The Advantages of Choosing a Credit Union for Your Mortgage

Your home will likely be the biggest purchase you ever make. Home prices are rising, as seen by the jump in the average sale price for a home in the United States from $383,900 in 2019 to $408,800 in 2021. Most people don’t have $400,000 lying around in their bank account – that’s where mortgages come in.

 

Mortgages are the most common type of debt held by Americans, and there’s no shortage of mortgage lenders in the US. The US mortgage industry is one of the largest in the world. There are many individual lenders and different types of lenders to choose from, such as banks, mortgage banks, alternative lenders, and credit unions. Picking the right type of lender can help you secure a mortgage that meets your unique needs.

Credit unions offer unique benefits to prospective homeowners.

What is a Credit Union?

Credit unions are nonprofit institutions whose shares are owned by their participants, or members, who use the credit union’s services. Credit unions are often smaller than banks and offer similar financial services. Credit unions are also a safe place to save and borrow money at reasonable rates.

Unlike banks, credit unions do not charge fees. Instead, they return the profits they make to their members in the form of higher interest rates and other benefits. Moreover, most credit unions are tax-exempt, since their participants own and operate them.

What Do Credit Unions Offer?

Most, if not all, credit unions offer the same financial products and services as banks, such as savings accounts, low-minimum checking account options, mortgages, and interest-bearing Certificates of Deposit (CD) which come in different term lengths. Their members take advantage of earning better interest rates on their savings and added benefits like high-interest accounts for seniors.

During instances when members need a financial service that the credit union does not offer, a reputable credit union will turn to a CUSP (Credit Union Service Provider).

What is a CUSP (Credit Union Service Provider)?

Credit unions often do not have the variety of financial services that their members require. Instead of providing every service themselves, they often partner with other trusted institutions like a mortgage bank in order to offer more comprehensive options and better customer care.

Collaborating with a trusted financial institution allows credit unions to present their clients with more specialized mortgage products and other finance-related services.

As a CUSP, A and N Mortgage has built long-lasting relationships with credit unions. The benefits of A and N’s CUSP include:

  • Non-warrantable condos – Up to 90% loan to value with no PMI
  • 10% down payment option on multi-unit properties with no PMI
  • Self-employed or 1099 less than 2 years
    24-month bank statements for income
  • No tax returns or W2’s needed to qualify
  • Gross deposits and 24-month (business or personal) statements for self-employed, 1099, or W2 borrowers
  • 55% Debit Ratio
  • Cash-out up to 90%
  • All underwriting, processing, and closing performed in-house

Advantages of Choosing a Credit Union for Your Mortgage

You might feel overwhelmed in trying to decide what mortgage lender is best for your financial circumstance. Credit union mortgages often come with lower fees and interest rates. Some of the best VA loans and home equity products available are offered by credit unions. Here are other advantages that come with choosing a credit union for your mortgage:

Easier Loan Approvals

Credit unions often have more flexible qualification requirements for mortgage loan borrowers. Their business model favors customer service and community over profits, so they’re more likely to help find a mortgage option that works for their members, despite a low credit score, for example. They also usually have more access to financing, which allows them to be more flexible with down payment amount requirements.

Furthermore, a credit union’s community focus allows members to leverage their personal relationships with the credit union in obtaining a mortgage loan. It’s possible that a credit union might pre-approve your mortgage if you already have a history with them.

Lower Fees

The nonprofit nature of a credit union makes it easier for them to cut out fees. Since they’re not as interested in making profits, borrowers won’t be subject to as many fees, such as origination fees and processing costs.

Lower Interest Rates

Credit union interest rates and APRs on mortgages and other loans are usually more than mortgage banks and big banks.

Community Feel

Credit unions are owned by the people they serve. Each client is a member and holds shares in the institution. The connection between the financial institution and client is much stronger in a credit union, and members usually share something in common, such as residence in a certain location, or membership in another shared association.

Since credit unions are nonprofit organizations, their values differ slightly from big banks. As member-owned organizations, the focus of a credit union is to support their members and improve their financial health through their financial resources and products. Credit unions do well if their members do well.

Many credit unions offer a much more personalized experience in their customer service and financial advisory model. Since credit unions are more centralized, a member, or prospective homeowner, is close to the decision process. The person deciding on your mortgage is a couple of doors away, rather than thousands of miles away at some head office.

The community feel of a credit union is unmatched by big banks.

Specialized Knowledge and Financial Education

Many credit unions want to improve the financial literacy of their members. Their advisors offer realistic, professional advice that supports members in improving their knowledge. They also often offer special workshops and programs to members and their community.

Unique Mortgage Programs

The mortgage programs offered by credit unions are often innovative, as they sometimes offer promotions and other seasonal offers. For example, some credit unions offer mortgage programs that require a very small, or no down payment. Big banks don’t offer the same flexibility in promotional pricing. When shopping around for a mortgage, make sure you ask credit unions if they are offering any special programs.

Potential for Cross-Product Discounts

Credit unions offer many services, with a range comparable to that of a big bank. With checking and savings accounts, business loans, insurance, and financial advisory services, credit unions have the bandwidth to offer cross-product discounts for their members. Mortgage banks don’t offer this same potential for multiple products, since their specialty is mortgages. Credit unions offer a more encompassing financial experience since they can package products and support their members in various financial pursuits.

What to Consider Before Choosing a Credit Union

While most banks and mortgage lenders will offer mortgage products to people who meet their eligibility requirements, credit unions only offer their products and services to their members. They have specific requirements for membership, which is essential to using their products, including mortgage loans. If you aren’t eligible for membership, then you would have to find an alternative mortgage solution.

Contact A and N Mortgage for Advice

Credit unions offer unique benefits to people looking for a mortgage loan. While there are many mortgage options to choose from, credit unions might offer more suitable benefits for your individual needs. A and N’s innovative mortgage products are a great fit with a credit union’s aim to provide their members access to more affordable loans at competitive rates.

If you’re thinking about taking out a mortgage or want to know more information about mortgages in your neighborhood, contact A and N Mortgage for advice. As a credit union service provider (CUSP), A and N’s portfolio programs allow our loan officers to provide specialized financing options with excellent loan terms for our clients.

A and N Mortgage Services Inc, a mortgage banker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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