When looking for a mortgage is a credit union your best bet?
There are three basic options you have for seeking a mortgage: A bank, a mortgage broker or a credit union. Most of us know about the bank. Banks can offer several different types of mortgages and deal rather directly and authoritatively with you at all times. They can also be rather cold and demanding in terms of your credit history and financial means and be the first to turn you down. Mortgage brokers are often a much more appealing option as they tend to have a real insider’s view of how the whole mortgage process works and will shop around between different lenders to find you the best deal on a mortgage. You really can feel like a good mortgage broker is on your side rather than being someone who’s just working for a bank. Credit unions however offer mortgages that are no accessible by a mortgage broker. Credit unions offer friendlier, more personal service than a bank. Sometimes they can also offer a better interest rate. The catch however, is that you have to be a member of a credit union, such as Apple Federal Credit Union, Steinbach Credit Union or Wescom Credit Union. You might also find the credit union mortgage options to be quite limited. It’s important then to understand just what a credit union is and how to become a member of one.
Isn’t a credit union the same as a bank? Yes and no. A credit union is the same as a bank as its purpose is to provide a place for people to both save and borrow money. A major difference however is that a credit union is a cooperative institution that is owned and run by its members. Rather than being a for-profit institution like a bank where profits go to shareholders, dividends from a credit union are divided among its members. What’s key to understand for a potential member of a credit union is that a it provides membership and services to a group or community of people who have some common interest, such as their line of work (teachers, firefighters, etc.) or their geographic region. What about security? Are credit unions a safe place to save money and make financial transactions? As safe as any bank as they are subject to the same regulations as a bank.
Become a Credit Union Member
How do you become a member of a credit union? How can you know if you will qualify? It depends. Certain regulations will control membership to any particular credit union. The first and most obvious qualifying factor is your association with the community of the credit union. If it’s associated with a region, town or state, then you’ll need to be a resident of those places. If it’s a military credit union then you’ll need to be in the military or have some military association. If you are in fact a part of the community for which that particular credit union exists then membership is not especially difficult to obtain and the fees are minimal.
So, provided you are a member, is a credit union mortgage the best option? Possibly, but there is no one absolute answer. Some credit unions don’t even offer mortgages. Others do and offer promotions at times if you are a member and in good standing. Ultimately the best advice however is just to ask around and compare. Sometimes some credit unions will offer better interest rates than you can find elsewhere, other times, not. Once again a credit union will offer personal, friendly and familiar service, but their mortgage options may be limited, especially compared to a mortgage broker. It is also important to understand that closing a mortgage loan can take longer with a credit union. The processes in a credit union are not always as computerized and automated as a bank. On the plus side of that your loan closing costs may be lower, which can be great, but only if your overall mortgage terms are also suitable. The lower closing costs alone are hardly worth it if your mortgage itself will cost more.
All things considered the nature of a credit union mortgage simply depends on the terms you may find. If you like the direct, personal service of a credit union and can find a great interest rate then that may be the way to go. Talking to a mortgage broker however to consider other options is always a good idea.