Do credit unions really have the best deals on a home mortgage?
Renting & Real Estate
Kirsten asked:
From the research I’ve done, the rates seem quite a bit better than most other banks. Is there a downside to getting a home mortgage from a credit union? Why wouldn’t everyone do it if the rates are so much better?
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From the research I’ve done, the rates seem quite a bit better than most other banks. Is there a downside to getting a home mortgage from a credit union? Why wouldn’t everyone do it if the rates are so much better?
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September 8th, 2008 at 11:45 pm
The credit union is a member owned type institution, so there might be some rate savings.
You must remember the way the mortgage business work.
Some banks and credit unions only have a few mortgage products available. This is based on the make up of your managers of your credit union or bank.
Some of these managers are very conservative therefore they will not offer any mortgage products except the ones they consider less riskier. They have a way of getting money to loan to their clients as long as they don’t have an over abundance of negative assets on their books, that they can borrow from the federal reserve at very low rates to them.
Then you have mortgage brokers and some mortgage bankers, they don’t have any money nor away of getting any so they qualify and get approved by wholesale lenders that do business with them.
They can get qualified and approved by as many of these wholesale lenders as they can.
Based on the wholesale lenders critiera these mortgage bankers and brokers are allowed to act as a go between for clients that want to borrow mortgage money.
These brokers/bankers are paid based on points they can charge up front or whatever the wholesale lender will give them called backend points. They mitght also charge a fee that is normally limited by the wholesale lender.
These mortgage brokers/bankers are normally competitive with other banks or credit unions. They could have mortgage products your bank or credit union might not have or because of your bank or credit union management would not consider offering to their clients.
If your credit union or bank can not get you a mortgage chances are you are through with them and your mortgage request is pretty much dead.
With a mortgage banker/broker if they can not get one underwriter to underwrite a mortgage request they simply send the mortgage request to another underwriter using the same credit report and appraisal.
I hope this has been of some use to you, good luck.
“FIGHT ON”
September 12th, 2008 at 11:05 am
They are not always better! It varies and it also depends if you included all the fees / points and finally how comprehensive was your research