Are you starting the homebuying process and trying to decide between a credit union or bank for a mortgage? There are many benefits of getting your mortgage from a credit union, from superior customer service to lower PMI (private mortgage insurance). In this blog, we’ll take a closer look at why you should consider getting your mortgage from a credit union.
Credit Unions Pride Themselves in Superior Customer Service
Credit unions are dedicated to providing their members with exceptional customer service. Unlike some banks, credit unions aren’t under pressure to meet unrealistic sales goals. Instead, they keep their members’ best interests in mind and help them make informed financial decisions.
Credit Unions are Personal & Local
Many credit unions are locally based organizations that are owned by their members. The money credit unions make goes directly to members in the form of lower interest rates, fewer fees, etc. Local decision-making also ensures that members receive a personalized experience.
Credit Unions May Offer Financial Incentives to Members
While this isn’t always the case, credit unions may also offer financial incentives to their members. Let’s review these potential benefits.
Credit Unions Can Charge Lower PMI Than Banks
Insurance companies offer a PMI discount for credit union mortgages. This lowers borrowers’ monthly payments and saves them money on insurance costs in the long run. This is one of the biggest benefits when you’re comparing a credit union vs. bank mortgage.
Credit Unions Can Hold Your Mortgage
In some cases, credit unions are able to hold the mortgage instead of selling your mortgage on the secondary market. This can simplify the payment process since you’re sending your payment to the same company every month.
Credit Unions May Offer Lower Interest Rates Than Banks
Credit unions may also offer their members lower interest rates than banks. They’re exempt from paying federal income tax, which means they can prioritize breaking even over making a profit. Lower interest rates reduce monthly payments and can save you thousands over your loan term.
Credit Unions May Offer Special Programs for First-Time Homebuyers
Credit unions may offer special programs and incentives for first-time homebuyers. Here are three first-time homebuyer incentives offered by or through Diamond:
- First-Time Homebuyer Share Savings Account
– Designed for members who plan to buy a house within two years
– No minimum balance and currently earns a 1.25% APY on balances up to $10,000
- Home Possible and HomeOne Mortgage Programs
– Offered through Freddie Mac
– Allows first-time homebuyers to apply for a mortgage with as little as 3% down
- First Front Door Program
– Grant program administered and controlled by the Federal Home Loan Bank
– Matches 1:3 for every down payment dollar up to a maximum grant of 5% per transaction
Credit Unions Employ Teams of Mortgage Experts
Another benefit of mortgage financing through a credit union is that you’ll receive expert financial advice. Many credit unions offer their members financial counseling at no extra cost. They’re focused on educating their members and helping them maintain good financial health. Credit unions may also offer services and accounts to help members with their budgeting needs.