A happy couple shows off keys to their new home after comparing credit union vs. bank mortgage.

You found the perfect house, saved up your money and you’re ready to buy. Now, your next step is to get a mortgage. A commercial bank could be the obvious choice, but they aren’t the only option for your mortgage. 

Credit unions also originate mortgage loans and work with you locally. If you’re ready to take out a mortgage for your dream home, here’s what we think you should know about credit union vs. bank mortgage.

Lower Rates

Because credit unions don’t have outside share holders like traditional banks, their focus isn’t on making a profit. Here at Bowater, we can offer higher interest rates for deposits and lower interest rates for loans. Overall, our rates tend to be lower for all loan types, including mortgages.

Even a small difference in interest rate can make a big difference over the life of a mortgage — especially when it comes to your monthly payment amount. Choosing a credit union to finance your mortgage could save you money in the long run with more competitive interest rates than banks.

Low to No Fees

There are plenty of unavoidable costs when taking out a mortgage — closing costs, vendor fees, and insurance. Most banks will also charge origination fees and other processing costs. 

Because credit unions are less concerned with making a profit, originating a mortgage with one will usually result in fewer origination fees and other processing costs that can easily add up! These reduced fees can potentially save you several hundred to several thousand dollars depending on your loan amount needed.

Your Loan Holding

Banks are known for selling their mortgages to other lenders or third-party services. When this happens, you lose any access to the people you’ve been dealing with throughout the whole process of obtaining the mortgage — including the rapport you’ve built with them. 

Unlike banks, credit unions do not typically sell mortgage loans to third parties. When choosing a credit union, our interest is in making an ongoing income from mortgage interest. Therefore, the chances are much higher in the same credit union being able to hold and service your mortgage throughout the life of the loan.

Easier Approval

In general, credit unions are more likely to approve mortgage applications if you have a lower credit score or less income or assets to qualify for a mortgage. This works out because credit unions set their terms and, as opposed to banks, they aren’t known to outside investors who place strict restrictions on the rates and terms. 

Also, if you’re already a member of the credit union where you apply for a mortgage, using other financial services such as personal banking of that credit union, you may be approved (or even pre-approved) based simply on your previous account history there.

More Personal Service at Credit Unions vs. Banks

Credit unions prioritize customer service for their members. Banks, on the other hand, are primarily motivated by profits. You may get a better, more personalized experience by working with a credit union to originate your mortgage. 

Because credit unions more often hold on to their mortgages, you’re more likely to work with them for the life of the loan. They also often offer special rewards programs and incentives for first-time homebuyers or low to no down payment options.

A credit union may also be better able to provide specific advice and context for loans. For example, credit unions specifically for veterans may have more insight into VA loans. During times of crisis, credit unions are known to be more accommodating to the needs of their customers and more likely to offer financial hardship support. 

Your Partner in Financial Health

Credit unions exist to support members’ financial well-being by encouraging members like you to learn money management and smart financial habits. Showing how to save and manage your money wisely has a significant impact on what we do.

At Bowater Credit Union, our free educational seminars and publications are available to members. A variety of topics are covered and these can be used as a resourceful tool before and during the mortgage application approval process! 

Credit Union vs. Bank Mortgage: Beat the Competition!

When you’re ready to take out a mortgage, you have a lot of options. As with other financial decisions, you should shop across credit unions, banks, and other lenders to find the best deal for you. 

Once you’ve decided which is best for you — gear up to be a competitive homebuyer! Read below for tips on the real estate market in the Cleveland/Athens area.

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