The Credit Union Mortgage Difference

The Credit Union Difference When It Comes to Mortgages

Perhaps you have been a loyal bank customer all your life, partnering with one branch to open new accounts and tend to other financial services. Now, as you’re taking the next steps to invest in your first home, you’re reaching out to the same bank to learn about their mortgage and financing options. 

While there is something to be said for customer loyalty, credit union home loans have more to offer you than a standard bank does. Particularly, credit unions may be better in terms of fees and interest rates, flexibility for those with poor credit or unique financial situations, and personalized service both before and after you close on the purchase of your home.

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Lower Fees and Interest Rates

Credit unions are structured much differently than banks. A bank is a corporation looking to make a profit off of a financial product such as a mortgage. To make a profit, banks charge higher fees from borrowers such as yourself. On the other hand, a credit union is a cooperative that operates on a not-for-profit basis. While a bank may charge exorbitant fees to make a profit, credit unions can afford to offer home loans to customers at or near cost, because their intentions differ. 

In addition, credit unions have a reputation for offering more competitive interest rates on mortgages than banks do. While there is no guarantee, in most cases you are likely to get a better interest rate from a credit union than a bank. Even when that is not the case, the lower fees and better service offered by a credit union may make up for higher interest rates in the long run.

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Flexibility

As a self-employed business owner or independent contractor, your income may fluctuate on a month to month basis, making it difficult to verify your income. Because of that, your debt-to-income ratio may be higher, or your credit rating lower, than you would typically prefer. 

While these issues may disqualify you from obtaining a mortgage from a traditional bank, credit unions can typically afford to be more flexible in lending to homeowners in unique financial situations. A credit union may even be more likely to say yes when a bank says no.

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Personalized Service

A credit union is more likely to slow down and hold your hand while working with you through the sometimes confusing mortgage process. Many homeowners appreciate this level of personalized service, especially if they are first-time homebuyers. 

It may be possible to achieve personalized service from a bank during the mortgage borrowing process as well. However, the big difference between the service that you receive from a credit union versus a bank is that the relationship you build with a credit union can continue after the purchase of your home as well. 

It is very common for the bank that originated your mortgage to sell it to a third party. After holding on to your mortgage for less than a year, your bank may sell it, and it could jump from bank to bank several times over the life of your loan. Credit unions are more likely to hold onto mortgages that they originate, so if an issue does arise with your loan, you can take it up with someone local that you know and trust rather than a faceless stranger at an out-of-state institution.

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Membership Benefits 

Borrowing from credit unions is restricted to members, and though some are more selective on who they bring in, most have broad membership requirements. Joining a credit union is a beneficial move as it offers you perks apart from the financial services you receive such as discounts with local businesses.

You deserve loyalty from your financial institution, especially when making a significant financial commitment such as taking out a home loan. Among other advantages, credit unions are loyal to their customers in a way that banks cannot afford to be – because you’re a member-owner of your credit union. To learn more about credit union memberships and the benefits they bring, contact us today!

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