy
After you complete your application and find the home you wish to buy, you’ll be asked to choose your rate lock option—to locl, float or lock float down.
- Lock: A rate lock protects you from the risk of increasing rates during the weeks before closing. When you choose to lock, the interest rate on your loan won’t change as long as you close within the lock period.
- Float: If the market suggests rates will decrease, you may choose to float your rate. This gives you the opportunity to lock at a lower rate, but you assume more risk in the instance rates actually increase.
- Lock Float Down: There’s also the option for a mortgage rate lock float down, which is a rate lock with the option to reduce the locked interest rate if market rates fall during the lock period.
We offer a special lock float down option called Freedom Lock, allowing you to choose to lock, float or lock float down. Most lenders charge a fee to lock float down, but we offer it at no charge.
To take advantage of Freedom Lock, you must contact your loan officer at least 7 calendar days prior to settlement to relock at the lower rate. Freedom Lock can be extended past the 60-day promotional period for an additional fee. Ask your home loan advisor for more information.
Navy Federal offers a rate match guarantee,2 which means that if you find a better rate at another lender, we’ll match it. If we aren’t able, we’ll give you $1,000 after you close with the competing lender. To qualify for our rate match guarantee, you’ll need to lock in your rate with us before you submit your rate match request. We’ll need a Loan Estimate from the competing lender that is dated and received within 3 calendar days of locking in your interest rate with us. Loan terms on the competing loan must be identical to the terms of your Navy Federal loan.
If we can’t match the competing rate and you qualify to receive $1,000, you must provide a signed executed copy of the final Closing Disclosure from the competing lender and a copy of your final mortgage note within 30 calendar days of your loan closing. Once approved, $1,000 will be automatically deposited into your Navy Federal account within 30 days of receiving the necessary documentation.
Common types of mortgage fees include origination, application, credit report, appraisal, processing and underwriting. Navy Federal doesn’t require an application fee. Applicable fees will be listed on your Loan Estimate form, which you’ll receive after applying for a mortgage.
With a fixed-rate mortgage, your interest rate stays the same for the life of your loan. With an adjustable rate, your loan begins with a fixed rate for a specified period of time and then adjusts higher or lower based on an index.
Discount points are optional fees you can pay directly to Navy Federal at closing in exchange for a reduced interest rate. One point is equal to 1% of the total loan amount. Depending on how long you plan to be in your home, it might make sense to pay these points and obtain a lower rate.
PMI is insurance that a buyer pays to protect the lender in case your loan ends up in foreclosure. Though most lenders require PMI for home purchases with down payments of less than 20%, Navy Federal offers many loan products that don’t require PMI, which can keep your monthly payment lower.
Navy Federal doesn’t offer funding for new construction. However, once construction is complete, you can refinance your funding into a mortgage loan with Navy Federal.
Not always. Several of our mortgage loans are available to qualified applicants with little or no down payment.3
Applying for a Mortgage
A preapproval shows how much you’ll be eligible to borrow when you decide to make an offer on a home. Your preapproval is based on information you provide, including your credit score, income, assets, debts, employment history and other financial information. The preapproval isn’t a commitment to lend until your information is verified with supporting documentation.
After you submit an application for a loan, a loan officer will contact you within 6-10 days with next steps. If you’re preapproved, the loan officer will typically email you the preapproval letter. Depending on your eligibility, your preapproval letter could be available in minutes. In some cases, you may get preapproved instantly.
Before you apply for a preapproval, you’ll want to check your current credit report to verify that all information is correct, and to see if there are any improvements you want to make to your credit to boost your chances of qualifying for a better rate.
After you receive your preapproval letter, start collecting the following documents and information for all borrowers so you’ll have them handy for the verification process.
- W2 forms for the last 2 years
- Pay stubs for the last 1 to 3 months
- Personal tax returns for the last 2 years
- Social Security Number
- Monthly debt and living expenses
- Deposit account and asset information held by financial institutions other than Navy Federal
Once you’ve found your home, call your home loan advisor and provide the property address. Your request for preapproval will then convert to a mortgage application.
