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NFCU mortgage and the no refi rate drop

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welshdan
New Contributor

NFCU mortgage and the no refi rate drop

So we've been gently house hunting while building credit and just stumbled on our dream house. Big enough for our large family, you name it, it's got it and we will be there to see the kids through high school (10 years)

 

We are going for 100% financed or close to it and hope to go down the homebuyers choice route with the aim of reducing our rate down as they come down in the next 3 to 5 years. From what I understand it's not an official refi with no appraisal, just more of an administrative task with a 250 fee.

 

Just wondering what the consensus was on the homebuyers choice with the no refi rate drop option? 

 

I've included the ARM options too which provide great monthly savings. However i don't fancy the full refi in 5 years, especially if house prices crash which will make it difficult to refi.

 

Homebuyers choice

284900 @ 7.875% for 30 years = $2030

 

3/5 ARM

284000 @6.75% = $1816

 

5/5 ARM

284000 @ 7% = $1863

 

 

Message 1 of 13
12 REPLIES 12
pizzadude
Credit Mentor

Re: NFCU mortgage and the no refi rate drop

Have you run the numbers for these against the scenerio that interest rates do not decrease over the next 3 - 5 years ?   The no-refi rate drop is a nice feature but it's not going to be an option unless rates drop. 

 

 

 

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 13
babbles
Established Contributor

Re: NFCU mortgage and the no refi rate drop

I did the HBC with NFCU once but it was fixed, I have done adjustable thing before but didn't like it because the rates kept adjusting upwards, good luck on it though!

Message 3 of 13
chijo
Established Member

Re: NFCU mortgage and the no refi rate drop

Anybody wanting to bet these bubbled housing prices won't tank soon is braver than I am right now regardless of lender. LOL Those involved closer than I am say stay put until we are past the usual tax season prices in 2024 at least if you can. I think old ham hands will have to start lowering rates by then as well.


Message 4 of 13
Horseshoez
Senior Contributor

Re: NFCU mortgage and the no refi rate drop

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.

Chapter 13:

  • Burned: AMEX, Chase, Citi, Wells Fargo, and South County Bank (now Bank of Southern California)
  • Filed: 26-Feb-2015
  • MoC: 01-Mar-2015
  • 1st Payment (posted): 23-Mar-2015
  • Last Payment (posted): 07-Feb-2020
  • Discharged: 04-Mar-2020
  • Closed: 23-Jun-2020

 

I categorically refuse to do AZEO!

In the proverbial sock drawer:
Message 5 of 13
VAMortgageGuy
Regular Contributor

Re: NFCU mortgage and the no refi rate drop


@Horseshoez wrote:

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.


Did you know you can do 3% down on a conventional loan?

Message 6 of 13
Horseshoez
Senior Contributor

Re: NFCU mortgage and the no refi rate drop


@VAMortgageGuy wrote:

@Horseshoez wrote:

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.


Did you know you can do 3% down on a conventional loan?


I think NFCU's minimum for a conventional is 5%, hence what I wrote above.  When the time comes I'm probably going to put down more like 20%.

Chapter 13:

  • Burned: AMEX, Chase, Citi, Wells Fargo, and South County Bank (now Bank of Southern California)
  • Filed: 26-Feb-2015
  • MoC: 01-Mar-2015
  • 1st Payment (posted): 23-Mar-2015
  • Last Payment (posted): 07-Feb-2020
  • Discharged: 04-Mar-2020
  • Closed: 23-Jun-2020

 

I categorically refuse to do AZEO!

In the proverbial sock drawer:
Message 7 of 13
ZackAttack
Established Contributor

Re: NFCU mortgage and the no refi rate drop


@Horseshoez wrote:

@VAMortgageGuy wrote:

@Horseshoez wrote:

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.


Did you know you can do 3% down on a conventional loan?


I think NFCU's minimum for a conventional is 5%, hence what I wrote above.  When the time comes I'm probably going to put down more like 20%.


