Why The Best Mortgage Rates Are From A Credit Union

Published On:
February 11, 2020

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When deciding where to get your mortgage, there are many determinants you should consider. 

You want to work with a lender that can make your experience as simple and straightforward as possible. You want a seamless process so you can close on time without too much back and forth. You want an experienced company to help you secure the most desirable financing for you. You want the best terms and interest rates you can get.  

With so many banks, credit unions, and other lenders stating that they can help you get the mortgage you want and need, why is it that when it comes to interest rates, credit unions stand out as having the best option? 

Well, interest rates are one of the most critical factors in a mortgage, and credit unions pride themselves on offering the lowest rates possible to their members. However, that isn't the only reason why you might love getting your loan at a credit union. 

Keep reading to learn about credit union mortgage rates and refinance rates, and why you can find the best options from a credit union.

The Credit Union Mortgage Process

The reason why you might prefer working with a credit union to secure your mortgage starts before a mortgage rate is even determined. It often begins with the process.

Better Mortgage Process

If you're currently a member of a credit union, they have access to your financial data, so there's often less information that needs to be provided during the application. This frequently leads to a more manageable and speedier approval process.

Also, the high-quality customer service credit unions are known for having what you need to make it through a time that might be a bit stressful. While buying a home can be exciting, the process can sometimes be time-consuming and nerve-wracking, so working with people who strive to make it as smooth as possible for you makes everything better.

Additional Mortgage Offers

Credit unions also offer various types of financing related to your mortgage, such as a home equity loan and home equity line of credit (HELOC). 

You can consider taking out either of these options at the same time as your primary mortgage and use the funds to make a larger down payment. In doing so, you may avoid paying monthly private mortgage insurance, also known as PMI. 

A credit union that you have a history with or even one that you don't, might be able to approve you for these financing options with your initial loan instead of waiting until later down the line to do so. 

Less Likely To Sell Your Mortgage

While you might initially get your mortgage with the lender you desire, it doesn't mean you'll be paying them every month for the life of your loan. Many companies that take on your loan initially will sell it to another company at some point. When this happens, you have no control over the chosen company. It's just a part of the mortgage process.

However, when you get your mortgage from a credit union, they are less likely to sell it to a third-party. When they have the goal of holding your loan, they can be more flexible when considering borrowers with a less than ideal financial history, such as having a higher debt-to-income ratio.

The Benefit Of Lower Credit Union Mortgage Rates

There's no doubt that credit unions are known for offering lower mortgage rates to their members. But why? 

The primary reason is that credit unions are not-for-profit organizations. Unlike banks and other online lenders, their not-for-profit status allows them to offer lower interest rates to their members. Members are also part owners, so as a member, you have a right to vote on what's important to you. 

Low-interest rates are often a common desire amongst members. A lower interest rate of even a few tenths of a point can save you tens of thousands of dollars over the life of your mortgage. 

Here's an example of the difference in interest rates for a $350,000 mortgage with a 30-year fixed-rate loan using a mortgage loan calculator

According to the National Credit Union Association, NCUA, the national average rate for a credit union mortgage was 3.91% in September 2019.

Mortgage - $350,000

Term - 30 years

Interest Rate - 3.91%

Total Cost of Mortgage - $595,024 

Monthly Payment - $1,653

According to the NCUA, the national average for a bank mortgage was 4.05% in September 2019. 

Mortgage - $350,000

Term - 30 years

Interest Rate - 4.05%

Total Cost of Mortgage - $605,181

Monthly Payment - $1,681

Based on this example, a less than 1% difference between the credit union interest rate and the bank interest rate led to paying an additional $20,157 over 30 years. The monthly difference is only $28 every month, so initially, that doesn't seem like much, but paying $28 every month for 30 years adds up. 

Think about what you could do with an additional $20,157 over 30 years. If you simply invested that money in your retirement, it could quickly grow into much more. 

Along with saving thousands of dollars based on interest, you'll also experience savings with lower closing costs and fees during the mortgage process.

Obtain The Best Credit Union Mortgage Rates

When securing financing for your next home, you want a lender with superior customer service, knowledgeable staff, a straightforward loan process, and low mortgage rates. A credit union can offer you all of that and more. 

Credit unions pride themselves on providing the best rates, and at Arbor Financial, we are no different. With our flexible terms and quick and easy loan pre-approval, we want you to get into the home of your dreams without paying more than you need to.

Learn More About Our Mortgage Financing Options


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