Credit Union Mortgage Vs. Bank Mortgage
Credit unions are not-for-profit financial institutions that are owned by the members. Banks are companies that lend money for a profit. Both offer mortgages, which are loans used to purchase homes. Mortgage loans are typically secured by a lien on the house.
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Features
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Credit unions usually have membership requirements based on where you live, work or attend religious services. Banks are open to everyone, but may have stricter lending requirements.
Function
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Because credit unions are nonprofits, they will generally have lower interest rates on mortgages and fees than banks, according to MSN Money. If you do not have much money to pay for upfront closing costs and the down payment, you should consider a mortgage from a credit union.
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Types
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Because of their larger size, banks may have more types of mortgages when it comes to customizing your mortgage than credit unions. These mortgage types can include fixed and adjustable rate mortgages, the length of the mortgage and variable payment options.
Considerations
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Credit unions have fewer employees to deal with customers than banks and usually do not offer 24-hour customer service. In addition, some credit unions have limited online access to your accounts and bill pay services so check to the services offered before you choose a lender, especially if you use customer service or the Internet to pay your bill on a regular basis.
History
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Credit unions were authorized by President Franklin Roosevelt in 1934 as a means of offering credit outside the traditional banking system. According to Bankrate.com, there are over 8,600 federally chartered credit unions as of 2008.
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