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Navy Federal Credit Union is a reputable financial institution. They offer banking services for military and family members of those who either are actively serving or have served our Country. You can join Navy Federal even if you or your spouse are not military, so when my husband and I found out that they offered a no money down mortgage with no PMI, we were all about it!
That was until about a month ago.
Our situation is unique. Because I’m a former Realtor and banker, serving in the financial services industry for over 15 years, and my husband has also been employed in the same industry for the past 17 years, we know our way around mortgages and loans in general. I want to share a little backstory, and then I’ll share why we dumped Navy Federal Credit Union and how our new mortgage lender gave us $70,000 higher loan approval (with no changes in income).
We worked our butts off in 2020 to pay off an astronomical amount of debt. We sold our home in Illinois, moved down to Florida because, let’s face it…politically and socially, Illinois is an absolute mess. There was nothing there for us.
So we buckled down, got our sh*t together, and started working hard towards paying off our debt. We listed our house for sale March 6, 2020. Remember that month? That was a fun month ~ said no one ever.
We worked our tails off to save money. We sold our boat. We skipped our annual summer vacation because (you guessed it)…we live in Florida now!
We also refinanced the remaining credit card debt into an unsecured loan with LightStream, a division of SunTrust. Best decision ever! I know Dave Ramsey isn’t a fan of debt consolidation, but it seriously made our lives so much easier, and for the first time EVER, we have not used the credit cards again!
I disagree with Dave on some of his advice, because I don’t believe that it’s all good advice, but if you love him, and working the baby steps is working for you then, by all means, keep going!
Because I’m self employed and have a lot of write offs, we thought it would be smarter to keep me off the mortgage (even though I have an 800 credit score) because my husband has an equally stellar score with 100% on time payment history.
His debt to income ratio is currently at 8% (incredibly low) after paying off all of the debt except his pickup payment.
So we thought when we applied for the loan with Navy Federal Credit Union, we’d be set for a decent preapproval. Keep in mind, I know my numbers (and so does my hubby).
Navy Fed manually underwrites all of its mortgages, and we have compensating factors that should put us in a great position to buy.
There was just one problem.
When we first were preapproved with Navy Federal Credit Union, we were approved for $315,000 for the no money down, no PMI mortgage, also called Homebuyers’ Choice.
This was definitely a good number to work with in our market here in NW Florida as property values are sky-rocketing.
The interest rate for the home mortgage was 3.875% for a 30 year fixed term. Not too bad, but not the best. However, we were happy we only had to come out of pocket with closing costs.
Here’s where our story gets complicated.
My husband was commuting to a job, and after Hurricane Sally destroyed Pensacola Bay Bridge, his commute went from 35 minutes one way to 1.5 hours one way. After multiple head on collisions on the only other bridge to our little island, we decided enough was enough.
My husband was offered a position at his former employer earning less base pay but with a guaranteed bonus structure and the potential to earn more than he was in his current role. So he accepted.
Changing Jobs in the Middle of Buying a House
When you change jobs in the middle of buying a house, you run the risk of it messing up your loan. We knew that, and for us, the reward was greater than the risk. We were going to find a way to buy a home AND improve his quality of life.
If you switch jobs but remain in the same field, most of the time, you can use your bonus income and commissions as income to help qualify for more.
Navy Fed said no to using the bonus income (even though there is a guarantee in writing from his employer).
Earlier I mentioned rate increases. Because we couldn’t use the bonus income and my husband took a slight pay cut, it decreased our preapproval amount from $315,000 down to $280,000.
We weren’t thrilled, because we knew it would be difficult to buy a home in our area to comfortably fit our family of five with two parents working from home, but when we learned about the rate increase, we were shocked.
The rate went from 3.875% up to 4.25%, and they lowered our preapproval amount down to $270,000. By now, we were panicking.
Again, we know our numbers. Something wasn’t right about his debt to income ratio with regards to this preapproval amount. So I asked the loan officer how much Navy Fed was calculating for taxes and insurance, and it was HIGH (much higher than what we were looking at).
When you’re calculating home affordability, you can’t go off of averages based on a zip code (which is what Navy Federal does). You must look at each home’s property taxes within your market, whether they have homestead exemption, and how much they will increase based on a higher sales price than its current assessment.
Before I talk about how to figure out potential assessed values, I want to share the final straw. Because my husband was going back to his former employer after one year with a different employer, he was able to get his tenure back.
