Credit Union better than Conventional Mortgages for low lows?
I was talking with my lender who said if I looking to buy a SFR for $70k it's looking around 9% if I do conventional 30 year right now. She even suggested I look at credit unions for small loans since it would offer better rates. Anyone have any experience with that? Would love to learn about this as I always thought using up one's 10 conventional loans first is the best way to go before going for more creative financing.
Hi @Jacky Lei, that is way off. They likely have to make a fixed amount per deal so naturally, they have to charge higher rates for lower loan amounts.
Depending on your credit score and a few other factors, you should be looking at something in the 6s. You might have to pay a point or two since pricing for investment properties is not the best right now but since the loan amount is so low, it would only be $500-$1,000 most likely.
With that being said, small credit unions could have better rates and terms. You never know unless you look.
Hope this helps! Let me know if I can be of any assistance.
Thanks @Andrew Garcia! Do credit unions generally work nation wide or only in the state where the property is located? I haven't worked with them before so curious is closing costs and process is mostly the same and how do you usually start looking for them?
Quote from @Jacky Lei:
Thanks @Andrew Garcia! Do credit unions generally work nation wide or only in the state where the property is located? I haven't worked with them before so curious is closing costs and process is mostly the same and how do you usually start looking for them?
@Jacky Lei, typically they are local and want a depository relationship. If they are selling to Fannie/Freddie, the process should be very similar but if they are holding it as a portfolio loan, it may be wildly different.
In whatever town or city you are looking to buy in, simply google "{city} credit unions". That should help you find a few.
You can still utilize conventional financing. You need to work with a lender that is better priced, though.
Hope this helps!
@Jacky Lei Just adding, ideally small credit unions or local banks may have the best terms and flexibility for small loans. I've worked with a few in my state where they did loans of $50k - $75k. Portfolio lenders, where they would just hold a meeting and approve / disapprove the loan and service it forever.
I even had one bank that allowed me to do a blanket loan with some equity in a few different properties and put it into one loan, $45k at 6.5%, 10 year term fixed.
So definitely shop around locally. Good luck!
I used a local bank for an investment property: they were hungrier for the business. Mine was 20% down and a 25 year note at 5.5% ….and due to a recent divorce my credit was under 700. Check local for in house loans….