Who does not want to own a place they can say home? But the first question that comes in your mind is about the expenses. Thankfully, these days there are number of entities that lend money for home or any other property. The options make it easy for the borrower to make a wise decision regarding mortgage loan. These entities are banks, building societies and credit unions. This type of loan is called mortgage loan.
Generally, people find it difficult to choose which option would work for them. Especially, the choice between commercial banks and federal credit union is quite difficult. In order to make a wise decision, one needs to think about all the key factors, such as the fees, profit models and branch access, and decide which feature is most important for them.
Let’s start by giving you some fundamental benefits of choosing a bank and a credit union.
Bank
- They are easily accessible. Banks have multiple branches in almost every region of a country
- They are quicker in adapting new technologies and trends
Credit Union
- Their main focus is satisfying their customers
- The interest rates are higher on deposits and the fees is low
How Credit Union is better?
Saving Money Factor
As discussed above, the fees of credit union loan is comparably low. As per Bob Dosra, president American Union Association in Las Vegas, the reason is that credit unions share their saving with its members. As banks on the other hand, work for the purpose of revenue generation for its investors doesn’t do that.
The servicer doesn’t change
When you take loan from a commercial bank, the company collecting the payments keeps on changing during the whole time. That is not how federal credit unions work. Usually, while getting a loan from credit union you know the servicer and most of the times that is the originating credit union.
Having the same servicer throughout the process, help you to avoid late fees caused by the confusion regarding where the payments need to be sent.
Not having a traditional profile is fine
To get a mortgage loan from federal credit union you don’t need to have a perfect credit history. Even a person with an unconventional profile can avail the mortgage benefits.
There are higher chances that credit unions will arrange lower-income and middle-income. Moreover, they have special offer for those who appeal for the very first time.
For instance, New York Time reveals that a North California credit union in Raleigh, gives 100 per cent financing without any private insurance on up to $400,000. In order to cover closing costs, credit also give a choice to borrow additional money. Another example is of the mortgage rate Houston, where the credit unions charge absolutely no origination point fees on loan.
It is easy
A general perception is that borrowing funds from federal credit union is difficult. It is a misconception. Also, for specific affiliations such as local communities, students association and religious centers credit unions have special programs. There are online platforms where you can read, what the parameters of getting a mortgage loan from federal credit unions are.
Raising presence of non-profit cooperatives
In 2015, the member-owned cooperatives were 11 per cent of the market, which was about 7 per cent in the previous 2 years. Credit unions offer saving rates by decreasing their own profits. The numbers are increasing because of their excellent customer service and fiscal training. Especially, those who are taking mortgage loan for the first time, opt for the credit union option.
Multiple Options
Just like a bank, federal credit union offers different loan options in order to help you making a correct decision; such as conventional loans, refinance loans and VA loans (service for veterans who can get loan without any down payment).
They cover different types of property that includes primary residence, town home residential units and investment property. These options help you to customize the service as per your needs and make you feel less-burdened.
Final Verdict
Federal credit unions provide the same high quality services to people as any commercial bank offers but on cheaper rates. No matter how good a bank offer is, they definitely would charge you higher rates than credit unions because they are not non-profit cooperatives. Their primary objective is to make money for their stakeholders. Whereas, credit unions work on non-profit basis and therefore they strive to provide maximum facilities to the borrower with minimum conditions and additional charges.