Credit union mortgages: better than a bank loan for millions of Americans

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When you’re considering getting a new mortgage or refinancing your current one—whether you’re a first time home buyer or you’ve made the home buying journey before—there are a lot of options for you to consider. How to select the right financing for your unique situation can feel overwhelming, and discovering which financial institution will best meet your needs can be complicated. You need to know that your mortgage loan officer has your best interests at heart and will guide you in selecting the right loan with the best rates and the lowest fees. Their job should be to serve you, not the financial institution they work for. With that in mind, it’s no wonder we’re seeing increasing numbers of home buyers choosing credit union mortgages over bank loans.

Credit union members, like those at OCCU, have come to a credit union because they expect better service, lower interest rates, and low or no minimum balance requirements and fees. When you’re getting a mortgage loan, all of those things add up to big savings for you. According to the Credit Union National Association’s Credit Union Profile for Mid-Year 2016, there are 6,126 credit unions in the United States with a membership of over 104 million Americans. That’s a third of the nation’s population! Here in our home state, more than one and a half million Oregonians are credit union members, and that number is steadily growing.

What are the advantages of a credit union mortgage loan?

Credit unions have more flexibility than banks typically do when it comes to rates, fees and services. Because a credit union exists to serve its members, there can be real advantages in getting a credit union mortgage, including those big cost-savers of lower rates and fees. It’s also important to take into account that your credit union genuinely wants you to succeed with your mortgage. You’re not just a customer to us; a credit union relies on the success of its membership because your success reflects directly on how well we’re serving you. Essentially, we’re your financial partner on the path to homeownership. That’s why at OCCU, we offer a wide variety of mortgage options, so our members can choose the right financing option tailored to their needs. Maybe you’re a first-time homebuyer or a veteran, perhaps you’re not sure whether a fixed-rate or an adjustable-rate mortgage is best for you, maybe you want to explore a Federal Housing Administration (FHA) or U.S. Department of Agriculture loan. Whatever your needs are, our mortgage loan officers will work closely with you to find the right loan with the most competitive rates and low- or no-closing-cost options.

You’ll also find a host of supportive services at credit unions like OCCU that assist members in finding the information they need to make the most knowledgeable decisions and get the best mortgage loan. At OCCU, we’ve established our Home Buying 101 Center and mortgage calculators to help you take any guesswork out of the process. You’ll be able to easily find advice and tips about getting a mortgage loan that’s right for you. You can compare long-term costs, calculate monthly payments and see annual percentage rates (APR) for fixed-rate and adjustable-rate loans. We provide checklists and reminders, assistance with making appointments, as well as tools to check your credit report, plan your budget, apply for pre-qualification, and more. The Home Buying 101 Center will track your progress for you, so you can easily stay organized. You can also explore our Learn blog to get information on shopping for the best mortgage, the timeline for the mortgage process, loan-to-value ratios, fixed-rate mortgages, FHA and VA loans, etc. Between these online resources and your personal connection with an OCCU loan officer, you’ll have the information you need to make smart decisions about your mortgage loan.

Additionally, because credit unions have the flexibility and commitment to best support their membership, they often have more options to serve members who don’t have traditional credit profiles or who are first-time home buyers. Credit unions are able to offer special programs and take into account special circumstances that may have affected their members’ credit scores in the past. This can be a real advantage to homebuyers who have the wherewithal to purchase a home, but perhaps don’t have the credit history to get a traditional bank loan. Because banks must answer to their shareholders’ expectations for profit, they have a harder time being flexible in regard to traditional credit rules.

Why are consumers moving from banks to credit unions?

Credit unions are not-for-profit financial cooperatives, which means each one is governed by its members for its members. Each credit union member has equal ownership and one vote, regardless of how much money the member has on deposit. The membership elects officers and directors from within the membership to establish the credit union’s policies. Therefore, as a credit union member and owner, you get to vote on the people who will direct your financial institution. Their job is to provide the membership with affordable financial services and benefits. This members-first approach is dramatically different from banks; usually banks are required to create revenue for their investors, so it’s not in their best interest to pass savings on to the people who bank with them. At credit unions, you’re more likely to see lower fees and interest rates on your mortgage loan, because the people who you helped to put in place want to make sure you, as a member, reap the rewards of credit union policies.

