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MORTGAGE KNOWLEDGE CENTER

PenFed Mortgage with Confidence

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image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

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

  1. Home
  2. Mortgage Knowledge Center
  3. Top Reasons for a Credit Union Refinance

MORTGAGE

Top Reasons for a Credit Union Refinance

EXPECTED READ TIME: 9 MINUTES

October 15, 2021

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:
 

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

Top 10 Benefits of a HELOC

There are plenty of benefits to a home equity line of credit, or HELOC. By leveraging the equity in your home, you can take advantage of the benefits.
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Top 10 Smart Home Features Homeowners Love

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Top 10 Mistakes to Avoid When Applying for a Mortgage

Applying for a mortgage can be tricky. There are pitfalls to avoid, so you don't get turned down. Find out what they are so you have a better chance of approval.
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image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

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

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

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

Disclosures

1Except for holidays, rates are updated Monday through Friday 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.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of September 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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