Mortgage loan programs available with the bank, lender or the credit union may differ in various aspects. In order to get the best of their services, you need to know how these organizations differ and how you can benefit from each of their services.
Unlike banks which are profitable organizations serving customers, credit unions are non-profit financial institutions owned by its members. Their services are customer oriented and not aimed to raise profits. They offer loan programs that are acceptable by its members only. Hence, with a credit union your search for a suitable mortgage becomes limited.
On the contrary, banks come up with a large number of loan offers, as they are able to create a larger volume of loan originations compared to the credit unions.
When you take a mortgage from the bank, you can speed up the closing process unlike a credit union. Credit unions take a longer time to close on a loan because most of the unions do not use computerized underwriting systems for reviewing the loan documents.
Rates and closing costs
When you seek mortgage from a credit union, you will have to pay lower closing costs and interest at a reduced rate. But the banks are likely to offer you variety of options to choose from, although you may get slightly higher rates and also pay higher closing costs.
In a credit union mortgage, the union officials themselves will service the loan. But banks sell off mortgages in the secondary market and hence different organizations will be servicing your home loan. This creates a lot of inconvenience, as there can be confusion, possibility of loss in checks, and other problems which may not bother you when you avail the services of a credit union.
Looking for a mortgage transaction with a credit union can be a wise decision if you can obtain a lower rate. On the other hand, banks may offer a higher rate but they provide various loan packages. This helps you to choose a loan program depending upon your requirements. Finally, whichever option you select, consider all aspects of both mortgage providers - the bank and credit union and try to determine which will benefit you the most.