Sunday, April 19, 2015

Credit Unions for Home Loans

Based on a recent article in the Los Angeles Times, it appears credit unions have been coming into the home lending business for several years, and they are competing well against the big banks like Wells Fargo and Chase. And membership in the credit unions is not limited to the small groups of the past.

As an example, the Navy Federal credit union, which is the nation's  largest, in March 2015 closed over $1 billion in home loans. And membership is not limited to navy personnel. It is open to all military branches, both active and retired military, civilian employees, contractors and all sorts of family members. Even partners who are living together and are unmarried can be eligible.

And they offer low down payment programs of the FHA (3.5% minimum), zero-down payments, and no private mortgage insurance premiums. You might think this would lead to higher loan loss ratios, but it does not. The overall serious delinquency rate as of March was less than one percent (.57%). They have been following the guidelines of the "ability to repay" years ahead of the requirements congress enacted.

While the maximums might not fit houses in large metro areas of CA or NY at $650,000, it would still be a fit for most areas in the United States. The next time you go shopping for a home loan, check out credit unions and see if you qualify to be a member.


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