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Space agency credit union offers down-to-earth, federally-insured, low- and no-down home loans targeting a limited audience, for a limited time

by Broderick Perkins

(8/1/2012) - If these special credit union mortgages don't prompt Washington, D.C. area mortgage borrowers to consider dumping their bank, Houston, we have a problem.

The special home loans come from the NASA (National Aeronautics and Space Administration) Federal Credit Union (NASA FCU). They are:

• Zero down on a fully financed mortgage of up to $650,000 for your primary residence.

• Five percent down on a primary residence mortgage from $650,001 up to $850,000.

• Up to 95 percent cash-out refinancing for a mortgage of up to $650,000 on a primary residence.

• Up to 90 percent cash-out on a refinanced mortgage from $650,001 up to $850,000.

But here's the best part: There's no mortgage insurance for any of the loans and interest rates start at the low 4 percent level.

There are a few catches.

• Right now the credit union mortgages are only available in the Washington, D.C. and surrounding Virginia and Maryland areas.

• Except for a 15-year fixed rate mortgage (FRM), the loans are hybrid adjustable rate mortgages (ARMS), 3-, 5-, 7-, and 10-year ARMs, but rates start in the low 4 percent rate.

"We currently aren't offering a 30-year fixed because we do have some exposure. There are some trade offs, we have to protect our financial stability, but these loans are not limited to the conforming level and that's a big deal for those trying to find this kind of financing," said Bill White vice president of residential lending at NASA FCU.

The special, limited-time mortgages are available from the NASA FCU, but before your eyes go rolling up into orbit, you don't have to be an astronaut to take advantage of them.

Kiplinger recently named NASA FCU one of the "7 Great Credit Unions Anyone Can Join" for good reason.

Founded in 1949 by seven NASA employees to serve NASA employees, the credit union has since expanded to serve members of a host of space science- and technology-related associations as well about three dozen credit union affiliates.

If you don't know astronomy from aeronautics and can't find an in through one of the 36 credit union affiliates, no worries.

NASA FCU's group of affiliate associations includes the American Consumer Council, a non-profit group bent on consumer education, advocacy and financial literacy. Council membership is free and once you join, not only can you learn how to maintain the level of financial prowess that can help you keep your home, you can join NASA FCU and take advantage of the mortgage deals.

There are also no fees to join NASA FCU, but you do have to open a savings account with an initial deposit of at least $5 to get a membership.

By the way, as a federally insured credit union, up to $250,000 of your savings is federally insured and once your are in, NASA offers online banking, access to more than 6,700 credit union service centers and more than 28,000 surcharge-free automatic teller machines (ATMs), nationwide.

So how do they make such great loans?

Pretty much like any other credit union.

Credit unions don't bank like banks bank.

They are non-profits and non-profit fundamentals apply.

Credit unions take in deposits. They make loans. They charge more on those loans than they pay on deposits. The recycle their earnings to make more loans. Everybody wins.

Credit unions survived the housing crisis largely unscathed. Without the profit motive they weren't lured by the get-rich-quick subprime mortgage racket and generally didn't play the mortgage securities game. They hold onto their own loans.

As a result, credit unions didn't need a bail out during the Great Depression, they didn't need federal intervention during the Savings & Loan debacle and they don¹t need government assistance now. And their rates are often lower or comparable with banks.

Don't expect to be coddled when you apply for a mortgage. Just as credit unions largely didn't offer toxic mortgages, they also steered clear of those NINJA (no income, no job or assets) loans.

"There are a lot of variables. Just like any other loan product, there are grids and you have to make sure everything fits. It's hard to dictate a rate until we truly have the financial picture of the client," said White.

You'll have to qualify based on their underwriting standards, you'll have to have the best credit to get the best rate, you'll have to prove your employment, and you'll have to have adequate income-to-debt ratios, but if you past muster, you can land one of the best no-mortgage insurance, low and no-down payment mortgages available.

NASA FCU says the "limited-time" period is TBA (to be announced). While there is no current cutoff date, it could occur at any time NASA FCU deems pertinent.

"We've had this loan out there for about a year and a half and we are not near our maximum so we have haven't set a deadline because we don't know how much is going to come in that we approve," White said.

Have a quickly verifiable mortgage deal like NASA FCU's special mortgages? Contact, Broderick Perkins.

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