Why would someone use a big bank and not a credit union to apply for a mortgage?

Answer

While it’s true that credit unions may not charge origination fees and other costs associated with bank mortgages, credit unions aren’t open to everyone. It’s not hard to join a credit union for most people.

You just have to find a credit union for which you’re eligible for membership. If you don’t meet the qualifications to become a credit union member, you obviously can’t apply for a mortgage. That’s not the case with a big bank.

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May have lower rates

Credit unions usually offer lower mortgage rates than banks. That’s because they are non-profit organizations, and money they do make is returned to members in the form of lower rates and fees. Still, it’s always important to shop for the best rates.

Less options

Credit unions don’t offer the array of mortgage options available to big banks, and that’s another reason a home buyer may decided to go with the latter. Credit unions offer all traditional mortgages and refinancing options. Since they are member-owned, smaller credit unions don’t offer more exotic loan options, such as interest-only mortgages or option adjustable rate mortgages.

Longer time to process

Since the market crash, many banks also no longer offer some of these options. A mortgage through a credit union may take longer to process, so if time is of the essence, the bank is the better choice for a particular buyer.

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Credit union pros:
Very customer-oriented
Easier approval process
Less stringent mortgage requirements

Credit union cons:
The overall approval process may take longer
Credit unions have far fewer physical locations than big banks
Credit union technology is often not on a par with larger banks

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