You may ask yourself, are credit unions good for mortgages, or should I open a home loan with a traditional for-profit banking institution? There are many reasons why choosing a credit union as your mortgage lender is the right choice to meet your home-buying goals.
So why are credit unions good for mortgages? Typically, credit unions are well-known and trusted within the local area, giving you an edge when purchasing a new home.
They also understand the local housing market and the financial requirements for buying real estate. Home buying can be complicated, so having a local resource to help you navigate the local real estate market is vital to a successful purchase.
The home loan experts at Vermont Federal Credit Union list below some reasons why you should always consider your local credit union when shopping around for home mortgage rates.
Easier Mortgage Loan Approvals With Credit Unions
Credit unions are often preferred mortgage lenders because they have a more personalized review process when considering your application. Most for-profit financial institutions have offices in other states with people you have never met reviewing your loan application. If your financial story is not straightforward or your credit history isn’t ideal, you may be denied a home mortgage without recourse.
Since credit unions are member-owned and house their underwriting team locally, you can speak directly to the team approving your mortgage application. This gives you the opportunity to provide them with more background information to explain anything unique on your financial statements or credit history.
Lower Interest Rates and Fees
Since credit unions are not-for-profit entities, they do not have to answer to shareholders who demand increased annual profit. Instead, credit unions can return profits to members through lower interest rates on loans and fewer and lower fees, easing the financial burden on their members.
Even a one percent decrease in a home mortgage interest rate can equal significant savings in the long run. For a 30-year loan, even a one percent change in your interest rate can save you tens of thousands of dollars over the life of your mortgage.
Loan fees can also quickly add up, so reduced fees on your mortgage can mean that more of your money stays in your pocket or can be invested in your home.
Offering members both reduced fees and lower interest rates often makes credit unions much better mortgage lenders than for-profit banks or online lenders.
Personalized Customer Service Experience
Credit unions prioritize the customer service experience for their existing members and prospective members. This is typically not the case with for-profit banking institutions, which instead focus mostly on financial gains and institution performance.
With customer service in mind, credit unions are also more likely to retain the loans they issue for the life of the loan instead of selling them on the secondary mortgage market, as many other lenders will do. As a borrower, you can have peace of mind knowing you can maintain long-lasting relationships with your lender and know who to contact whenever you have a question or concern.
Credit unions also specialize in specific home loan types, such as VA, first-time homebuyers, FHA, or USDA loans. This makes them a useful resource for navigating the loan application process and helping you to determine which loan option might be the best for your unique situation. Personalized attention can go a long way in helping you find the right mortgage.
Credit Unions Understand Their Local Housing Market
As we mentioned, since credit unions are often locally based, they have the added benefit of knowing their unique housing market. For example, they’ll know which issues you should look out for because they’re common to the houses in the area.
Your local credit union will also better understand the overall financial situation of the community and community members. A loan officer living in New York City, for instance, will have a difficult time understanding the situation of an applicant living further north, south, or west and could make their decision based on faulty assumptions or the region. A local loan team will understand what they’re looking at when they review your application.
Access to Free Financial Education and Online Tools
When you open a new loan with a credit union, you also become a member. This comes with added benefits that increase the value of your investment. Credit union members gain access to free financial education in the form of classes, tutorials, and articles, as well as options for managing their mortgage and making payments online. Some credit unions even offer discounts to members on other products they offer.
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Are credit unions good for mortgages? Most definitely. You just need to find one that fits your needs. If you are looking for a mortgage in Vermont,contact the loan experts at Vermont Federal Credit Union and become a member today to start experiencing all the benefits of working with a local credit union.
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