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Credit Unions Help Members Save with Mortgage Refi Deals

Credit Unions Help Members Save with Mortgage Refi Deals

With home prices and interest rates still low and job stability slowly improving, many want to cash in on the opportunity that this current market is providing, creating a home buying and refinancing boom. If you are in the market to refinance your home, a credit union is the perfect place to go! Along with historically low rates, many credit unions are offering special refinancing programs as well as incentives for new and existing members, and doing so with the guidance, care, and personalized service that credit union members have grown to expect.

To Refinance or Not to Refinance

For some credit union members, the decision of whether or not to refinance their mortgage can be a difficult one requiring some help from a knowledgeable and trusted resource. Your credit union can provide this insight to help you make the best decision for your particular situation.

“It’s never been a better time to refinance, rates are at historical lows and many of our members are able to refinance into a short term and still reduce their monthly housing payment,” explains Scott Auen, Vice President of Mortgage & Mortgage Lending, Digital Federal Credit Union (Marlborough, MA). For DCU, it’s all about the member experience. “Our members have trust in our ability to guide them through the refinance process, be with them each step of the way, and do so much more quickly than a bank,” says Auen.

Eli Lilly Federal Credit Union (Indianapolis, IN) offers refinance options for members that have their mortgage with the credit union or elsewhere. “Today, more than ever, when home prices may have deteriorated, when consumers are feeling trapped by a mortgage that isn’t competitive in today’s interest rate environment, we have an opportunity to become recognized as a safe resource and an ally for our members and prospects,” says Rich Jones, SVP Sales, Marketing and Business Development.

In addition to superior service and lower rates and fees, the professionals at TruMark Financial Credit Union (Trevose, PA) help members to understand the reasons and ideal financial climate for refinancing. “If the homeowner intends to retain the property for the next several years, the monthly saving in interest should allow them to break even in a relatively short time period, and then allow them to use the additional funds as they see necessary,” explains Timothy Rawlinson, VP of Mortgages.

Likewise, Tim Mislansky, SVP & Chief Lending Officer of Wright-Patt Credit Union, Inc. (Fairborn, OH) and President of myCUmortgage, delineates the various options and benefits of mortgage refinancing to members. He explains how refinancing to a lower rate will either help a family save money on their monthly payment putting money back into their pocket each month and adding to the family budget, or reduce the life of their loan, saving tens of thousands of dollars in interest payments. “To determine if it makes sense to refinance when the member is saving on their monthly payment, the member should divide their total closing costs by the amount they save each month -- this shows them how long it will take to recoup their closing costs; if the number of months is shorter than how long they intend to live in the house, then it typically is worth the cost to refinance.”

Mortgage Refinancing Gets Personal at Your Credit Union

In order to cater to all types of members as well as different financial situations, many credit unions are creating tailored mortgage refi loans. These options are member-centered with the focus on saving the member money as they embark on their refi venture.

Assisting over 1,200 members obtain mortgage financing year to date, DCU offers a wide variety of refinance products to meet the needs of current members as well as new members seeking to refinance. “We have several programs with fixed rates as low as 2.875 % including their 5/1 adjustable rate mortgage, and also introduced a 5/5 adjustable rate product that members have taken advantage of and has done very well. We’ve also reduced some of our upfront fees to make it even more affordable for our members to refinance,” says Auen.

Eli Lilly recently did a special offer to their members that had, before the economic crisis, taken advantage of their first time home buyer program. These members were not able to take advantage of the current interest rate environment because of loan to value problems or in some cases deteriorated credit. “We relaxed underwriting and gave a special break on finance fees so they could refinance and take full advantage of a lower interest rate and lower payments -- we had allocated $12M for this initiative and within 36 hours of the offer, we had over $36M in the pipeline and ended up refinancing over 85% of these applications,” reports Jones.

Although their rates do not deviate significantly from the fed rates, the credit union recently provided a special program, which reduced the origination fees but required the member to pay approximately 25BP higher in interest rates. “This program was a resounding success and we quickly learned that our members do the math -- they knew when they would make back the origination fees and were willing to take a slightly higher interest rate to decrease the time to make up for the origination fees,” explains Jones.

Wright-Patt has been active in helping their members save money by refinancing their mortgages either with the credit union or from other institutions. Mislansky says that members who refinance today benefit by locking in a historically low interest rate. “30 year fixed rate loans are below 4.00% and a 15 year fixed rate loan can be had for around 3.00%.”

In addition, the credit union is currently promoting two things. The government’s Home Affordable Refinance Program (HARP) helps people refinance their existing Fannie Mae or Freddie Mac mortgage even if their loan-to-value is over 100%. Retire Your Mortgage features a 10-year fixed rate loan with a low interest rate (3.00% today) and only $899 in closing costs. “This loan is designed for members who have a lower loan balance and would like a lower rate, but don’t want to go through a standard refinance due to time and costs,” explains Mislansky. He reports that 342 members have taken advantage of the Retire Your Mortgage program for almost $30 million in balances.

Member Service Above All Else

When refinancing their mortgage, a major financial event for most people, credit union members are comforted by the exceptional service that their financial institution brings.

Digital Federal Credit Union is guided by a vision that every credit union employee lives by every day. “Our vision that ‘All Members Achieve Their Financial Goals’ means we want to be the catalyst and the cheerleader for our members’ long-term financial success -- refinancing and saving members money on their monthly mortgage payment is certainly going to allow them to achieve those financial goals,” contends Auen.

Jones says that, as with most loan underwriting, Eli Lilly underwrites the person first. “We look at the person, the relationship they have with us, the opportunity to deepen that relationship more as a driver -- when we know the person and where they work, we are willing to take risks that others may not.” He explains how when dealing with credit unions there are rarely “bait and switch” situations, predatory fees, or unrealistic interest rates even in a risk based pricing situation. “The credit union model allows us the latitude to do what is right for the member first, what is right for the organization second.”

And, likewise, Mislansky feels that a consumer is better served by a locally owned and operated institution like a credit union especially when it comes to a major transaction like refinancing. “This is due to the member ownership aspect of a credit union as well as credit unions’ consistent service delivery and approach to lending.”

If you want to take advantage of the current low rates by refinancing your mortgage loan, contact your credit union’s loan department for details and incentives. Not a credit union member? Find one and join today!

By Cyndi Cohen
Published June 5, 2012
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