Navy Federal Rate Match Re-Match

brk1971 · ‎02-09-2021

I am again recommendeding Navy Federal Credit Union's match program to anyone who is (or can be) a member. I don't know how common it is for them to do a second match during processing, so I wanted to provide a bit of an overview of how the path has gone for me.

Back in November when I signed the contract for a new construction home, I app'd with the builder's lender and several others (NFCU and PenFed among them).
- NFCU's original rate offer at the time was 3.375% - not competitive. PenFed's was 2.625% with a lender credit of $1k.
- NFCU at that time matched PenFed's rate / lender credit, and had no PMI, so I moved forward with them.
- I added an extended (120-day) rate lock that was to carry my 2.625% rate through the original estimated close date plus a 14 day buffer - a period I incorrectly thought was sufficient.
- The cost of that extended lock was paid with a portion of the lender credit (negative points) I was getting at that rate, so it was no out of pocket along with me being concerned about rates rising.
Fast forward to last week... After a couple of iterations, the close date has now settled out at 17 days past the original close date (due to lumber and labor issues earlier in the process).
- I checked with NFCU about extending the rate lock another week to cover the new close date. They denied this request, telling me that rates will shift to market rate after the lock expires per the terms of the rate lock.
Recalling that NFCU's original offer (a.k.a. "market rate") was not competitive, and that rates are now higher than they were in November, I made the decision to shift my business to another lender. I applied to PenFed again, including telling the loan officer why I was shifting my business from NFCU.
- PenFed's rate this time around was even better than last time (2.375%, though no lender credit). This news left me thrilled, because their new, lower rate (even with PMI) is almost exactly comparable with NFCU's no-PMI rate that was locked and was set to expire before the new close date. So I'm off to the races, full steam ahead to get everything PenFed needs - uploading this and that, signing the intent-to-proceed, etc.
Next, I notify NFCU that I'm switching, and they ask me - "Do you want us to try to match the new PenFed offer?" Of course my answer was yes, but truly... If they just extended the existing [expiring] rate, I'd be happy, because it was relatively the same periodic and 5 years cost for both loans.
- End result = NFCU re-matched PenFed's new offer, this time with a new 60-day lock, no PMI (as it's NFCU), and credit underwriting was already complete. As an added bonus, the previous extended rate lock fee was washed away and not payable, as they treated this as a new match.

(I certainly didn't mean to "use" PenFed, but that's what ended up happening. If you can't join NFCU, I strongly recommend them as well - the entire mortgage team I dealt with was great.)

Other DPs:

Loan: Conventional 30
Purchase price: $298k
DP: 5%
MMS is currently 758, but NFCU hasn't updated my credit report since their original pull, where they showed it as 739, so their match is based on that.
DTI is about 15.1/28.5
NFCU is my primary bank (3 cards, auto loan, Navcheck account). (In case some of their decision is relationship based.)

MauiMan85297 · ‎02-09-2021

Yes you did "use" them and never gave them the opportunity to match anything that was given to you from NFCU. If NFCU was so great then why did you have to jump through extra hoops with a 2nd lock ext that they said couldn't be done. PenFed sounded like they were on the up & up the whole time. Just my 3 cents worth...

brk1971 · ‎02-09-2021

Your erroneous assumptions aside, I did speak with PenFed about Navy's offer. They couldn't match a no PMI loan with the same rate, which made it not as good a choice. And the MLO from PenFed specifically told me that while she'd love to have my business, it didn't make financial sense to switch now that NFCU moved.

That step, like the step where I called the builder to change the lender to PenFed, then called again to get them not to change it after all, were pretty irrelevant to the point of the post (which is actually defined in the thread title).

My post wasn't a "NFCU rocks" post, it was an advisory that their match program isn't a one time thing and some data points to be helpful for others in a similar situation. Again, see the thread title.

I won't defend NFCU for not just extending the previous lock (which would have prevented the entire exercise), but I don't fault them either, because they were following precisely what the extended lock agreement said.

Also FTR, there's absolutely nothing wrong with rate shopping, nor negotiating with a lender on rates and costs, including back and forth. In fact, it's a recommended practice. But that fact is, in this case, irrelevant, because that's not what I was doing.

I legit thought I was switching to PenFed (who I deem to be very equivalent to NFCU), until NFCU offered the option to match again (something I would not have known was a thing had it not happened the way it did).

Merc1776 · ‎02-10-2021

Your details and dp were very helpful. You did the right thing in shopping for rates and terms. Who wants to pay $1000s over the whole course of a 30 yr loan in extra fees and interest.

Merc1776 · ‎02-12-2021

Is there any notable updates of the details of the whole process so far?

brk1971 · ‎02-12-2021

@Merc1776 wrote:
Is there any notable updates of the details of the whole process so far?

Closing date is set for 3/24, and credit was already approved. Just finished updating docs that expired (e.g. check stubs and account statements), and we're ordering the appraisal early next week and a blue tape walk in the second week of March. Seems like the rest should be smooth sailing.

And I am assuming the appraisal will come in fine, as:

Prices in that development have jumped 20% in the past 5 months due to lumber and other costs
My price is in line with pre-inflated pricing (which at the time of my contract was backed by plenty nearby comps)
Recently sold existing and spec homes sold within 1 miles actually suggest the appraisal will be 3-5% higher than my purchase price

Fingers crossed that there's nothing out of left field, I've tried to do my best to anticipate and prepare for common and rare eventualities!

Merc1776 · ‎02-12-2021

Congratsss. Nice things are coming together for you. Did they try any origination fees or try to have you buying points? I was alway very curious to see what NFCU the detailed fee struture was once the mortgage was inked. Did you notice any mortgage rate verse mortgage "Apr %" difference? The banking industry is known to have 2 metrics where the "APR %" is including all the fees bundled into the percent vs mere mortgage rate. Obviously the APR% metric is the higher of the two.

brk1971 · ‎02-12-2021

Comparing the two:

NFCU: Rate = 2.375% / APR = 2.407%

PenFed: Rate = 2.375% / APR = 2.665%

Both have 0.125 points, which is about $350 added, neither have a OF or funding fees. (The PenFed loan has PMI, which largely accounts for the difference.)

I went from having a surplus lender credit of $350ish to paying an extra $350ish, for a delta of $700 on the loan. Corresponding payment went down about $40 a month, so a no-brainer there.

Merc1776 · ‎02-12-2021

Glad the fees were straight forward and nothing hidden. Yeah that is quite a great rate and APR%. The 0.125 point is decent as well. Thanks for the dp update as well.

Anonymous · ‎02-12-2021

That is a really good rate especially considering the 5% down payment, and the fact that it is a purchase (I got 2.375 with a refinance at a different bank, and 20% down) . I wouldn't have qualified for nfcu, I think you have to be or have a household member in the forces or national guard.