How do credit unions stack up against larger lenders for home loans?
You’ve finally decided to put down some roots and purchase a home. It may be a big house with a white picket fence, a fixer-upper in the suburbs, or a condo in the city. Regardless, this purchase is one of the most significant financial decisions you’ll make in your lifetime.
To finance your dream home, you’ll likely need to take out a mortgage, as most home buyers do. There’s tons of competition among mortgage lenders, but at an even higher level, you’ll need to decide between applying through a bank or a credit union.
Credit unions have been expanding their presence in the mortgage business and are not only highly competitive in their offerings, but provide benefits that commercial banks simply can’t match. Here are three reasons you might consider joining the growing number of homeowners that value the advantages of a credit union:
They’re not for profit
Banks are responsible to investors who expect a return on their investment. Credit unions, on the other hand, pass any profits back to their members in the form of savings. That translates to lower interest rates and a lower total cost. Whether you’re borrowing a hundred or five hundred thousand dollars, even a quarter point will make a significant difference in the interest you pay over the life of the loan.
Also, unlike a bank, a credit union doesn’t charge their members the Intangible Tax on a mortgage loan, which positively impacts the total cost. This tax of $3 per thousand dollars borrowed amounts to $900 in savings on a $300k loan. The credit union’s mission is to serve the members of their community, not earn a profit from them.
They’re more accommodating and offer greater flexibility
Credit unions value their relationship with their members. You won’t simply be an account number. A credit union will work with its members to find a suitable mortgage solution that meets your needs.
Credit Unions also work hard to make the stressful mortgage process a more positive experience. They scan documents for more efficient processing, and are more than happy to close a loan at a member’s home, office, or the branch. The flexibility and accommodations they offer are just part of their culture and their desire to deliver superior service to their members.
They invest in their members
Credit unions also work to better educate their members on financial services and transactions. Your mortgage is debt that you’ll likely carry for the next 30 years. It’s incredibly important to understand the requirements of the loan, the process, the fees, and the answers to all of your other questions. They’ll also offer guidance on the type of loan that’s the best fit for a member’s circumstances.
Credit unions are solely devoted to helping people build a healthy financial future. Members quickly learn their credit union will be of service to them, even during a financial crisis. They take pride in building the community they’re a part of and invest in its future.
Banks still hold the biggest piece of the mortgage loan pie, but credit unions are making some significant headway. You should consider all of your choices and be sure to shop around to find the most favorable deal. Just remember that your neighborhood credit union may just be the best route to your dream home.