5 things your bank won’t tell you about getting a mortgage

Buying a home is likely the single biggest purchase you will ever make. That’s why, when it comes to choosing a financial partner, it’s important to do your homework. Most financial institutions out there offer mortgages—but only credit unions offer mortgages that truly have your best interests at heart.

Here are five things your bank probably won’t tell you about getting a mortgage.

1. Your credit union wants you to pay off your mortgage quicker

Most financial institutions generate their revenue through interest rates and service fees, and because mortgages are such a large loan, they also carry a lot of interest. For financial institutions who have an obligation to generate as much profit as possible for their shareholders, that means the longer it takes you to pay off your mortgage, the more revenue they make. Because credit unions operate with a member-first approach, getting you in a better financial situation first is far more important than striving for record profits.

2. The best mortgage isn’t necessarily the one with the lowest interest rate

A bargain basement interest rate can come with a ton of other restrictions and stipulations, which, depending on what they are, can end up costing you way more money in the long run. Credit unions are able to offer competitive mortgage rates, but they may not be as low as other financial institutions. However, that also means the terms and conditions offered by credit unions are often a lot less stringent. Make sure you know what you’re signing up for and be willing to look beyond just the lowest interest rate possible when considering a lender for your mortgage.

3. A low payment isn’t necessarily a good thing

How much your monthly mortgage payment is depends on the total amount of your mortgage. But things like interest rates also play a factor. If interest rates are lower than “normal”, it might mean your monthly payment could potentially be lower, too. However, over the course of a standard 25-year mortgage, interest rates will likely climb again, which means your monthly payment is also likely to go up. The majority of mortgages offered by credit unions need to pass a stress test—a simple calculation that basically ensures if mortgage rates go up, you’ll still be financially comfortable. That means, before you’re even approved for a mortgage, your credit union has made sure you can afford your monthly payment, regardless of what might happen with interest rates. Credit unions will also work with you to figure out your monthly budget and priorities so you won’t end up with more mortgage than you can handle.

4. Your mortgage is about more than just the terms of repayment

A mortgage is a contractual document between you and your financial institution. That means your mortgage documents cover things like the amount of the loan and the terms of your repayment. It also means your mortgage agreement can cover other things like the type of insurance you’re required to have, information about reasonable upkeep of the property, and what happens if you’re unable to keep up your end of the agreement. Signing documents for a mortgage can be overwhelming and even intimidating, but it’s important to read the fine print and understand exactly what you’re agreeing to. It’s ok to ask lots of questions. In fact, we want you to ask lots of questions. Financial literacy is very important to credit unions and we want to make sure you feel comfortable.

5. You are more important than the sale

Like any business, credit unions do care about the bottom line. But unlike most businesses, credit unions care far more about their members and their financial well-being than simply logging another sale. When it comes to getting a mortgage, credit unions work with you to ensure you have the mortgage that’s right for you and to make sure you understand the process, the paperwork, and what other requirements (think home and fire insurance, property taxes, etc.) you need to have lined-up before you go house-hunting.

If you have questions or are looking to talk to an expert, find your nearest credit union here.