The decision to apply for a mortgage may leave you wondering whether a credit union or a bank is the best lending resource for you. You may ask yourself: credit union vs bank, where should I go? The answer to this question can be discovered with more of an understanding between the differences and similarities of a credit union vs bank.
Both financial institutions offer overlapping opportunities, but the differences between a credit union vs bank may sway potential home buyers in one direction or the other when it comes to applying for a mortgage pre-approval. If you’re considering purchasing a home, reviewing these differences is worth your time and consideration.
If you were to compare the physical layout of a credit union vs bank, they may look quite similar and both typically offer comparable products and services to assist homebuyers in making sound financial decisions.
But an underlying fact about the organizations creates a significant difference. Banks are generally privately owned corporations designed to provide stockholders with a substantial return on their investment. These for-profit organizations typically encourage their employees, the ones serving you, to strive for sales goals to ensure they’re making enough money for the stockholders of the bank.
By contrast, credit unions are not-for-profit organizations that are owned by their members. Typically, the minimum balance requirement for your savings account represents your membership share in the credit union. As a member, you can attend the credit union’s Annual Meeting where updates are shared, and members are able to vote on items pertaining to the future of the credit union and its board of directors. As a member, you have a vote and a say in the organization’s direction.
The credit union goal of serving their members’ financial needs often results in mortgage products with competitive interest rates, reduced processing fees, and excellent service. They are there to help you find the product that best fits your budget and needs, versus selling a product to meet a sales goal.
The credit union vs bank mortgage lending programs may seem comparable on the surface. Both financial institutions facilitate government-backed mortgage products as well as privately secured options. Qualified borrowers can expect to see the following home loan options at both banks and credit unions.
When shopping for a home loan, the difference between a fixed-rate and adjustable-rate mortgage (ARM) is important. Fixed-rate mortgages establish a monthly payment that does not change over the life of the loan. By contrast, an ARM may shift higher or lower depending on the current state of the market. It’s essential to discuss the best mortgage option for your needs with a member of Peach State’s Mortgage Services team.
When working through mortgage rate and fee structures, it’s important to understand that neither a bank nor credit union can offer a zero-interest mortgage or waive all the fees. Banks do have to provide their stockholders with a return on their investment, while credit unions reinvest any returns into offering better products/services and more affordable lending opportunities for their members. Choosing to work with a credit union like Peach State is akin to reinvesting in yourself and the community.
As a financial cooperative, Peach State helps families achieve their dream of owning a home in Georgia or South Carolina by offering a variety of affordable mortgage options. Peach State reinvests the modest interest rates and fees into strengthening our ability to better serve our membership. We reinvest in the local Georgia and South Carolina communities that we serve and call home. If you’re considering buying a home, get pre-approved for your mortgage with Peach State today!