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Credit Unions Help First-Time Homebuyers Achieve Their Dreams

Credit Unions Help First-Time Homebuyers Achieve Their Dreams By Cyndi Cohen
Published August 28, 2012
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If you are in the market for your first home, look to your Credit Union as a trusted resource. In the current housing market, there are some great opportunities and special programs for first-time homebuyers. Interest rates are still low, home prices are affordable and many mortgage financing options are available for members, with special perks for those who are first-time homebuyers.

Purchasing your first home comes with many big decisions as well as costs. However, with some insider information and guidance from your credit union, you’ll be armed with the knowledge and tools to help you develop a financial strategy for buying your first home. In addition to mortgage loans, pre-approvals, home-buying seminars and other traditional home-buying services, many credit unions now offer first time home-buyer programs boasting reduced rates, fees and down payments; closing cost assistance; home-buying tips and more.

Zero Down, Zero Closing Costs, 100% Service

Landmark Credit Union (New Berlin, WI) offers a First-Time Mortgage Program in which they waive all closing costs while also providing low rates and local servicing. Promoted through their newsletter, website, TV commercials, billboards, postcard mailings, and online ads, the program has been popular among members. “Roughly a third of the mortgages we make are to first-time buyers,” says Patricia K. Ransom, Vice President of Marketing.

Likewise, State Employees Credit Union (Raleigh, NC) provides first time buyers with 100% financing, no PMI or origination fee, up to $1,000 to cover closing costs, and flexible underwriting guidelines. The only fee due to SECU is the cost of an appraisal ($300). “The member will have to pay the attorney fees, title insurance costs and recording fees but we can finance up to $1,000 of those costs as part of the mortgage,” explains Spencer Scarboro, SVP of Loan Originations. All in all, members have very little out of pocket expense as part of this program.

The credit union has nearly $1 billion in First-Time Homebuyer mortgage balances representing over 7,500 loans. “Despite the potentially higher risk exposure associated with the higher LTV and the inexperience of the borrowers, these loans typically perform as well or better than our more traditional mortgage loan products with lower LTVs,” reports Scarboro. He says that credit unions typically have more flexibility in creating niche products such as these. “A credit union is more likely to be concerned with placing the member in a mortgage that is the best fit for the member instead of what may be most profitable for the institution,” contends Scarboro.

FHA and Credit Union Home Specialists to the Rescue

Some credit union first time homebuyer programs feature FHA loans. FHA mortgages are issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for borrowers who are unable to make a large down payment by allowing the buyer to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, making this a popular loan with first-time buyers.

For instance, Arizona Central Credit Union (Phoenix, AZ) includes FHA loans in their first time buyer program, with down payments as low as a 3.5%. The credit union also offers conventional loan programs with as little as 5% down and a VA (Veteran’s Administration) Loan for the credit union’s service members with a 0% down payment option.

“Very often first time homebuyers are just getting settled in their careers and their income may be a little lower,” says David Kexel, VP of Marketing. “The FHA loans allow for this in the ratios allowed to qualify and the low down payment.” The down payment can be gifted from family members who may want to help their children get started with homeownership, and the program also allows for the sellers of the property to pay up to 6% of the buyer’s closing costs.

“Our not-for-profit, member-owned structure allows us to pass on lower rates, lower fees and to give personal one-on-one attention to our members,” says Kexel.

One more valuable credit union feature that first-time home buyers can take advantage of is seminars with industry specialists.

Delta Community Credit Union (Atlanta, GA) hosts First-Time Home Buying seminars in the spring and fall of each year during which they provide an overview of the lending process. “We also have a Home Loan Specialist in most of our metro Atlanta branches who originates loans and basically assists members with applying for a mortgage loan,” says Pam Davis, VP of Real Estate Services.They are very knowledgeable about mortgage loan products, rates and terms.” Members can find a specialist near them by visiting the Home Loans section of the credit union’s website. “For quite a while, we have also offered a $500 lender credit on all purchase transactions which helps first-time home buyers with their closings costs,” says Davis.

In addition to these special services, Delta’s First Time Home Buyers (FTHB) program offers borrowers who are purchasing their first home a low down payment option with very low closing costs and lender paid mortgage insurance. Davis says that with a 70% increase in applications from 2011 to 2012, the FTHB Program is a very popular product with their membership as well as real estate agents.

Members benefit from:

  • Up To 97% Financing Eligibility
  • No Origination Fee
  • No Private Mortgage Insurance (PMI)
  • Competitively Low Loan Rates
  • Guidance from our Home Loan Specialists
  • User-friendly Online Mortgage Application with preapproval

At Delta, they realize that buying your first home isn’t just a transaction it’s an achievement. “As exciting as buying a home can be, we know it can also be a little overwhelming,” says Davis. “Our program and Home Loan Specialists are designed and available to guide first-time home buyers through the process, with time and money-saving options, helping them achieve their goal of owning a home.”

If you are a first-time homebuyer looking to successfully prepare for one of life’s most important investments, look no further than your credit union. Not a member? Find a credit union in your neck of the woods and join today!

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