Because credit unions don’t have to answer to investors, they typically have more latitude to pass the savings on to the members that come from their not-for-profit status on to the membership in the form of higher rates on savings accounts, lower rates on loans and credit cards and fewer fees. A great example of this is the difference in minimum balance requirements between banks and credit unions. In traditional banks, the people who get the best service and rates are those who can establish and maintain the highest minimum balances. Credit unions, on the other hand, are able to create account types that better serve their members. For instance, at OCCU, we require that you maintain just a $5 minimum balance in your primary savings account, and there is no minimum balance requirement for secondary savings accounts. Our Remarkable Checking accounts also require no minimum balance, and there is no monthly service fee, but you still get a long list of great features and services.

When possible, credit unions also work for their membership to offer competitive rewards programs like those we offer at OCCU on our Duck, Beaver and NICE Visa cards. We give rewards like bonus points for every dollar you spend, 0% introductory APR* on balance transfers, no annual fee, no foreign transaction fees, and more. And the benefits don’t stop there; we offer a wide variety of membership benefits and services, from free access to nationwide ATMs to complimentary identify theft protection. All of these benefits save you money and are only available to credit union members.

Because credit unions are owned by their members, those members also expect superior service, and that’s just what you’ll get at a credit union like OCCU. This commitment to the best member service can be seen in the research done by the American Customer Satisfaction Index (ACSI). As recently as 2015, the “ACSI score demonstrates how credit unions are best in class in financial services,” said Jim Nussle, President and CEO of the Credit Union National Association (CUNA). “Credit unions are steadfast in their dedication to member services, in large part because credit union members are credit union owners. Our not-for-profit structure allows us to serve our members rather than focus on maximizing profits for shareholders.”

Okay, credit union mortgages are great, but isn’t it difficult to join a credit union?

You may have heard that there’s limited eligibility when it comes to credit union membership; not just anyone can open an account. Credit unions have membership criteria that may include where you live or work, who your employer is, what industry you work in, or where you went to college. However, credit unions have expanded their membership criteria significantly in the past few years. While there are still specific credit unions for certain industries, alumni associations, and other groups, new regulations approved by the National Credit Union Administration (NCUA) have given credit unions even more flexibility in how they define “communities” and who they can invite to join. These new regulations have allowed OCCU to open membership to even more Oregonians. In fact, becoming a member is very easy to do. It can be as simple as living in one of the 28 Oregon counties we serve, or even just being a Bi-Mart store member. You could become an OCCU member online in less than five minutes.

How to choose the right credit union for you

Credit unions aren’t all the same. Of the more than 6,000 credit unions in the Unites States, there is a lot of variance in services and size. It’s important, therefore, to shop around. Here are some things to consider:

  • Make sure the credit union is insured by the federal National Credit Union Administration (NCUA). The NCUA provides the same protections that the Federal Deposit Insurance Corporation (FDIC) provides for banks: insurance coverage on deposits up to $250,000. There should be a prominently displayed sign in the credit union, but you can also check at the NCUA website to find a credit union’s insurance coverage.
  • Choose a credit union that best meets your needs. Compare rates and fees. You want to find the credit union that will give you the best rates on your mortgage loan, and low- or- no-closing-cost options. Factors like whether or not you’re a veteran can be important as you shop around.
  • Look for great programs and benefits. These can save you money and make your banking experience much more pleasant.
  • Make sure you’ll get the member service you expect when you walk in, and that there are credit union branches and ATMs conveniently located near you. Many credit unions are now joining ATM networks, so even if there isn’t a branch near you, you can still get free ATM service.
  • In the age of convenient online banking, you’ll want to also make sure your new credit union has robust digital banking tools, so you can bank or make online payments from the comfort of home or using your smartphone while you’re on the go.

The members-first thinking that is the foundation of credit unions makes your relationship with your credit union dramatically different from what happens when you get a traditional bank mortgage loan. Credit union mortgages are increasingly popular because not-for-profit credit unions are able to offer advantages to their members that for-profit banks simply can’t match. Credit union members seeking the best mortgage loan can often find better service, lower interest rates, low- or no-minimum balance requirements, and low- or no-closing-cost options. This flexibility in regard to services, rates and fees also means that mortgage loan officers, like those at OCCU, have more room to work when it comes to helping you find a mortgage loan that fits your unique needs, even if you don’t have a traditional credit history.

If you’d like to learn more about credit union mortgage loans at OCCU, our mortgage loan officers are happy to answer your questions. Send us an email, come on in to one of our branches, or give us a call.

*Review the additional terms and conditions on our credit card options.