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If you are having trouble getting a mortgage, a credit union might be the next place that you should try. Many people overlook credit unions when they are shopping for mortgages, but a credit union can provide some unique advantages to you. Here are a few things to consider about getting a mortgage from a credit union.
Credit unions do not operate like most traditional lenders. There are several differences that you will notice when you start doing business with them. First of all, credit unions are nonprofit organizations. This means that they do not have to pay taxes as traditional lenders do. Because of this unique advantage, their interest rates are usually not as high as other lenders. You could potentially save some money on your monthly payment by going with a credit union.
Another difference is in how they treat their account holders. If you hold an account with the credit union, you are considered one of the owners. You get to vote on important matters such as who is going to sit on the board of directors. You also get some of the profit from the credit union distributed to your bank account.
Keep Their Mortgages
Another one of the key differences that can benefit you when you are shopping for a mortgage is in how they handle their mortgages after they are written. Most traditional lenders package these loans together and sell them to investors in the secondary market. Because of this, loans have to adhere to certain standards in the lending industry. Otherwise, they would not be attractive to investors and the lenders would have trouble selling them. Credit unions are not under these types of regulations. They typically keep most of the mortgages that they write in their own portfolios. This means that they do not have to worry about what other investors are going to think about the loans that they write. Therefore, they can write loans according to their own standards, and they will not have to worry about any outside influences.
Another big difference between traditional lenders and credit unions is in the income requirements for mortgages. With a traditional lender, you are going to have to have a higher income than you will with a credit union. The approval rates for mortgages for individuals with low incomes is higher with credit unions.
Typically, credit unions do not deal with subprime mortgages. This means that you are going to have to have a solid credit score in order to get approved. In most cases, credit unions are going to offer only a standard 30-year fixed-rate loan or an adjustable-rate loan. However, in some cases, they will offer you a 40-year loan or an interest-only loan. They usually do not get involved in a lot of the exotic mortgage loans that are running rampant in other areas of the mortgage industry.
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