Buying a home will likely be one of the most important financial decisions you make of your life, simply due to the amount that you will spend on a mortgage. House prices dwarf those of all other major purchases. Cars, vacations, and furniture are all a fraction of the cost of buying a new home.
It stands to reason, then, that you take plenty of time to get familiarized with the ins and outs of home loans. You may believe that getting a mortgage simply means heading down to your bank and accepting the rate that they give you, and in the past, this was what people tended to do. Now, though, fortunately, you have more options.
Two of these are credit unions and mortgage brokers. To find either of these in your area, you just have to google “credit union near me” or “mortgage broker near me.” But are you sure of what the differences are? Do you really know where the best deals and services are likely to be found?
Read on for five reasons why a credit union is a far better choice than a mortgage broker.
What is a mortgage broker?
A broker acts as a middleman and will assist you in matching with the lender for your needs. Brokers work with mortgage companies, acting as a single point where you can compare many different loans. They receive information from you, like your income, employment documentation, assets and other pieces of information. This is used to assess your ability to secure financing. Once this information has been collected, it is passed on to mortgage providers.
Mortgage brokers are often more expensive than credit unions, as they work on the basis of making a profit. Credit unions, on the other hand, are not-for-profit entities that serve the needs of their members.
What is a credit union?
Credit unions are banking institutions that are owned by their members. They are usually smaller than banks and offer more personalized services. The profits they make benefit their members through lower loan rates and higher returns on savings accounts.
The advantages of choosing a credit union instead of a mortgage broker are numerous. Here are just a few of these advantages.
1. They charge lower fees
As credit unions do not make a profit, they are able to charge lower fees than mortgage brokers. This means that if you opt for a home loan from a credit union, you will likely be paying less both at closing and overall. Sometimes, when you apply for a loan there will be hidden fees involved. This is not the case with credit unions. They are up front about any charges that may arise.
2. They charge lower interest rates
Credit unions tend to have lower interest rates than big banks and mortgage brokers, meaning that you will save again.
Of course, it’s better to get lower interest rates for anything when you are borrowing money. If you are buying a car, the difference between having a good interest rate and a bad interest rate might work out at a few hundred or perhaps even a few thousand dollars in savings. When buying a house, due to the amount of money involved, the difference between opting for an institution that offers you a reasonable rate to one taht offers you a poor one can run to five figures. It’s worth shopping and considering a credit union such as Solarity.
3. Credit unions approve more home loans
It can be easier to get home loans from credit unions, as the qualification requirements tend to be more flexible. Since credit unions are more focused on helping people, they are more likely to offer the opportunity to get a mortgage for those who have a low credit score and would be turned away from mortgage brokers. They also are willing to work with borrowers who don’t have the funds to make large down payments.
When you work with a credit union, they will pre-approve or pre-qualify your home loan, making it quicker and easier to secure your new home.
4. They are interested in your needs
Mortgage brokers operate on the principle of a zero-sum game. This means that when one party loses, the other wins. When they give people home loans, they want to make as much money as possible for their shareholders, which means that they will charge you as much as possible.
This is not the case with credit unions. As non-profit organizations, they have different values. Rather than existing solely to generate a profit, they instead strive to assist their members, and that means they offer better rates.
Credit unions offer their members much more of a personal experience and are often operating at your local branch. They know you and your community. Whereas a mortgage broker making the decision on whether to give you a home loan could be thousands of miles away in another country.
5. Free financial education
Credit unions strive to help their members increase their financial literacy. As such, they often provide information or put on workshops to help demystify some aspects of financial knowledge. This helps members to make better decisions regarding their finances.
Buying a home is an exciting event, and obtaining a mortgage should leave you feeling satisfied with your decision. So, before you decide to Google “mortgage broker near me,” you might instead speak with a member-focused credit union such as Solarity Credit Union in Washington State. We are here to serve future and current homeowners and will give you straightforward advice to help you make the right decision regarding your home loan and your future.