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Credit Union vs. Bank Mortgages: What's the Difference?

When you are looking to buy a home, there are many benefits to going with a credit union mortgage vs. a bank mortgage. From personalized decisions and a desire to help community members to better rates and faster processing times – it’s easy to see why credit unions make a great choice for financing your home purchase.

Read on to learn more about the differences between credit unions and banks.

Better Interest Rates

Because credit unions are non-profit and member-owned, they can pass down the savings to their members. One of the ways that borrowers benefit from this cost structure is through lower interest rates.

The interest rate that you lock in for your mortgage will greatly affect not only your monthly payment but also how much you will pay over the lifetime of the loan. The slightest drop or increase in interest rate can translate into thousands of dollars when you consider the length of the mortgage.

This makes your interest rate an extremely important part of your loan terms. Credit unions generally have lower rates than banks and other types of lenders, making them the better choice for your home mortgage.

Faster Loan Process

As opposed to waiting for the underwriting process of a large corporate bank, credit unions are often much quicker with their loan processing times. If you are already a member of your local credit union, you may be able to receive funds more easily than applying to another type of financial institution.

It can be a major advantage to have all of your financial services (from your checking account to your mortgage) at the same place. In addition, you can usually expect to see much lower fees with a credit union than with a large national bank.

For example, loan origination fees are often lower or even bypassed altogether with a credit union mortgage. Even closing costs can be lower with a credit union than with a bank. The entire mortgage application and underwriting process should be much quicker and easier with a credit union due to its close-knit structure.

Local Involvement

Credit unions are involved in their local communities in various ways. Some common things that credit unions do for the betterment of the neighborhood around them include offering seminars and other financial education resources, volunteering in the community, and giving back financially to various local organizations and non-profits.

This reputation in the community lends itself well to working with realtors and other professionals involved in the closing process, helping ensure a smoother mortgage application from start to finish.

Personalized Decisions

Likewise, dealing with a small local company allows borrowers to benefit from more flexible terms and financing decisions. Where other banks may deny an applicant based on a low income or a poor credit score, oftentimes, credit unions are more willing to work with their members and extend financing to them.

Sitting down with a fellow community member results in more personalized decisions and opens up access to financing options. Credit unions are also more likely to offer loans with better terms – such as smaller down payments – and step-by-step guidance for specialized loan applications such as VA or FHA loans.

Friendly Service

In contrast to dealing with a large national bank where you are just a number, you can expect to be treated with respect at your local credit union as a valued customer and member. Whether you need to apply for a loan or simply need to set up a new payment method, the customer service of a local credit union is generally better than dealing with a faceless corporation.

Credit unions are less likely to sell your portfolio to other third-party financial institutions, and you will likely deal with the same loan officer and the same representative throughout the lifetime of your loan.

Being able to visit your local branch and speak with your mortgage officer face to face is an extremely valuable perk of going with a credit union mortgage vs. bank mortgage.

Credit Union vs. Bank Mortgages: The Clear Winner

It should be obvious that in the battle between credit union mortgage vs. bank mortgage, the clear winner is a credit union mortgage.

At Credit Union of America, members enjoy all the security and services of a traditional bank plus friendly service, personalized care, low-interest rates, and low fees. We offer a variety of mortgage products to fit your needs and our local underwriters provide local servicing along with flexible financial products and low down payment options.


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