Screenshot 2023-12-13 173808.png

@VAMortgageGuy was probably mentioning it as the base. Though they didn't went to check the website of NFCU just to confirm.

 

In general based from NerdWallet that its 3% down but dealing with a specific lenders needs could change it. In this case, NFCU needs to 5% down.

 

 

Obv the interest rate is going to change up and down but there is defenity difference on the type of interest you'd be paying on the house between conventional and homebuyers.

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Ford Credit Car Loan 2-year 6/22/2023 ($299/month)
Message 8 of 13
VAMortgageGuy
Regular Contributor

Re: NFCU mortgage and the no refi rate drop


@Horseshoez wrote:

@VAMortgageGuy wrote:

@Horseshoez wrote:

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.


Did you know you can do 3% down on a conventional loan?


I think NFCU's minimum for a conventional is 5%, hence what I wrote above.  When the time comes I'm probably going to put down more like 20%.


Oh, sorry, I guess I misunderstood your post. I thought you were suggesting coming up with 5% down was going to be difficult.

Message 9 of 13
Curious_George2
Valued Contributor

Re: NFCU mortgage and the no refi rate drop


@ZackAttack wrote:

@Horseshoez wrote:

@VAMortgageGuy wrote:

@Horseshoez wrote:

This is a timely thread; I just joined NFCU last night because my wife and I are gearing up in our home hunting efforts and plan to buy by the end of the first quarter 2024.  That said, given there is roughly a 2% difference in interest rates between the Homebuyers Choice and the Conventional Fixed Rate options, it seems worth it to try and cobble together the necessary 5% down payment to qualify for the fixed.


Did you know you can do 3% down on a conventional loan?


I think NFCU's minimum for a conventional is 5%, hence what I wrote above.  When the time comes I'm probably going to put down more like 20%.


Screenshot 2023-12-13 173808.png

@VAMortgageGuy was probably mentioning it as the base. Though they didn't went to check the website of NFCU just to confirm.

 

In general based from NerdWallet that its 3% down but dealing with a specific lenders needs could change it. In this case, NFCU needs to 5% down.

 

 

Obv the interest rate is going to change up and down but there is defenity difference on the type of interest you'd be paying on the house between conventional and homebuyers.


I'm wrestling with the decision between conventional and Homebuyer's Choice (which Navy refers to as HBC) right now and I have learned a few things germane to this thread. 

First, in practice, the difference in interest rates between these two types of loans can be smaller than the simplified adverisements suggest. Right now, Navy's Rates page shows a difference of 0.75% for 30-year, non-jumbo. But when I call them and ask what my rates would be, they look it up based on my down payment and credit score tier and the difference is just 0.125%.  

There is a strange nuance about the way they calculate these rates.  For both loan types, the advertised "as low as" rate is the so-called base. To quote a rate to a particular borrower, Navy uses tables of adjustments to the base rate, which take account of credit tier and LTV percentage. But, to my surprise, the adjustments go in opposite directions for their conventional vs. HBC loans. For conventional loans, the adjustments (always? Nearly always?) make the rate higher. But for HBC, the adjustments can move the quoted rate lower than the base rate. The result is, with a big enough down payment and a good enough credit score, one can get an HBC loan with a rate lower than the advertised "as low as" rate. I don't think that's possible with conventional. (I'm ignoring points and origination fees.) 

The other important thing to bear in mind about the No Refi Rate Drop program is that it can be ended at any time. Navy introduced the program in 2023, for the obvious purpose of motivating people to take on a mortgage despite the relatively high interest rates at the time. The fine print says "RATES AND TERMS ARE SUBJECT TO CHANGE AT ANY TIME WITHOUT NOTICE." It seems to me highly likely they will terminate this program when rates fall low enough that the mortgage market returns to something like a normal level of activity (and, therefore, profitability). None of us know when that will be, but no one should assume this program will be around long enough to let them ratchet a 2024 mortgage down to a sub-3% interest rate. 

 

Message 10 of 13
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