Unless you have deep pockets, you will most likely need to take out a mortgage when you purchase your home. The mortgage process is an extensive loan-seeking process which you conduct before looking for a new place to live, so that you know how much you’ll be able to borrow and how much of your own money you’ll have to pay.
Traditionally, most home buyers turn to their bank or a private lender to get a mortgage for their house. However, some people may sign up with a credit union instead of a bank to house their funds. If you use a credit union, you may be asking yourself, are credit unions also good for mortgages? As it happens, credit unions are great for mortgages, and here’s why.
Lower fees and more flexible terms
There are two main issues when it comes to banks and mortgages. The first issue is that banks adhere to a strict set of guidelines when evaluating a person’s ability to take out a loan. The second issue is that banks typically charge more fees throughout the buying process, such as closing costs and origination fees.
Credit unions, on the other hand, are much less picky about who can borrow from them. This is due to their non-profit status, which allows them to have more flexible terms on what types of income and financial history a potential borrower needs. Credit unions also charge fewer fees when you are approved for a mortgage, and may offer lower payment plans and interest rates over the course of the mortgage loan. If you’re someone who is not likely to be approved by other lenders, or who doesn’t like the higher interest rates that come from them, a credit union may be the way to go.
Sending mortgage payments to one company
With many other lenders, you may find yourself making payments to different companies many times throughout the life of your loan. This happens because certain lenders have the ability to sell your loan to other companies. Although this typically has little effect on your payments or the terms of your mortgage, this could become an issue if you’re not able to switch fast enough and make your new payments on time. A credit union is one lender which is less likely to do this, giving you more peace of mind as you continue working toward paying off your mortgage.
Let’s say you live in a fast-paced city, where everyone is rushing about to get things done each day. Other lenders, especially in an environment such as this one, are going to be relatively terse and may focus more on the profitability of your mortgage, rather than trying to tailor a mortgage and repayment plan that will work for you. A credit union in Mandeville, LA, for example, may be better suited for your needs than a bank, as credit unions put the emphasis on providing customer satisfaction and guiding individuals through the process as they figure out what works best for them. They may even add in some extra tips such as finding free landlord software, if you plan on turning your purchase into an investment. Renting your property out to tenants is an excellent way to recoup costs and earn income toward paying your mortgage.
People are often hesitant about approaching credit unions, as they are less well-known than other mortgage lenders. However, credit unions are just as effective and may be better options for your mortgage needs. If you’re looking to purchase a home, there’s no harm in starting your search with a credit union.