You have finally found your dream home and are ready to finance it. Though there are several avenues through which you can acquire a loan, not all are affordable. Buying your dream home shouldn’t leave you burdened with an unmanageable mortgage. When it comes to mortgages, there are many advantages to choosing a credit union over other lending institutions.
A credit union home loan will typically come at a lower rate and with more personalized service. Choosing the right loan will reduce the cost of your monthly payment, helping you move into your dream house with more ease and less stress. Here are just a few of the advantages of choosing a credit union for your home loan.
Lower Rates
Unlike banks, credit unions are member-owned, which means they are not-for-profit. This means that they aren’t beholden to investors, nor do they have to pay federal income tax. Since they don’t have to generate extra revenue for shareholders, this enables them to allocate part of their profits to lowering mortgage rates and fees. They can offer higher interest rates for deposits and lower fees for loans and mortgages.
All of these factors mean credit unions typically offer lower rates for all loan types. When it comes to paying a mortgage, higher rates can keep you in debt for longer than you intended, and at a higher monthly payment than you can afford. A small difference in interest rates can have a huge impact on the life of your loan. A lower interest rate means lower monthly payments and the chance to pay off your loan sooner, leaving you the freedom to enjoy your home comfortably at an affordable price.
Options for First-Time Buyers
If you’re a first-time buyer, it can be difficult to finance a home. Having to make a 10% to 20% down payment can make owning a home seem insurmountable. Credit unions typically offer programs meant to help first-time buyers secure their loans with a lower down payment, helping them break into the market with less financial strain.
A credit union home loan can also offer a combination loan, which consists of two mortgage loans from the same lender to the same borrower. With an 80/20 loan, the combination of the first mortgage at 80% with the second mortgage at 20% means there’s 100% financing available for the house. This gives homeowners the ability to avoid having to pay for private mortgage insurance.
At Rivermark Community Credit Union, we have experienced mortgage officers who can help guide you through the entire process—taking the confusion out of buying a home. We eliminate the need for big down payments, offering loans with down payments as low as 3% for first-time buyers. With fixed interest rate options and 100% financing, we make owning your dream home an achievable reality.
Easier Approval
Not everyone has a great credit score, which makes qualifying for a loan more difficult. A credit union has the flexibility to work with someone with a lower credit score. If your credit score is poor, then a credit union may be your best option for lending.
Additionally, a credit union is more likely to lend to you if you have a good pre-existing history with them. They may be able to approve your loan based on your previous account activity.
Other Financial Services Available
If you’re already a member of a credit union, access to other financial services is easier to obtain. Whether you want to refinance your house or need to tap into your home’s equity, this will be easier with an institution you already have a relationship with.
Once you own your home, you may want to get a home equity line of credit (HELOC). A HELOC is a loan that’s secured by your home, so it’s only available to homeowners. These loans have low interest rates and often have no upfront costs. A HELOC acts like a credit card with lower rates. You can use this equity for home improvements or borrow the money for other purchases unrelated to your house. Or you may opt to use the home equity loan as part of the down payment in order to avoid costly private mortgage insurance.
If at some point in your time as a homeowner you need secondary financing, it will be easier to acquire it through a credit union you already have a positive history with. Credit unions typically offer home equity loans along with the first mortgage.
Personalized Experience
Credit unions are designed to provide personal service to their members. Since they are member-focused, they strive to create long-lasting relationships with their members. This lends itself to easier communication, where the lenders know you by name and strive to help answer your questions and remove any confusion.
Plus, with all of your information already on file, it’s easier for them to help with specific advice regarding your home loan. Since a credit union home loan is often an in-home loan, you will have them for the duration of your mortgage. Communication and specific help are easier when working with the same lender for the life of the loan.
Moving into your new house shouldn’t be a financial hardship for the foreseeable future. With lower rates, flexibility, multiple loan options, and highly attentive customer service, choosing a credit union will help secure your loan at a comfortable price so you can rest easy in your dream home.