He worked for this insurance company for 4 years before we moved to Florida, and because there was just a year difference, his company put his hire date as 10/2016 instead of 3/2021.
Navy Fed’s big hangup on using his bonus income was that he didn’t have 2 years of history with his former employer, so we decided to ask if they could use the bonus income. I wasn’t going down without a fight!!
So we had underwriting look at it in depth, and our loan officer came back a few days later and said that after underwriting looked at our loan, not only could they not include his bonus income, but our preapproval had been lowered to $250,000, and they had raised interest rates AGAIN…now at 4.5%.
I was livid. Obviously feeling completely defeated, I started researching other lenders.
Quicken Loans Rocket Mortgage For the Win
I looked at local lenders, but I remembered one of the easiest transactions I’d ever had as a Realtor® was when one of my buyers used Quicken Loans to buy a home.
It was a seamless transaction with excellent communication, and even though Realtors® always suggest using a local lender, Quicken was at the top of my list of lenders to check out.
I started a chat with Quicken and was called by a banker, Daniel, who was confident that he could help us. I explained our situation, and he said that using the bonus income would be no problem at all as long as we could document it.
Getting a Quicken Loans Preapproval
It took about one hour total, and we were able to receive a preapproval for an FHA loan, requiring 3.5% down, at an interest rate of 2.875%. The preapproval amount? $320,000! A conventional loan would have required at least 5% down and the interest rate was 3.5%.
There were questions, such as “Did we have a mortgage in forbearance during Covid?”.
When we listed our home for sale on March 6, 2020, in Illinois, we had no idea that the idiot governor was going to shut the entire state down for months.
People just weren’t comfortable buying a home from a virtual walk through. So our home sat on the market for several months, and instead of paying for 3 homes (my husband’s short-term rental, our home in Illinois, and rental in Florida), we put it in forbearance.
Money was tight, and this was before we had paid off our debt.
Can I Sell My House While in Forbearance?
Daniel asked us if we sold our home while it was in forbearance, and the answer was YES. We never missed a payment. At the closing, we had to pay the accrued interest from those months of skipped payments, so we netted less than we would have liked, but we were never late on a payment.
Under the CARES Act, there should be no negative impact to one’s credit report as a result of forbearance. I asked Daniel if this was going to mess up our loan, and he assured me that it would not, but it would require more paperwork.
I simply had to upload the documents from my previous lender stating that it was Covid forbearance and not due to any other financial hardship.
Buying a Home with Quicken Loans aka Rocket Mortgage
You might be wondering what the process is like with Quicken Loans? I’ll share my timeline for buying a home with Quicken Loans.
- April 6 – Wrote an offer on a property.
- April 7 – Executed Contract (Offer Accepted).
- April 10 – Decided to Back out of Contract on That Property (It just wasn’t right for us)
- April 11 – Communicated with Realtor about an Upcoming Listing that was PERFECT for us!
- April 12 – Listing went LIVE and we were the first to see it! Made an Offer. Spoke with Lender to Update PreApproval Amount.
- April 13 – Executed Contract with a Counter Offer from Seller. Called Insurance Companies to Start Quotes
- April 14 – Termite Inspection
- April 15 – Whole Home, Wind Mitigation, 4 Point Inspection – Emailed Reports to Insurance Agents
- April 17 – Conditional Approval from Quicken Loans! (needed to upload some documents)
- April 23 – FHA appraisal is Scheduled for this Date!
- April 25 – Septic inspection
- May 26 – Anticipated Closing Date (sooner if possible)
Working with Quicken Loans has been a breeze, and I am so thankful that we gave them a chance! Since we were quoted the 4.5% interest rate from Navy Federal Credit Union, we haven’t heard a single word from our loan officer. She has no idea that we are working with another company. She just stopped communicating altogether.
So if you’re looking at buying a home, but you’re feeling discouraged by all of the different options, check with multiple lenders and don’t give up hope. It’s still a great time to buy a home! Rates are still low depending on who you choose, and I highly recommend Rocket Mortgage with Quicken Loans.
Side Note: This article is not sponsored in any way, shape, or form, although I would LOVE to work with Quicken on future projects.
I’ve done all the things! Girl, I’ve washed my face. I’ve trashed everything that doesn’t spark joy. I’ve walked the baby steps. I’ve cried. I’ve prayed, but my perfectionism has really held me back.
Perfection Hangover can be crippling. Stop comparing yourself to others and start living your best life! That’s why PH exists! I want to encourage you to take control of your money, your blog, and your business.