USAA Lender Review | 2024
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The bottom line
When it comes to customer service and knowledge of VA loans, veterans and the military USAA scores an A+. Veterans looking for a new home or to refinance should check out this lender. But do shop around as USAA may not always offer the best mortgage loan rates.
USAA’s benefits outweigh the lender’s drawbacks. Read our review to learn more about what it’s like to work with them.Check today's VA rates by completing this quick online form (Dec 4th, 2023)
Pros & cons of USAA
Twenty-five U.S. Army officers met in 1922 to discuss auto insurance because they hadn’t been able to secure any. Insurance companies viewed military officers as a high-risk population. Those 25 made a pact to insure each other, and that was the beginning of United Services Automobile Association (USAA), which now insures millions.
USAA has all kinds of products for the military besides auto insurance, which includes renters and homeowners insurance. USAA also has banking products and lend for mortgages.
Pros of USAA
- Impeccable customer service*
- Offers low- and no-down-payment mortgage loans
- In-depth knowledge of military, veterans and VA mortgages
- Private mortgage insurance (PMI) not required
- Free membership so you can use USAA’s other products
- Offers a first-time homebuyer program
- Services all loans USAA originates
*J.D. Power recently released their 2020 U.S. Primary Mortgage ServicerSatisfaction Study and USAA came in first with 895 points out of a possible 1,000. J.D. Power surveyed 7,300 customers who bought or refinanced a home more than 12 months prior to March 2020. Although the survey asked questions about escrow, billing, and payments, the number one place mortgage servicers fell down was with communication. Lenders either communicate too little or too much and use the wrong method but USAA shined in this area.
Cons of USAA
- Only five physical locations in four states
- No FHA or USDA loans
- No home equity loans or home equity lines of credit (HELOCs)
- Higher interest rates than most lenders
- Loan applications must be filled out over the phone
How to get a mortgage with USAA
First, you need to be eligible to join USAA, which means you’re active military or a veteran of the U.S. Air Force, Army, Coast Guard, Marines, Navy, or National Guard or Reserves; or you’re a spouse of a veteran. After you join USAA, then you can set your home buying in motion.
USAA offers the following types of mortgages:
- VA mortgage. You could pay zero down for a home without private mortgage insurance (PMI).
- Fixed-rate mortgage. Firm interest rate for the duration of the loan, which is usually 15 or 30 years.
- Adjustable-rate mortgage (ARM). Interest rate set for the first few years and then it can change according to the market.
- Conventional 97 or first-time homebuyer loan. You may be able to borrow 97 percent of your home price and pay as little as a 3 percent down payment.
- Jumbo mortgage. For borrowing a larger amount than the limits on the other types of mortgages.
Get prequalified, which you can do on the USAA website, to see what you can reasonably afford. This will give you some bargaining power when you find your ideal home.
Compare rates with other lenders and if you choose USAA, fill out your mortgage application by making a phone call to 800-531-0341. Gather the documents you’ll need to submit with your application like proof of income (pay stubs), bank statements, and anything else you think might be requested.Get started by completing this quick online form (Dec 4th, 2023)
Buying a home with USAA
Decide which features your new home must absolutely have, but keep that to a low number, then find a trustworthy and reputable real estate agent. Ask friends, family, or business colleagues for recommendations.
With your pre-approval in hand, you’re ready to go house hunting. Do some advanced footwork by visiting open houses and real estate search sites to eliminate some of the obvious “no’s”. That saves you time before you venture out with your real estate agent.
When you’ve found that just-right home, make an offer to the seller with the guidance of your agent. After your offer is accepted, the waiting begins. While you’re on pins and needles, hoping to hear you’ve been approved, is a good time to schedule an inspection of your new home. Ask your real estate agent to recommend a home inspector. You’ll usually pay for the cost, but any necessary repairs can be negotiated with the seller.
Before closing, take a tour of the new home to see that those needed repairs have been made and nothing unexpected has happened. Then you’ll sign the closing papers, probably wire some money for closing costs, and you’ll get the keys to your new home.
Refinancing a home with USAA
If you’d like to lower your monthly mortgage payments or shorten the time you have left to pay on your home, USAA’s Streamline Interest Rate Reduction Refinance Loan (IRRRL) should do the trick. It’s considered one of the best products on the market today because USAA doesn’t charge an origination fee, and they pay your appraisal, title, and VA funding fees. In 2019 borrowers avoided an average of $2,800 in closing costs with this type of refinance from USAA.
However, remember that we said USAA has higher rates than average? This is probably why. Lenders typically raise their rates slightly to pay for fees and closing costs. This can be a good deal for most, though, as refinancing homeowners rarely want to come up with cash to refinance or roll costs into their loan via a higher balance.
With an IRRRL, you can refinance your entire existing loan balance, no matter what your home is worth now. Plus, there’s very little documentation involved. You don’t need an appraisal, proof of income, or employment verification. That speeds up the process and makes it less costly.
If the mortgage loan on the home you’re refinancing was from a lender other than USAA, you may still have to get an appraisal.
Besides VA mortgage loans and refinancing, USAA provides a host of other advantages to its members.Check today’s VA refinance rates (Dec 4th, 2023)
Special benefits for veterans
USAA members have an amazing number of benefits. With their life insurance, war zones aren’t excluded, and it’s also guaranteed after you complete your military service.
Members are entitled to discounts on auto insurance, renters insurance when living on a base, moving and storage, travel insurance, home security, and more.
USAA offers a free job search tool, and free tax filing for ranks E-1 to E-5.
Banking customers don’t pay ATM fees and have 24/7 fraud support. Checking accounts are free with no minimum balance and no service fees.
USAA members share in the ownership of the company and may receive a distribution share at the end of the year. That is, if the insurance premiums collected surpass the claims paid.
This lender also contributes to the local and national community.
USAA gives back to the community
During these crazy times, USAA jumped in wherever it could help. Because of nationwide protests, CEO Wayne Peacock, in a statement on USAA.com, said he and his company stand in support of the Black community. He said the company is doing its best to create a diverse and inclusive work environment.
USAA, following suit with other auto insurers, is giving back $800 million to drivers on their auto policies because of COVID-19. That calculates to 20 percent credit for each of three months during the pandemic and affects more than 7 million of their members.
This organization has also made special payment arrangements with members who need financial help on their property and casualty insurance, credit card accounts, consumer loans, and special mortgages.
On a national basis, when we aren’t in a pandemic, USAA gives financial support to nonprofits that operate within their focus areas. Those include military caregivers, families of the fallen and wounded military, and other programs that help military personnel withstand the challenges they face.
Locally, in the five brick and mortar branches’ communities, USAA assists hungry and homeless families, supports STEM (science, technology, engineering, and mathematics) programs, and assists with natural disaster response.
USAA also gives grants to nonprofits that assist the military.
Military personnel and their spouses are encouraged to apply for jobs here. USAA strives to have at least 30 percent of its workforce from the military community. According to Militaryhire.com, USAA scored in the top 22 of companies that promote an environment for veterans to use their existing skills and to have opportunities to train on the job.
Although employee volunteer work has been suspended during the pandemic, employees typically receive two days of paid time to volunteer for the organization of their choice. USAA also matches 1:1 when employees donate to a charitable organization up to $500 per employee annually.
As you’re shopping for a mortgage lender, be sure to consider USAA. Though their mortgage rates may sometimes run a bit higher than other lenders, they offer excellent customer service and knowledge of VA loans.Ready for a VA mortgage? Talk to a lender today (Dec 4th, 2023)