usaa home refinance
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Is a Refinance the Right Decision?
Once at rock bottom, interest rates have ticked up slightly. But the prospect of refinancing a mortgage is still attractive. Find out if it's a smart move for you.
Months ago, according to Freddie Mac statistics, interest rates fell to record lows. If you didn't refinance your mortgage at that time, a refinance still could be a good financial move now. Do your homework to see if a refinance makes good financial sense -- but make a decision soon.
An August 2013 Freddie Mac study reports that interest rates are projected to rise to 5% or above by August 2014.
"The window hasn't closed, but homeowners should analyze their mortgage situation to see if a refinance can improve their overall financial picture," says John Young, director of real estate product management at USAA.
Mike Fratantoni, vice president of research and economics at the Mortgage Bankers Association, agrees. "When market rates were at 3.5%, 90% to 95% of outstanding loans would have benefited from a refi," he says. Now, with mortgage rates at about 4.4%, he says that just 25% to 30% of homeowners with outstanding loans would come out ahead.
Here's a guide to the current refinancing marketplace and the factors to consider when making your decision.
Homeowners consider a refinance to:
Pay off your mortgage early. Moving from a 30-year term to a 15-year term without a big jump in monthly payments could save you thousands in interest and help you build equity in your home faster.
Create more cash flow. Lower interest rates can create lower monthly mortgage payments, freeing up money to pay down debt or just to provide more wiggle room in the budget for other things.
Access home equity. On a cash-out refinance, you borrow more money than you owe on your current loan, and use the funds for purposes such as reducing other debt, remodeling your home or just recovering from a financial setback. "As home values start to rise, there is some pent-up demand for a cash-out refinance to access the equity in the home for other purposes," says Diane Brooks, real estate product management director at USAA.
Fratantoni puts today's mortgage holders into three categories:
- Already refinanced: Those with strong credit, job security and plenty of home equity. These homeowners have refinanced in the past few years and secured a rate in the low- to mid-3.0% range.
- Already refinanced through federal programs: Those with good credit and employment but not enough equity to qualify for traditional refinancing. These borrowers only qualify to refinance through federal programs such as the Home Affordable Refinance Program, known as HARP, or the Federal Housing Administration's streamline refinance -- both advantageous to a homeowner who owes more on his mortgage than his home is worth. (Consumers must work directly with their loan servicer for the HARP; USAA works with the FHA through our Military Home Loans Joint Venture). Fratantoni notes that many homeowners who qualify for those programs have refinanced.
- Current candidates for traditional refinancing: Those who have regained their financial footing after a job loss or credit trouble, or who are no longer underwater as home values rise. Those from Category 1 who never refinanced also fall into this group.
USAA's Brooks would add a fourth category for recent purchasers who secured a low-interest-rate mortgage. A refinance for these mortgage holders, she explains, does not make sense.
If you're in the market to refinance, consider these factors:
The numbers. Do your financial homework, says Brooks. "It's not just about payment savings. That's not the whole story," she says. How quickly will you recoup closing costs -- typically between 2% and 5% of your loan? How long do you plan to stay in the home? How long are you extending the term?
Your emotions. Doing the numbers may not reflect how badly you want more cash flow in your budget or how passionate you are about that kitchen remodel. So even if the numbers aren't optimal, there still could be enough of a financial and emotional boost to justify a mortgage refinance. Just remember, you are leveraging your home, Brooks says.
Need for flexibility. A 30-year loan, while having a slightly higher interest rate, can provide a lower monthly payment that's more manageable in lean financial times. Young explains, "On a 30-year loan, you can make a larger monthly payment to pay the loan off in 15 years. If you run into cash flow problems, you can always make the minimum payment. Refinancing for a 15-year loan, while getting you a better interest rate, will also get you a higher minimum payment that must be paid on time."
Financial readiness. Ask yourself these questions:
How's my credit score? A stellar credit score can help you get a good interest rate.
- How will I pay closing costs? Plenty of people roll them into the refinanced loan amount. But, Young asks, "Do you want to pay interest on the closing costs?" Saving enough to pay for the closing in cash can make the refi an even better deal.
- Where does my mortgage fit into my family's financial picture? Consider your overall budget, investments, college savings plan and other financial goals.
Discipline with savings. If your refinance lowers your monthly payment, what will you do with the extra cash? Many people don't have a good strategy for this additional monthly savings. Ideally, the payment savings should be applied to other debt or to boost your savings account, Brooks says.
usaa home refinance
USAA began in 1922, when a group of 25 army officers decided to insure each other’s cars when no one else was willing to do so. The United Services Automobile Association is a San Antonio-based financial services company that focuses its efforts on serving current military personnel, veterans and their families.
The Fortune 500 Company, mainly known for its insurance and banking products, is not specifically endorsed by the U.S. government or military. But they have proven themselves as an organization geared towards helping finance the dreams of those in the military and their families.
Over 29,000 employees strong, USAA has a solid reputation for treating employees well and was even voted a ‘Top Workplace’ by the Tampa Bay Times and the Denver Post. 1 If you are a former member of the military, or a family member, you will fit right in working at USAA.
The “Noble Career” as they call it, is stocked with military personnel-the company has a target of hiring 30% of its workforce as veterans and their spouses. 2
This puts many military customers at ease knowing their financial affairs are being watched over by employees that understand the unique needs of military families, not a faceless ‘suit9rsquo; in New York City. Speaking of dress codes, USAA maintains a flexible business casual or casual dress environment which is an attractive benefit and a growing trend in the financial industry.
