A Credit Union Could Be Your Best Source For A Mortgage

Navy Federal pays up to $2,500 in closing costs for members and will match any loan approval at a lower interest rate. Toler says some credit unions offer a $500 rebate at settlement or even pay all closing costs for members.

"We offer the 'Harmony Loan' to members of credit unions we work with, which allows borrowers to reset their interest rate as often as every 120 days if mortgage rates decline," says Toler. "Instead of refinancing, borrowers can check rates online and reduce their interest rate with the click of a button. There's no loan approval or appraisal process and no closing costs."

Membership options

While credit unions were traditionally restricted to employees in certain industries or residents in a particular area, "credit unions are a lot easier to join than they used to be," says Toler. "For instance, the Fairfax County Federal Credit Union in Virginia used to be open only to county employees, but membership is now open to anyone who lives, works, worships or goes to school in the county. Some credit unions are more closed, but others are affiliated with an association and open to anyone who makes a small donation to the association."

You can find a credit union to join at the National Credit Union Association. Membership fees are very reasonable, usually ranging from just $5 to $20.

However, just as with banks, credit unions vary widely in their fees and services. The credit union you qualify to join may not necessarily be the one with the best mortgage products.

Customer service

"Credit unions are fiercely pro-customer," says Brian Martucci, a mortgage lender with GetLoans.com in Washington, D.C. "However, a credit union with regional or centralized operations will be less likely to give their customers special attention than a direct lender."

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