When shopping for a mortgage, many people instantly think mortgage broker. While mortgage brokers are certainly experts in mortgage loan programs, they are not your only option for funding for your new home loan. Credit Unions, like OCCU, offer the same mortgage programs as mortgage brokers, however, there are a few differences that may make a credit union a better lending option. Consider these differences when shopping for your next home loan.
Credit unions function similarly for its members as banks and other financial institutions, such as mortgage brokers, do for their customers. However, credit unions are member-owned, not-for-profit organizations, where banks are for profit and shareholder-owned. Credit unions exist to promote the well-being of their members. Governed by a member-elected board of directors, members are represented in the vision and direction of the organization.
Rates and fees
Credit unions provide many of the same services as banks, including savings and checking accounts, auto loans, home equity line of credit loans and mortgages. Because credit unions focus on serving the members rather than focusing solely on making a profit, they are able to add value to member through often offering better rates and lower fees.
It may seem counterintuitive that a credit union can offer better rates than a big bank. Kevin Scaife, OCCU’s Director of Real Estate Lending, says that isn’t so. “When it comes to mortgages, we have access to the same government loan programs as mortgage brokers. The difference is in the rates and service. The higher the interest rate a broker gets for you, the higher commission they receive. As a not-for-profit, we want to get members the best possible rate, so our ‘rate mark-up’ tends to be lower.”
“The big banks originate a large volume of mortgage loans, but at a credit union you are going to get a personalized loan solution for your needs,” Scaife says. “It's not about the one transaction with us. We want to find your best path for financial success today and ten years from now. For example, if we look at your refinance and the numbers just don't make sense for you, we are going to advise you of that. We aren't going to pressure you into completing the loan so we can make our commission. We truly want what is best for the member.”
That service-minded guidance extends to the loan. The mortgage loan officers at OCCU educate homebuyers on the whole picture of their investment, beyond their monthly loan payment, taking insurance and taxes into account. Scaife says “We’ll never push a member into a monthly payment that’s outside of their comfort zone. Often times, members qualify for a much higher amount than they may want to spend. Ensuring the member is ready to take on all the costs associated with owning a home will set them up for success.”
Much like hunting the perfect home, you should shop around for the best mortgage too. We encourage you to consider a credit union, like OCCU, when researching your home loan options. The rate, as well as the company you’re doing business with, the fees associated with the loan and the service you’ll receive should all factor into your decision.
Learn more about the home buying process.