PenFed Mortgage with Confidence


Top Reasons for a Credit Union Refinance


Is it better to do a refinance through a credit union vs. a bank or mortgage broker? Read on to discover the top 10 reasons you should consider doing your next refi with a credit union.

#1 Savings From a Surprising Source

One of the top questions we get is: “Do credit unions refinance mortgages?” Most people know that credit unions offer checking and savings accounts, money market certificates, and IRAs. But surprisingly, they may not be aware of the vast mortgage products and services many credit unions offer. 

Because credit unions are “non-profit” credit unions tend to have lower mortgage interest rates and fewer lender fees. So, if you’re shopping for a lender and comparing banks and mortgage brokers, don’t forget to see what credit unions have to offer. We think you’ll be pleasantly surprised.

#2 Low Credit Union Refinance Rates

What’s the top thing homeowners look for when refinancing? Low rates. That’s why it’s essential to look at the mortgage interest rates for credit unions. It’s always good to compare a few lenders to make sure you’re getting the best deal. But when you’re comparing, make sure to look at the lender costs also. Compare each lender to see how long it will take you to recoup your fees.  

When you compare both interest rates and lender fees, you can see the overall cost of the refi. That way, you won’t get fooled by low advertised rates that aren’t as great as they sound. Some borrowers choose to “buy down” their rate with discount points which adds more to their closing costs. Buying discount points isn’t always a good investment. It’s essential to look at the overall costs and how long it will take you to recoup the amount you pay in points.

#3 Possible Roll-Over Escrows

Some financial institutions, including credit unions offer roll-over escrow accounts. Once you’re a member and have a mortgage with them, it’s possible for them to “roll over” your escrow account the next time you refinance with them. That makes the refinance easier and faster. Here’s an example – you purchase a home and get the financing through a credit union. You refinance with the same credit union a few years later, and they “roll over” your escrow account.

With a rollover escrow account, you don’t need to come up with additional funds for property taxes and homeowners insurance which can be substantial depending on the time of year you refinance. It also makes the refinance process more streamlined. If a roller-over escrow account is important to you, ask your lender if they provide that option.

#4 Some Credit Unions Specialize in VA Loans

Credit unions are known for catering to a specific population. There are credit unions for teachers, members of a particular county, and credit unions for veterans and their families.

There are significant advantages of going to a lender that knows how to do VA loans, has lots of experience, and understands what might come up in the process. Experienced lenders get the certificate of eligibility right away to avoid delays and they know how to restore entitlement benefits. And, if you want the best IRRRL rates, always check with a credit union first.

#5 A Variety of Mortgage Loan Products

Most credit unions offer an excellent variety of home loan products specifically targeted to fit their member’s needs. A credit union catering to teachers may offer FHA loans with local or state-funded down payment assistance programs.

A credit union focusing on veterans and service members may promote and offer lower-cost refinance loans (IRRRL) that make refinancing more cost-effective. Credit unions in rural areas may promote USDA loans. As you can see, credit union offerings can be different depending on location and member needs.

#6 Lower Cost HELOCs

There are two types of refinances: Rate-and-term and cash-out. Cash-out interest rates are often higher. So, some borrowers first get a rate and term refinance, rather than getting a cash-out to refinance to pay off debt. That way, they capture the lowest rate possible for their mortgage.

Once their refinance is complete, they take advantage of getting a HELOC or home equity loan to pay off debts or make home improvements. The closing costs for HELOCs and home equity loans are very low, and the rates are much better than credit card interest.

#7 Same Lender for 1st & Equity Loans

In the example above of getting a first mortgage and then an equity line of credit or equity loan, illustrates the advantages of using the same lender. You know how the process works, and you feel comfortable moving forward.

Some credit unions service their loans rather than selling them once they close. When that’s the case, it makes paying your mortgage and equity loan even easier — especially if you also have your checking and savings with the credit union. 

#8 Mortgage Brokers May Not Offer HELOCs

If you get a mortgage or refinance from a mortgage broker and want a HELOC, you most likely will need to go to another lender. For brokers, HELOC’s aren’t very profitable, so many brokers don’t want to spend their time on them. For credit unions, it’s different. Their members want this type of loan, so they offer them.

Having one lender for all of your financial needs only makes sense. When you know what your overall financial plan is, it’s easier to choose the best lender to fit your needs.

#9 Easier Bill Paying

Who doesn’t love a one-stop shop? As we get busier, convenience is not only nice — it’s vital. With credit unions, you can have all of your finances in one location. That can include:

·      Checking

·      Savings

·      Mortgage

·      Home equity loans

·      Car loans

·      Personal loans

·      Credit cards

Many credit unions have easy-to-use member dashboards where members can track all their loans and mortgages in one place, plus their checking and savings accounts.

#10 Credit Union Promotions

Because credit unions are non-profit, they can offer some great promotional deals. So being part of a credit union can give you opportunities that a bank or mortgage broker may not offer. Plus, the promotions can be more targeted towards your needs.

If you’re currently with a bank, it’s worth your while checking out credit unions. Once you’ve found the one that fits your needs, it’s easy to switch from a bank to a credit union.

For more information about PenFed Mortgages:

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Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5


1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.