Mr. Cooper Mortgage Review 2024: Online Mortgage Options With Opportunities To Save (2024)

Pros of a Credit Union Mortgage

• Low fees: Credit unions are nonprofit organizations, and they pass any savings on to their members. That means you can expect low fees when you take out a credit union mortgage. Depending on your credit union, you could receive lower closing costs, appraisal fees or private mortgage insurance (PMI) policies.
• Low rates: Credit unions also tend to offer the lowest rates on lending products. For example, the national average rate on a 30-year fixed-rate credit union mortgage is 6.90%. The national average on a bank mortgage is 7.02%.
• Easier to qualify: Credit unions are more willing to work with borrowers who have less-than-ideal credit profiles. Instead of solely looking at your credit history, credit unions consider your total financial picture, like your income, assets and employment history.
• Personalized service: Credit unions tend to be smaller and offer a more personalized service to their members. Some may even offer special programs or incentives for first-time home buyers.

Cons of a Credit Union Mortgage

• Membership requirements: Most credit unions have membership requirements, and if you don’t meet those requirements, you can’t apply for a mortgage with that institution. For example, membership can be based on an occupation, community or association. However, everyone can find a credit union where they qualify for membership.
• Limited technology: Credit unions don’t usually have the resources to invest in the latest technology. Some credit unions may not offer digital banking tools, which can affect your ability to manage your loan. If this feature is important to you, look for a credit union that lets you apply for and make your loan payments online.
• No Federal Deposit Insurance Corporation (FDIC) insurance: Credit unions aren’t covered by FDIC insurance—instead, most credit unions are insured by the National Credit Union Association (NCUA). However, some smaller credit unions may be insured by a private company that’s less secure. You can find a complete list of federally chartered credit unions by using the NCUA’s Credit Union Locator.

Pros of a Bank Mortgage

• More loan options: By working with a bank, you’ll have access to a wide variety of loan options. Nearly every bank will offer conventional, FHA, VA and USDA loans, but that may not be the case at every credit union. This can be a significant benefit to individuals with unique financial situations who need a specific type of mortgage.
• More services: Banks also tend to offer a wider variety of services than the average credit union. For example, many banks offer deposit accounts like checking, savings, money market accounts and certificates of deposit (CDs). Some banks also offer credit cards, personal loans, auto loans and investing options.
• Latest technology: Because banks have more resources than credit unions, they tend to offer the latest technology, which can significantly improve your lending experience. You may be able to apply and complete your loan application entirely online. And most banks let you manage your loan online and set up automatic payments.
• More accessible: Banks are more accessible than credit unions since there are no membership requirements. You can apply for a bank mortgage even if you’ve never done business with that bank before. Banks also tend to offer more branch and ATM locations.

Cons of a Bank Mortgage

• Higher fees: Because banks are profit-driven, they will likely charge higher fees and rates than credit unions. You may get stuck with higher origination and processing fees, and your interest rate may be higher. Even a small difference in interest rates can cost you thousands of dollars over the life of the loan.
• Less personalization: If you apply for a mortgage with a large bank, you probably won’t receive the same personalized service. Bank loan officers have more clients to serve, so they won’t have as much time to spend with you. If personalization is important to you, you may want to look for a local or regional bank.
• Harder to qualify for: Banks tend to have strict lending requirements, so it can be harder for borrowers with less-than-ideal credit to qualify for a mortgage.

Credit unions and banks are equally safe since both provide ways to protect your money if the financial institution fails. Bank deposits are insured for up to $250,000 through the FDIC, and credit unions are insured for up to $250,000 through the NCUA. To determine whether a bank is FDIC-insured, ask a bank representative, look for the FDIC sign or call the FDIC directly. Credit unions should also display a sign stating they’re a member of the NCUA, or you can contact the NCUA and ask.

Maybe—credit unions may be a better choice if you’re already a member of a credit union. They’re also a good choice for anyone looking for low rates and fees and personalized customer service. However, banks are more accessible and offer the most loan types and services.

Banks are probably more likely to sell your mortgage, while credit unions are more likely to keep the loan on their books. However, both credit unions and banks have the option to sell the loan to another servicer without your permission.