Routing # 256078446
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Mortgage Refinancing: Banks Compared to Credit Unions
What you'll learn: What you need to know about refinancing with a credit union over a bank.
EXPECTED READ TIME: 4 MINUTES
September 23, 2024
There are a lot of lenders on the market who offer ways to refinance your mortgage. So how do you know who to choose? Is it better to work with a bank or a credit union? Are there differences in the rates that they offer?
While it will ultimately come down to your unique financial situation and goals, here are the differences between credit unions and banks that you need to know.
Banks compared to credit unions: What is the difference?
While traditional banks have long been a go-to choice for borrowers, credit unions are popular with homeowners who are looking for more ways to save on their mortgages. This is because credit unions are not-for-profit entities.
Unlike banks, which are owned by shareholders and have quotas to fill, credit unions are cooperatives owned by their members. This means they are able to pass more savings onto their members, often offering lower interest rates and fewer lender fees.
On top of more savings, the mortgage process you go through with a credit union will be incredibly similar to a traditional bank. From application to closing, you can expect the same steps and paperwork procedures to be involved when refinancing with a credit union.
Here are the differences broken down:
| Credit Unions | Traditional Banks |
| Not-for-profit entities | For-profit institutions |
| Membership eligibility may depend on location or profession; however, some offer open membership to the public | Membership is open to the public |
|
Often keep and service mortgages they originated. | Often sell originated mortgages to the secondary mortgage market |
Choosing your lender is a personal decision, but it is worth considering all of the options you have available. Especially since you will be working with your lender for the remaining life of the loan.
Benefits of a credit union refinance
As you weigh your options between traditional banks and credit unions, consider these benefits of a credit union refinance:
Lower rates and more savings
Low rates are a hot commodity among homeowners, so it is essential to compare credit union rates against those offered by banks. Most credit unions are able to provide their members with competitive rates and overall fewer fees, potentially saving you more in the short and long term.
Closing costs and fees will vary depending on the credit union, so it is important to reach out to a few so you can compare lender costs.
Personal treatment
When determining eligibility for refinancing, they will take a more personal look at your income, assets, and employment history, judging decisions on a case-by-case basis and offering more opportunities to a wide variety of borrowers.
Specialized services
Relationship-based customer service is a stand-out benefit of most credit unions. They focus on developing real connections with their borrowers, so you get to know the people you are working with when you refinance.
Variety of choices
You may be surprised to learn that credit unions have a wide range of mortgage products to choose from in order to meet the needs of their members. Credit unions are focused on what works for their members, dedicated to saving them money. By offering additional options, members can more closely tailor a home refinance to their specific needs. Even if you worked with a bank to secure your current mortgage, it is worth knowing that there are other options out there for when you are ready to refinance.
Once you have found a lender you trust and a refinance option that fits your specific needs, you may be surprised to discover how easy it is to become a credit union member.
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Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except 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 1.0 discount point, which equals 1.0 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.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except 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 1.0 discount point, which equals 1.0 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 96.5%; 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.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except 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 1.125 discount point, which equals 1.125 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 $450,000; loan-to-value ratio of 95%; 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.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except 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 0.625 discount point, which equals 0.625 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; 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.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance 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.
Routing #256078446
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