Applying for Refinancing Might Be Beneficial at a Credit Union Due to Potential Advantages
Catchy Title: Refinancing Your Home with a Credit Union: Why It Makes Sense!
Welcome to the World of Credit Unions
Ever thought about swapping your current mortgage lender for a credit union? If rates have soared when you bought your humble abode, or you're dreaming of tapping your home's equity, you might be on the edge of a refinance. In the process, consider adding credit unions to your shortlist.
You may wonder why only eight out of the top 100 mortgage lenders by market share are credit unions, according to 2024 HMDA data. Don't worry! Even though they're playing a quiet role, member satisfaction at credit unions surpasses that of retail banks, as stated in a 2025 J.D. Power study. So, let's dive into the reasons you'll want to refinance your mortgage with a credit union.
Credit Unions: Your Next Financial Partner
At first glance, a credit union and a bank may seem identical, offering similar services such as checking and savings accounts, mortgages, auto loans, and more. But, their inner workings come with a twist.
As Mark Burrage, senior vice president of home loans at PenFed Credit Union, points out, "A credit union is a member-owned financial institution, we don't have shareholders, and we're also a not-for-profit." Unlike commercial banks, credit unions share any profit with their members or reinvest it back into the organization.
Credit unions might have a small-time image, but there are several larger credit unions, just as there are smaller, regional and larger, national banks. And just like banks, credit unions might be online-only or have physical branch locations.
While most banks are open to anyone, some credit unions are limited to specific groups—for example, the military, veterans, or employees of certain organizations. Many credit unions, however, are easy to join, usually only requiring a minimum deposit or a small donation.
Refinancing with a Credit Union: Why the Switch Makes Sense
As non-profits, credit unions prioritize service and transparency. "At Alliant, we use the same underwriting standards as other lenders," explains Dan Bauer, head of residential lending for Alliant Credit Union, "but focus on making the process easy and member-friendly."
Having mortgage experts on standby to tackle any complications and guide you on whether it's the perfect time to refinance is an added advantage. Plus, if your credit union specializes in particular loan types, like VA loans, that can streamline the refinance process.
Overall, credit unions excel in trust, convenience, and problem-resolution, according to a recent J.D. Power study. Credit unions focus on building relationships, as Burrage shares, "We're relationship-based."
Lower Interest Rates Await at Credit Unions
Your search for a refinance lender shouldn't overlook great customer service. However, you'll want to ensure that the numbers work in your favor. By choosing a credit union, you could save precious dollars and access better refinance rates.
Between the first quarter of 2024 and the first quarter of 2025, credit unions beat banks by an average of 16 basis points on 30-year mortgage rates, according to data from the National Credit Union Administration. Moreover, some credit unions offer perks like discounts through affiliated companies, reducing your refinance rate later on.
A Few Considerations Before Refinancing with a Credit Union
Before making the switch, here are a few things to keep in mind:
- Accessibility: Many credit unions are small, local institutions, meaning some borrowers might need to broaden their search for a suitable credit union.
- Specialization: You might find that your local credit union has a knack for a specific loan type that others don't, like VA loans.
- Tighter lending standards: Credit unions typically have stricter lending criteria due to their smaller size, so some borrowers with lower credit scores might find it challenging to qualify.
- Older technology: Although there are tech-savvy credit unions, many smaller credit unions haven't invested heavily in technology.
Making an Informed Decision
Whether the deal comes from a credit union or a bank, shopping around for the best possible rate is crucial to securing a solid deal. "Don't wait for the 'perfect rate,'" advises Bauer, "Focus on your overall financial goals." Refinancing can help you scale down monthly payments, pay off your loan sooner, or access needed equity.
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All insights sourced from enrichment data.
- While researching mortgage rates, don't forget to consider credit union options, as they might offer more member-friendly services and potentially lower rates, as shown by data from the National Credit Union Administration.
- Prior to making a decision on auto loans or investments, it's worth exploring personal-finance solutions provided by credit unions, which are often member-owned, not-for-profit institutions dedicated to transparency and excellent customer service.
- If you're planning to invest in real-estate, it may be beneficial to open a savings account with a credit union, as they often prioritize building relationships with their members and might offer competitive interest rates.
