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Credit Union vs. Bank vs. Mortgage Broker: Which One Is Right for You?

Getting a Mortgage from a Credit Union vs. Bank vs. Mortgage Broker

Why You Should Get Your Mortgage from a Credit Union Instead of a Bank

Call us biased, but we think credit unions are great.

They’re about community and bringing people together who believe in service to one another. It’s one of the reasons our name is United. Here are a few reasons to use a credit union when you shop for a mortgage.

LOWER FEES AND INTEREST RATES

Credit unions often offer lower interest rates and APR than the average bank. That applies to mortgages, as well as credit cards, personal loans, and other financial products. The rates are fair without hindering your financial flexibility.

The same logic applies to fees. At United, we work hard to make them reasonable. When you shop for a mortgage with us, we don’t overload you with appraisal, origination, processing, tax service, and underwriting fees. Case in point: United’s total mortgage fee is $970, while other lenders may charge up to $4,000. The real question is, what are you going to do with an extra $3,000 in the bank?

EASIER CREDIT APPROVAL

Credit unions understand if your credit score isn't perfect. They don’t let less-than-perfect credit stop you from securing a mortgage or making a modest down payment. According to the National Credit Union Administration, the median credit score to secure a mortgage with a credit union was 753, lower than the median score for banks.

FRIENDLY LOCAL EXPERTS

Credit unions care about the community because they are a part of the community. They live, eat, and shop with the same people they serve. This close-knit relationship is why they know you on a first-name basis.

United believes in making the community a better place through its great financial products and excellent service. That’s because we are a not-for-profit institution. We focus on guiding Members, which includes our own employees, to their mortgage goals with friendly expertise every step of the way. That’s also why, even when we have marketing campaigns, we feature our authentic, diverse Members. They are what make us United.

MEMBER BENEFITS

You get reward points when you use your credit card. Every so often, you can cash those in for some perk. Credit unions are like that, expect the benefits every day, every month, every year.

Being a Member gives you access to insider deals, regardless of your account size. It's one of the ways credit unions give you more. Here are just some of the benefits of being a United Member:

  • Free online and mobile banking
  • Free online bill pay
  • Personal financial tools for budgeting
  • Member Assistance Program
  • Discounts with United partners like LifeLock

Want another perk? We have two of them. First, you get voting rights. When you’re a Member, you get a say in important credit union decisions, like board members and whether Old Town Road by Lil Nas should play on the homepage. (Okay, not that last one, but you get the idea.)

The second is dividends. When Members deposit money in a share account, United pays them a dividend. The dividend is similar to interest at a bank. The more shares you own, the more dividends you receive. It’s a way of showing our appreciation for you banking local and choosing United. It also ensures our employees (and Members) work towards United’s success.

What If I Choose a Bank or Mortgage Broker?

There is nothing wrong with a bank or mortgage broker. Personally, it’s not our style. Here are some of the reasons why people choose one or the other.

Pros of a Bank

RANGE OF FINANCING OPTIONS

If you’re going to make us say some nice about getting a mortgage with a bank, we’ll give kudos to their financing options. Banks often have a greater number of lending services, so you have more choices when mortgage shopping. Many banks also offer special savings if you sign up for other financial products, like a credit card or checking account.

MORE LOCATIONS

Banks are for-profit institutions and have bigger budgets because of it. The largest banks have outstanding mobile apps, countless ATMs, and a host of other convenient features. (That said, our mobile app is nothing to sneeze at.) All these features are a potential bonus to getting your mortgage from a bank.

Cons of a Bank

HIGHER FEES

One of the drawbacks of being a for-profit institution is more fees and higher fees. Some of these fees are inevitable, like closing costs and insurance. Banks are generally less concerned with passing savings on to their users than credit unions.

HIGH INTEREST RATES

Banks charge higher interest for their financial products. Datatrac, a technology and data company, looked at the average interest rates of seven different mortgages. Credit unions offered lower rates than banks in six of the seven categories, only losing one-year ARMs by 0.01 percent.

STRICT LOAN QUALIFICATION

Banks tend to have stricter qualifications for their mortgages. That makes it 1) harder to get a mortgage and 2) harder to get the best terms. However, if you love a good haggle, then a bank might be for you.

Pros of a Mortgage Broker

ACCESS TO DIFFERENT MORTGAGES

A mortgage broker does all the legwork for you. They take time to find different mortgages options, steering you clear of onerous terms while you kick back and relax. Some brokers may even have exclusive access to some lenders, so you get a deal on your mortgage.

HANDLES PAPERWORK FOR YOU

A mortgage broker saves you time and a mountain of paperwork. As part of their commission, they fill out your applications and negotiation loan terms. This industry insight helps speed up the mortgage process.

Cons of a Mortgage Broker

DO NOT LEND MONEY

Brokers find you the mortgage. You’re on your own when dealing with your lender. The extra step is becoming increasingly problematic with the rise in defaults among broker-originated mortgages. Some lenders refuse to work with brokers, which shrinks your potential lender pool.

COMPENSATION FEES

You have to pay your broker on top of the origination and appraisal fees. As a rule of thumb, brokers charge anywhere from 0.5 to 2.75 percent of your mortgage value. You also have to do your due diligence to make sure there aren’t any unscrupulous charges.

The Bottom Line

You have plenty of options when taking out a mortgage. A credit union is an ideal choice if you want competitive rates and immaculate customer service. Banks and brokers give you access to more mortgage and financing options, but usually at a higher cost.

Discover the difference a credit union makes by contacting your local United mortgage advisor today.

United Routing Number: 272484894

 

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Insured by NCUA. Equal Housing Lender – We do business in accordance with the Fair Housing Act and Equal Credit Opportunity Act. NMLS #471962.

If you are using a screen reader or other auxiliary aid and are having trouble using our website, call us at (888) 982-1400 for some help. All products and services available on this website are available at all United Federal Credit Union full-service locations.