5 benefits of choosing credit union home loans

March 12, 2024

By Lois Sullivan

5 benefits of choosing credit union home loans

Young smiling couple both hold up five fingers in their home, reinforcing the five benefits of choosing a credit union home loan.

You have a lot to think about when buying a new home, including how you'll finance it. While there are many options out there, credit unions are an increasingly popular choice for financing and offer a variety of home loans.

If you are currently going through the home buying process and shopping for loans, take some time to learn the benefits of choosing a credit union for a home loan versus a traditional bank and discover why a credit union home loan might be the right choice for you.

Understanding credit unions

Credit unions offer a range of banking services, including savings accounts and loans. The major difference between banks and credit unions is who owns the financial institution. At a bank, stockholders are the owners. That means banks answer to their stockholders and have a fiduciary duty to those stockholders. They do not have the same obligation to their customers.

On the other hand, credit unions are member-owned and not-for-profit institutions. Since credit unions don't answer to stockholders, credit unions can distribute profits to their members. This model allows credit unions to serve their members’ best interests.

Overview of home loans

Most people need a mortgage to purchase real estate, such as a new home. When you get a home loan, you agree to pay the principal amount plus interest throughout the loan. Your home serves as collateral for the loan, meaning the lender can foreclose on the property if you stop making payments. “Foreclose” means the lender can take ownership of the property and sell it if you miss a specific number of monthly payments.

You have many options for a mortgage lender, including traditional banks and credit unions. Both offer a variety of home loans, including: 

  • Conventional mortgages: A conventional mortgage is a loan through a private lender that isn't backed by the federal government. This type of loan usually requires a minimum credit score and a down payment.
  • Jumbo loans: Those needing to finance loan amounts greater than the maximum allowed on loans eligible for purchase by Fannie Mae and Freddie Mac may need a jumbo loan. This type of loan exceeds the conforming loan limit for conventional loans.
  • Government-backed loans: Certain borrowers may qualify for government-backed loans. These types of mortgages include Federal Housing Administration loans, United States Department of Agriculture loans, and Veterans Affairs loans. •
  • Fixed-rate mortgages: A fixed-rate mortgage has the same interest rate throughout the loan term, usually 15 or 30 years. 
  • Adjustable-rate mortgages: Unlike a fixed-rate mortgage, an adjustable-rate mortgage can change interest rates over time. It may start at a fixed rate for a specific period and then vary throughout the rest of the loan term.

Benefits of credit union home loans

Not sure whether to choose a bank or credit union for your mortgage? Consider these benefits of credit union home loans.

Competitive interest rates and fees

If you're concerned about rising interest rates, a credit union home loan may be right for you. Credit unions typically offer more competitive interest rates on home loans and lower lender fees than traditional banks. As not-for-profit institutions, credit unions pass on their profits and cost savings to members, not investors. Securing a lower interest rate, especially on a fixed-rate mortgage, can result in significant long-term savings throughout the loan.

Personalized service

For most people, a home is the biggest purchase they'll make. When you choose a credit union as your lender, you'll receive personalized service, usually from a mortgage loan officer dedicated to your application. Your mortgage loan officer will answer your questions and explain the process in a way you understand. This personal relationship can give you greater confidence throughout the home-buying process.

Flexible loan options

A credit union can offer flexible loan terms and repayment options based on your unique needs. For example, a credit union may offer loan programs for first-time homebuyers, self-employed professionals, or borrowers with no down payments.

Member benefits

The benefits don't stop once you secure your home loan. After qualifying and signing up for a mortgage, you become a credit union member. You'll be part of an institution focused on its members' long-term financial success.

Community involvement

Credit unions often give back to the communities they serve through various initiatives, such as scholarship programs or volunteer services. For example, the Alliant Credit Union Foundation is a not-for-profit charitable foundation with a vision to provide reliable broadband, digital literacy resources and technology equipment for underserved communities, including rural, digitally-challenged and under-resourced populations. The Foundation also invests in local community organizations and provides grants to various charities. When you get your mortgage from a credit union, rather than a bank, you're making a statement about your choice to support local community involvement. Credit union home loans offer many benefits, including competitive interest rates, flexible options and excellent service. When you obtain a credit union mortgage, you'll become a member of an institution committed to your financial well-being through ongoing, personalized support. Consider a credit union mortgage as you shop for the best home loan to meet your needs.

Questions? Contact an Alliant Credit Union mortgage loan officer

Have more questions about credit union home loans, how they work, or their benefits? We're here to help. At Alliant Credit Union, we put our members first in everything we do, from home loans and insurance to investment accounts. Contact a mortgage loan officer of your choice for more information about the mortgage process and how we can help make your home ownership dreams a reality.

Everyone in the United States is eligible to apply to join Alliant Credit Union. You can qualify for membership in different ways. You can be an employee/retiree of a qualifying company or a member of a qualifying organization, or you can live or work in a qualifying Chicagoland community. Easiest of all, Alliant can make a one-time $5 donation to the Alliant Credit Union Foundation, which partners with charitable organizations that provide reliable broadband, digital literacy resources and technology to under-served communities.

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