Years ago, credit unions weren't the best place to look for a mortgage. But that was then and this is now. Today, credit unions are a great source for mortgages, especially if you're looking for something more creative.
Pentagon Federal Credit Union has some unusual loans that you typically won't find from a bank or mortgage broker and could save you money in the right situation.
For example, they have a 15/15 ARM. It's a 30-year loan, but the rate is only fixed for the first 15 years. You get a lower interest rate than you would with a traditional 30-year loan. And because the typical person keeps a loan for around 7 years, this can save you money. If you do stay put in the house, the loan resets at prevailing rates 15 years down the road.
Other credit unions are offering a 5/5 ARM. The rate is set for 5 years at today's rate, but unlike a 5/1 ARM, the rate resets five years down the road and stays put for another 5 years. For many people, these rates would work very well too.
When it comes to mortgages, the difference between a credit union and a bank is the credit union wants you to get out of debt, while the bank wants you to stay in debt. So credit unions do more creative products with the whole design being to get you debt free instead of paying the bank forever and ever.
For further reading:
- Outdated features can land you a deal as a homebuyer
- Pros and cons of reverse mortgages for seniors
- The dangers of forced place insurance