To check the status of your mortgage application, visit HomeSquad by signing in to your online account and selecting Loans & Credit. You can always contact your home loan advisor for additional information or call 1-888-842-6328.
Closing on Your Mortgage
Closing costs comprise various fees, which vary by lender, location and loan type. They typically amount to 2% to 4% of your home’s purchase price. Common fees include appraisal fees, property taxes, mortgage insurance and title fees. They’re identified on your Loan Estimate. Because these fees are estimates, certain costs may change between the original Loan Estimate and your closing date.
Typically, closing costs on purchase loans cannot be rolled into your mortgage. However, the funding fee for certain loans may be included as long as the total mortgage amount doesn’t exceed the loan-to-value ratio. If you’re refinancing a mortgage and have enough equity in your home, closing costs can be included in the loan amount. Check with your Home Loan Advisor for more information.
To pay closing costs, you’ll need to provide the funds through a wire transfer or cashier’s check, or have the funds transferred directly from your Navy Federal account. For closing costs under $1,000, a personal check may be accepted. Be prepared to have closing costs available up to 2 days before your closing date.
You’ll want to confirm the details with your loan officer before you go to closing, but typically, the only thing you’ll need to bring is a photo ID. By this point, your closing funds should already be transferred to the settlement agent.
The settlement agent handles the transfer of funds and property ownership through an escrow or trust account.
Managing Your Mortgage
As long as your mortgage or Fixed Equity Loan payments are up to date, you can pay extra toward the principal of your loan. When making your payment online,select the “Additional Principal and Escrow” option and enter the amount you wish to pay.
You can also pay extra toward the principal of your Home Equity Line of Credit. Your additional principal payment must be submitted after the current month’s payment is satisfied and before the next month’s bill is generated, which usually occurs on the fifth of each month. The bills can generate earlier if the fifth falls on a weekend or holiday.
To have the duplicate payment refunded to you, you’re welcome to call us at 1-888-842-6328 or send us an eMessage through online banking. Click here to sign in and send us a message.
To have the duplicate payment refunded to you, please submit a written request via mail at P.O. Box 3300, Merrifield, VA 22119, eMessage, or fax at 703-206-3650. Your request will be processed after 7 business days to ensure the funds have cleared your external account. If you’re looking for an expedited refund, you may include proof of the payments with your written request. The proof of payment may be a screenshot of your account activity or your most recent statement. It must show that both payments have cleared your external account and are no longer pending along with a running account balance.
A portion of each monthly payment is applied toward the principal balance, and a portion is applied toward interest. As your loan matures, the amount of each payment applied toward the principal balance will increase, and the amount of each payment applied to interest will decrease. For payment breakdowns specific to your loan, you can view your amortization schedule through Navy Federal online banking. The Amortization Schedule option is located in the My Loan drop-down menu after you click on your mortgage account.
To pay off your mortgage, simply request a payoff quote. A payoff quote will capture the full balance due to pay off your loan. It’s important to get a payoff quote, as the principal balance of your account is different than your full payoff amount due to interest calculations, any outstanding fees and the recording fee collected to record the release of the lien.
To receive a payoff quote for your loan, you may sign in to online banking and click on your mortgage account. Then, select Payoff Statement under the Statements and Documents tab and fill in the required information. After obtaining your payoff quote, you can submit the funds required to pay your loan in full. Keep in mind that a payoff may take longer to post than a regular payment.
Refinancing Your Mortgage
Refinancing means replacing your existing mortgage for a new mortgage with better terms or features.
Yes. You can refinance your loan with Navy Federal whether your original loan is with us or another financial institution.
It typically takes 45 days to refinance your home from application to closing. This time frame varies depending on how quickly we obtain all required documentation to approve your loan request.
Refinancing your home loan typically doesn’t require you to pay for closing costs out of pocket because the closing costs can be included in the total loan amount.