Credit Union Vs. Bank Mortgage: How To Choose Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
sshepard/Getty Images June 21, 2022 Mitch Strohm is a regular contributor for Bankrate. Based out of Nashville, Tennessee, he has been reporting on the finance space for more than 12 years. Since 2010, Mitch has written and edited articles for Bankrate on topics including mortgages, banking, credit cards, loans, home equity and personal finance. His work has also been seen on sites including Business Insider, Clark Howard, Yahoo Finance, Fox Business, Interest.com and Bankaholic.com. Bankrate senior editor for mortgages Bill McGuire has been writing and editing for more than four decades at major newspapers, magazines and websites. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. You have a lot of options on where to get a , and it’s not just big or regional bank . Credit unions are increasing their stake in the mortgage market, as well. Not only do credit unions offer competitive loan terms and a more personalized customer service experience, but they also feature more flexible lending criteria in some instances. Still, a traditional bank could be a better fit, depending on your financial situation.If you’re trying to between a credit union or bank for your mortgage, here’s what to consider.
What is a credit union mortgage
In short, a credit union mortgage is a debt product you can use to finance a home if you can’t afford to pay for it in cash. If you’re approved for a credit union mortgage, the lender will pay the seller directly and you’ll make installment payments to the lender over time.
Pros of getting a credit union mortgage
“More and more people are learning that they can find the best deal and the best service in town at a credit union,” says Curt Long, chief economist and vice president of research for the National Association of Federally-Insured Credit Unions (NAFCU). The benefits of getting your mortgage through a credit union include: Fewer fees
Credit unions are known for their lower fees. You’re likely to see lower fees and rates at credit unions because they pass on any savings to their members. This is different from banks, whose sole purpose usually involves generating revenue for investors, says Bob Dorsa, former president of the American Credit Union Mortgage Association in Las Vegas. “(A credit union’s) ‘stockholders,’ per se, are the members, the customers,” Dorsa says. Lower rates
If you’re looking to get the possible, there’s a good chance you’ll find it at a credit union. “On average, credit unions offer lower rates on mortgage loans,” says Long. Remember, even a slightly lower rate can have a big impact on the interest you pay over the life of the loan. Better personalization and service
Credit unions are known for their superior service, says Long. For example, there’s a greater chance that you’ll know your servicer. With bank mortgages, it’s common for to change several times over the life of your loan. That’s usually not the case with credit union mortgages. “Credit unions retain a higher share of the loans they originate in their portfolio than other lenders, where it is more common to sell the loan and its servicing to a third party,” says Long. “Credit union borrowers are more likely to maintain the relationship they establish with their lender throughout the life of their loan.” Sticking with the same servicer can save you from late fees that could arise due to confusion over where to send your payments. In addition, credit unions may provide more specialization and advice when it comes to the type of loan you need. Navy Federal Credit Union, for example, specializes in loans for veterans and provides step-by-step guidance for those seeking a . Easier approval
If you have less-than-stellar credit, you might have better luck getting a mortgage at a credit union than at a bank. Potential homebuyers who don’t have a traditional profile, such as an excellent credit history, can benefit from getting a credit union mortgage, Long says: “(Credit unions) are more likely to make lower- and middle-income loans than other originators.”
Cons of getting a credit union mortgage
The benefits of credit unions aren’t as apparent when searching for , because credit unions don’t have the marketing scale banks have, which is why they generally don’t appear in searches for low rates, says Rich Arzaga, founder and CEO of Cornerstone Wealth Management in San Ramon, California. The cons of getting a mortgage through a credit union include: Membership requirements
At banks, generally anyone with the right credit requirements can apply and qualify for a loan. Credit unions, on the other hand, require that you’re a member. “Many credit unions have membership requirements based on their target market,” says Arzaga. If you don’t meet the requirements, you won’t be able to get a mortgage with that specific credit union. That said, joining a credit union isn’t always as difficult as you may think. There are specific credit unions for alumni associations, communities, places of worship and other types of affiliations. Some credit unions, like PenFed Credit Union, even offer nationwide membership to anyone who wants to join. Lagging technology
If you’re looking for a lender with a first-rate online experience or intuitive technology, you may want to consider a bank or online institution instead of a credit union. “For those who prefer to use technology for tracking their finances, credit union technology lags,” says Arzaga. Tech functionality becomes an important consideration because credit unions don’t have as many local branches as regional or national banks, says Arzaga. That can be difficult when trying to access funds from out of state or out of country. “This technology gap becomes more apparent when a borrower wants to use an app that aggregates financial matters in one place,” says Arzaga. “Linking credit union accounts is not possible in some cases.” Limited branch access
In general, most credit unions have a smaller geographical imprint than national banks. Banking at an institution that lacks a national presence makes it more difficult to access funds when operating outside of their main area, especially if the credit union’s technology is lacking. Some credit unions have a shared banking network with wide ATM access, but that’s not always the case. Potentially higher overall cost
While they often provide great rates for their members, there are occasions when credit unions simply can’t compete with larger banks. “For those who are inclined to only shop at credit unions, the biggest downside is that banks will periodically offer sharply lower mortgage rates,” says Arzaga. “When combined with minimum deposits that will lower the interest rate, the difference can be meaningful.” That makes it important to shop at both credit unions and banks for mortgage rates.
Credit unions vs bank mortgages How to choose the right lender
Banks make up a large portion of the mortgage market, but don’t overlook credit unions when . These member-owned institutions provide a number of benefits, such as lower rates, fees and exceptional customer service. “Credit union loans are a resource for those who want to avoid supporting banks (this is a strong preference for some), prefer to have a personalized experience and who seek preferred rates,” says Arzaga. However, a bank could be a better fit if you aren’t a member of a credit union or prefer a financial institution that leverages technology to provide a more seamless lending and loan management experience. Make sure to shop around at several different lenders and choose one that best fits your needs and financial situation. SHARE: Mitch Strohm is a regular contributor for Bankrate. Based out of Nashville, Tennessee, he has been reporting on the finance space for more than 12 years. Since 2010, Mitch has written and edited articles for Bankrate on topics including mortgages, banking, credit cards, loans, home equity and personal finance. His work has also been seen on sites including Business Insider, Clark Howard, Yahoo Finance, Fox Business, Interest.com and Bankaholic.com. Bankrate senior editor for mortgages Bill McGuire has been writing and editing for more than four decades at major newspapers, magazines and websites. Related Articles