Another nice thing about working at USAA is the ability to rotate across their different lines of business-in fact, it’s encouraged. This way, the financial professional gets a taste of different departments and the way they run. An understanding of how all the separate divisions function together is very important, especially when assessing managerial talent.
Working at USAA receives a good rating on review site Glassdoor, with 3.6 out of 5 stars and an 84% approval rating for the CEO. 3 There is no better way to assess the workplace atmosphere than from anonymous current and former employees of the company. A frequent criticism we came across was complaints about too much bureaucracy (I guess this is to be expected given the military ties).
Like in the military, there is the opportunity to work your way up through the organization.
A great example is Kent Fortune who began his career at the company’s Colorado Springs call center, speaking with customers about their auto insurance. He worked his way up to the general manager position at USAA’s Colorado Springs campus in 2011. 4 This shows that even lower, entry-level positions have the ability to advance into management.
But USAA won’t just throw you into the mix right away. If you land a managerial role at the company, you will attend and complete their ‘Management Development School’ program located in San Antonio campus. One drawback with this position is that if you are relocated, they will not provide relocation assistance. But that is one of the few areas of this company that doesn’t provide strong benefits.
There is great room for advancement at USAA, but you won’t be going to USAA looking for the highest compensation levels unless you get to a Director position, where employees report the average salary as being $113,863. 5 You can be sure many of these professionals have an advanced degree such as an MBA or many years of experience at the company.
USAA typically recruits talent for their two main areas, banking and insurance . They appear to be hiring for positions nationwide, with openings in Tampa, Colorado Springs, San Antonio, Phoenix and Chesapeake. There is no coincidence that these locations mirror military facilities. Tampa is home to MacDill Air Force base and CENTCOM, Colorado Springs has Peterson and Cheyenne, San Antonio has Lackland Air Force Base and there are numerous bases in the Chesapeake/Hampton Roads areas of Virginia. Some of the specific positions we saw openings for were:
Like many of the positions at USAA, strong leadership qualities are highly valued and this is spelled out specifically in the job requirements as you may be asked to take on the leadership of ‘select projects’, similar to project manager role. These professionals oversee a group of professionals operating at one of their 4 main banking call center locations. The position also requires three years of leadership experience. 6
USAA is a major, property and casualty insurer and must periodically investigate, negotiate and settle customer claims. The claims adjuster is a stepping stone to higher jobs in USAA’s insurance department, ending at property examiner after roughly six years in the department. 7 The insurance industry is unfortunately, the target of fraudulent claim activity. Not as scrutinizing as a fraud investigator, a claims adjuster is the first line of defense for an insurance company against any type of fraudulent claims. The average of 27 reviewers pegged the average salary for a claims adjuster at USAA at $44,548. 8
You can expect to see this position nationwide at USAA, given the rebound in the economy and especially the housing market since the Great Recession. Given the fact that military families often move around several times, this is a position that shouldn’t be going away anytime soon.
Mortgage loan officers at USAA must be acutely aware of the military benefits available for borrowing for home ownership-most notably the loan products available through the VA (Veterans Affairs).
This position would not necessarily require a Masters level degree but does require a bachelor’s degree, military or sales experience. More specifically, this would require knowledge of real estate lending and experience with loan processing.
At USAA, financial advisors are there to assist in the wealth building process for its customers. According to 47 salary reviews on Glassdoor, the average compensation for these professionals is $53,137, but pushes to over $60,000 in total compensation. 9
Similar to a career in the military itself, it’s more about the benefits and coverage than salary. Employee benefits really stand out to USAA employees who rated that category with 4.4 out of 5 stars. 10 These include a generous health and wellness plan, comprehensive medical, dental and vision plans, along with wellness and wealth building programs. 11 These ‘wealth building’ programs include a 401(k) match up to 8% of the employee’s salary. 12 There are also abundant continuing education programs, demonstrating that USAA believes in investing in its employees.
There are also a wide range of scholarships and grants awarded to the military when it comes to education, most notably the ‘Post 9/11 GI Bill’. Many people don’t realize that the benefits of the GI bill apply to post-graduate studies as well as undergraduate degrees. 13 Highlights of the bill are the payment of 100% of state school tuition (or up to $21,970.46 for a private university, per academic year), a housing allowance, and an annual book stipend of up to $1000. 14 Here are some frequently asked questions to see what programs apply to your specific circumstances. One of the most often-cited drawbacks to a obtaining a Master’s degree is the cost, so this benefit is a major plus!
Online Masters in Finance Degree
If you are pursuing a career in finance or are changing careers, earning an online Master’s in Finance degree goes a long way towards obtaining a financial position. Similar to the way military members begin with a leg up if they enter with a 4-year degree (often considered the officer training route) an advanced degree should give employees at USAA a leg up and the ability to move up through the organization quicker.
A Masters in Finance degree is a great program to separate yourself from other candidates. These programs teach the basic financial skills necessary for today’s careers in finance. And it’s increasingly becoming a prerequisite for candidates without a financial background. To reach the higher ranked positions at USAA such as Director, a Master’s degree in Finance or similar advanced degree such as an online MBA in Finance will go a long way.
If you are a military veteran or in a military family and are looking to pursue a career in finance, USAA is a great place to start, in our opinion.
Considering that USAA already targets 30% hiring for military and their families, you have an immediate advantage in getting a foot in the door. And an advanced degree sets you on a trajectory towards a long, fulfilling and well-compensated career in finance.