Why a Credit Union Is Better than a Bank
Most of us have an idea of what our dream house looks like. Some of us have even seen it on the market and want to buy it. However, what many of us haven’t considered is who to go to in terms of getting the financing arranged. While most people will go directly to their commercial bank, there are other options out there as well. You may, for instance, consider Florida home financing through a credit union.
Credit unions are nonprofit cooperatives, owned by their members. Over the past few years, they have been increasing their presence when it comes to offering people mortgages. In fact, in the first quarter of 2015, credit unions shared 11% of the total mortgage market, up from 7% in 2013. So should you go to a credit union if you want a mortgage? Let’s take a look at how they compare to traditional banks.
- They Could Save You Money
Firstly, credit unions have much lower fees than banks, and much lower rates as well. This is because they are nonprofit and any savings are send to their members. Banks, by contrast, only want to generate more money for their investors. Credit unions don’t have stockholders, they have members. And these members are also their customers. Hence, by keeping their rates low, they earn their customers money.
- You’re More Than a Number
If you are a member of a credit union, you will actually know your servicer and not just be a number on an application form. When you have a mortgage with a commercial bank, it is likely that the company that you make your payments to will change several times while you hold the mortgage. This won’t happen with a credit union, however. You will know who will service you from the moment you start your payments to the moment you end them. The credit union will continue to operate, and they will continue to collect your payments. When you don’t change providers, you are also less likely to be charged a late fee if you got confused over who to pay to.
- You Can Be Considered if You Have Bad Credit
Credit unions offer excellent solutions to people who have bad credit. If your profile is “non-traditional”, you may not even be considered for a commercial bank mortgage. If you have a low to middle income, credit unions are still likely to accept you. They even have options for first time buyers in place. Some credit unions even provide 100% financing to first time buyers, even if they don’t have private mortgage insurance. Uniquely, they may even enable people to borrow more so they can pay for their closing costs.
A final thing to remember is that it isn’t difficult to join a credit union. In fact, there are many unions around for specific types of people, such as communities, alumni associations, places of worship, and so on. Find out whether there are credit unions in your area that you can join, and apply for your home loan through them.