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USAA Mortgage Review 2020

USAA, which is short for the United Services Automobile Association, was founded in 1922 by a group of U.S. Army officers who wished to insure each other’s vehicles. The San Antonio-based company now serves military members, veterans and their families.

As a technology-focused lender, USAA primarily serves its members remotely, but provides in-person services at a handful of physical branches.

Working with USAA

USAA is licensed to operate in all 50 states and the District of Columbia. Residents of U.S. territories are not eligible for a home loan through USAA.

There are only five financial centers available to customers seeking face-to-face interaction:

  • San Antonio
  • Colorado Springs, Colo.
  • Annapolis, Md.
  • Highland Falls, N.Y.
  • West Point, N.Y.

In 2019, USAA originated a total of 64,000 home loans, according to Home Mortgage Disclosure Act (HMDA) data from the Consumer Financial Protection Bureau.

USAA mortgage borrowing requirements

USAA doesn’t publish minimum credit score requirements for its loans. However, as a lender who provides loans backed by the U.S. Department of Veterans Affairs (VA), a 620 credit score is typically the minimum required for most VA lenders.

USAA provides home loans for the following property types:

  • Single-family homes
  • Condominiums
  • Townhomes
  • New construction

Manufactured homes aren’t eligible for a loan through USAA.

USAA mortgage products

Purchase

  • VA loans. USAA offers VA home loans to military service members, veterans and eligible spouses. There are no minimum down payment or private mortgage insurance (PMI) requirements.
  • Jumbo loans. USAA offers jumbo loans for VA borrowers up to $3 million. As with a standard VA loan, PMI isn’t required.

Refinance

  • VA interest rate reduction refinance loans (IRRRLs). VA IRRRLs allow current VA loan borrowers to refinance with fewer paperwork requirements. USAA covers the appraisal fee, title fee and VA funding fee.
  • Conventional refinance loans. USAA members may qualify for a conventional refinance for up to 95% of their home’s value. (Note that these types of loans are not backed by the government.) Borrowers are typically required to have a minimum 620 credit score and pay PMI for home equity amounts less than 20% of a home’s value.

Home equity

USAA doesn’t offer home equity loans or home equity lines of credit (HELOCs).

The mortgage application process

  • How to apply. The first step in the mortgage application process is to apply for a mortgage preapproval. You can get preapproved online, or talk to a loan officer over the phone. The preapproval process takes minutes and gives borrowers a solid idea of how much house they can afford. At this point, you’re ready to shop for a home.
  • Disclosure process. Once you’ve put in an offer on a home and the seller accepts it, you’ll complete your mortgage application and submit required documents, such as pay stubs, bank statements and tax returns.
  • Submitting loan for approval. USAA will order a home appraisal and title search to ensure the home doesn’t have any outstanding liens. You’ll receive status updates throughout the process.
  • Final approval. Once your application is processed and approved, you’ll be cleared to close on your home.
  • Closing. At your mortgage closing appointment, you’ll take care of your down payment and closing costs and sign several documents to finalize your home purchase.
  • Servicing. According to USAA’s website, U.S. Bank handles loan servicing for its closed loans — this means you’ll likely make payments and manage your mortgage through U.S. Bank.

Communication during the process

Once you find a home and begin the loan application process, you’ll work with an assigned loan officer, who will be your main point of contact. Most required information is communicated through email and your USAA account. You can also reach the USAA mortgage team by phone at 800-531-0341 Monday through Friday from 7 a.m. to 10 p.m. CT and Saturday through Sunday from 8 a.m. to 7:30 p.m. CT.

Pros and cons of a USAA mortgage

Pros

  • Offers several VA loan options
  • Offers jumbo loan options
  • Provides a digital mortgage application process
  • Provides a wide range of educational resources on its website

Cons

  • Doesn’t offer FHA or USDA loan options
  • Doesn’t offer options for purchase conventional loans
  • Doesn’t offer home equity products
 

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