Welcome to the “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about borrowing to buy a house; specifically, whether a credit union is a good source for mortgage money.
Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.
You also can learn how to send in a question of your own below.
For more information, check out “How to Pick the Best Credit Union for You” and “Ask Stacy: Is a Credit Union the Best Place for Loans?” You can also go to the search at the top of this page, put in the words “mortgage” or “credit union” and find plenty of information on just about everything relating to these topics.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by Money Talks News, serving up the best in personal finance news and advice since 1991.
Today’s question comes from Sally:
“Are credit unions a good place to obtain mortgages?”
The short answer is yes; you should definitely check out credit unions when it’s time to mortgage shop. Let’s go over a few reasons why.
Not-for-profit is more profitable for you
The reason I can say that credit unions are typically better than banks is because they’re nonprofit. That means that, unlike a bank — which is formed to make as much money as possible — a credit union is there for the benefit of its members.
Why does that matter? Because when you’re not trying to make a profit, you can charge less on your loans. And remember, even a quarter-point lower can mean hundreds, even thousands, in savings over the life of a mortgage loan.
So when shopping for a mortgage, you should definitely check credit unions, both local and national. But don’t stop there. Check as many sources as you can. The internet is full of mortgage search tools, including one we have at Money Talks News.
Bottom line? You should definitely check out credit unions for all your banking needs. You’re often — but not always — going to find lower rates on loans of all types, including mortgage loans, as well as higher rates on savings. And since they’re smaller than the big banks, you might also find more personal service.
More credit union pros and cons
One negative often associated with credit unions is convenience. Generally speaking, credit unions are local. So, what happens if you’re from Florida and you need to make a mortgage payment in Colorado?
While that may seem like a drawback, it’s often not.
Most credit unions participate in what’s called a shared branching network. That means they basically share their branches. So, I could go to a completely different credit union’s branch in Colorado and access my Florida credit union account. Pretty cool, huh? You can also use ATMs all over the country. Some are even in 7-Elevens! (You can see the 30,000 ATMs and 5,000 participating branches here.)
That’s the good stuff. What about the bad? There can be some minor drawbacks to credit unions, depending on what you’re looking for. For example, credit unions may have fewer bells and whistles when it comes to things like reward points on credit and debit cards. If that kind of stuff is important to you, you might want to shop for those services.
Which brings me to my last point. Before switching banks, or many other services, start by writing down exactly what you’re looking for. Do you want a vast ATM network? Do you want better savings rates? Do you want lower loan rates? In other words, figure out what you need, then compare services.
Hope that answers your question, Sally. Now, if you’re watching me on YouTube, click the subscribe button below. If you’re watching me at Money Talks News, sign up for my free, awesome newsletter: Click the “newsletter” button in the nav bar above. I’m Stacy Johnson, and I’ll see you all next time!
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The questions I’m likeliest to answer are those that come from our members. You can learn how to become one here. Also, questions should be of interest to other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and I’ve also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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