Welcome to the BeSmartee blog. Enjoy a wide selection of articles related to mortgages, the industry, and real estate.

Should You Get a Mortgage with a Credit Union?

By Laura Agadoni · Aug 2, 2016 · Mortgage

Should You Get a Mortgage with a Credit Union?

Image courtesy of Flickr, Alessandro Valli

Most people experience great customer service at their credit union and typically enjoy higher savings rates there and get better deals on auto loans. But what about mortgage loans?

All sorts of people, people from both ends of the political spectrum even, have a problem with big banks.

People's distaste for big banks started in a huge way after these banks were deemed ''too big to fail'' and received government bailout money. And even after the bailout, the big banks continue to alienate many people, from their impersonal service to the fees they charge their ''low-profit'' customers.

People who are fed up with big banks often join credit unions, not-for-profit financial cooperatives owned by their members. Most people experience great customer service at their credit union and typically enjoy higher savings rates there and get better deals on auto loans and home equity lines of credit. But what about mortgage loans? Are they better deals at credit unions? The answer is maybe but not necessarily.

Credit Unions Becoming More Popular

We reached out to Steven Rick, chief economist at CUNA Mutual Group, which provides insurance and financial products for credit unions nationwide. Here's what we learned:

  1. Credit union membership soared during the first five months of 2016.
  2. There were 2.242 million new members joining during the first five months of 2016, compared to 1.433 million during the first five months of 2015.
  3. During the past year, memberships grew 4.3 percent.

This proves that people these days really are flocking to credit unions, perhaps as an alternative to big banks. But should they get a mortgage through a credit union?

Reasons to Get a Mortgage Through a Credit Union

Personalized service: Some folks want personal service when they take out a mortgage, and many credit unions offer that. ''Because a credit union's mortgage department is local, it is likely you'll interface with the actual person that approves your loan,'' says Toby Hayes, VP of Marketing, SAFE Federal Credit Union. ''At a credit union, you're a person and not just a number. This is important when you are making such a large investment.''

Brady Popp, Senior VP of Lending at Texas Trust Credit Union, demonstrates how personal service works at his credit union: ''At Texas Trust, we won't process a loan application unless we talk to the borrower and make sure the loan meets their needs and requirements.'' He adds, ''Credit unions are interested in building a long-term relationship with a borrower/member, as opposed to being driven by quotas and profitability. This changes the dynamics of the lending process.''

Competitive rates: Rates should be, if not your biggest concern when taking out a mortgage loan, one of your top concerns. Credit unions often offer the best rates. ''Credit unions are highly competitive and offer great rates comparable to or better than national banks,'' says Hayes. ''Many credit unions keep their loans in their own portfolio,'' explains Popp. ''This allows us to offer better terms and rates.''

More flexibility: Many credit unions are more flexible regarding lending terms. If you have bad credit, for example, you might be automatically denied a loan at a big bank, but your credit union might be able to work with you. But the opposite is often true too. ''Credit unions' risk tolerance is typically lower than other lenders,'' says Popp. ''A borrower's credit quality will be scrutinized more and credit requirements may be tighter.''

Reasons a Credit Union Might Not Be Right for You

Membership requirements: Credit unions come with membership requirements. Members need to share a commonality, such as working at the same place or living in the same community. So you might not be able to join the credit union you would like to get a mortgage from. ''Our field of membership is restricted to a geographic area,'' says Popp. ''So we cannot provide a loan for a property that is not located within our geographic boundaries.'' But there are ways around the membership restriction. Some credit unions, for example, are open to people who join an organization that includes membership in the credit union as a benefit. In this case, the old saying, ''Where there's a will there's a way,'' applies.

Not a deal: A credit union might not offer the lowest interest rates. In today's market, rates are low across the board. You might see the best rates at a credit union, and that's great if you do. But you should always shop around first. All sorts of organizations offer mortgage loans besides credit unions, such as banks, mortgage brokers, and online lenders.

Bottom Line

If personal service is your top priority, then you'd be hard-pressed to find a better fit than a credit union. ''[A credit union's] primary concerns are truly in helping their partners (members), be it with simple share accounts or home mortgages,'' says Bob Sadowski, a CUSO marketing specialist with myCUmortgage.

But when you're in the market for a mortgage loan, your best course of action is to shop around. See which lender will give you the best rate. Check all the types of mortgage lenders to see where you will get the best deal. And where better to shop around than right here at BeSmartee!

Real Estate Commission: Explained, Revealed and Compared
By Arvin Sahakian · Aug 17, 2015 · Real Estate Data

Real estate agents receive commissions from home buyers and sellers, collectively earning over $50 Billion per year. Learn how commission amounts are set, who pays them, and how they work in this article. Read more.


California Property Tax: Complete List by County 2014-2015
By Tim Nguyen · Nov 26, 2014 · Real Estate Data

List of secured property tax rates for all counties of California fiscal year for 2014-2015. Read more.


California Proposition 60 and 90: Your Complete Guide
By Tim Nguyen · Nov 28, 2014 · Real Estate Data

If you live in California and are over the age of 55 you can effectively reduce your property taxes when buying a new home. Read more.


Houston vs. Dallas: Which One is Better to Live in?
By Amanda Curry · Oct 11, 2016 · Real Estate

Houston Vs. Dallas? If you are considering moving to either of these major metropolitan areas, we've created a resource to help you make the decision process a little easier. Read more.


What to Expect During the Home Loan Closing Process
By Arvin Sahakian · Feb 24, 2015 · Mortgage

You've heard the term used before, but what does loan closing mean? Find out all you need to know about the process. Read more.


5 Illegal Borrowing Activities: Things That Are Illegal When You Try to Get a Home Loan
By Laura Agadoni · Jan 22, 2016 · Mortgage

Whenever there is money to be made or money to be spent, some unscrupulous folks will take advantage, trying to game the system or commit all-out fraud. Read more.


The Surge in Foreign Real Estate Investment in the United States
By Laura Agadoni · Feb 24, 2016 · Real Estate

Foreign real estate investment in the United States, both commercial and residential, is a huge phenomenon that is only expected to accelerate, maybe even to skyrocket, in 2016. Read more.


Does Homeowners Insurance Pay Off your Mortgage if the House is Burned Down?
By Amanda Curry · Feb 8, 2017 · Mortgage

In this article, we explore how homeowners insurance works and what happens in the event of a house fire. Read more.


16 Ways to Improve Your Debt-to-Income (DTI) Ratio
By Veronica Nguyen · Nov 29, 2014 · Mortgage

Your DTI is used by mortgage lenders to determine whether you qualify for a loan, and if so, for how much. Improve your DTI with these 16 tips. Read more.


6 Creative Financing Solutions For Your Next Home Purchase
By Laura Agadoni · Mar 22, 2016 · Mortgage

In this article we explore some creative financing options for your next home purchase. Read more.