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Credit Unions vs Mortgage Broker or Banks


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I'm looking to purchase my sister's home from her and I was wondering what the opinions are on going to a credit union for a mortgage as oppose to a mortgage broker or bank.

My score is okay (683), I don't have a down payment, but I have been banking with them for a number of years and they are suppose to have a good first time homebuyers program and a first time state employee program (of which I am). The rate for these programs as advertised in the monthly newsletter is 5.25%, plus they will give $1,000 toward closing, which I suspect would be low because my sister and I will not need the assistance of a broker to do the sale.

The price my sister and I have tentatively agreed upon is well within my budget as I do not have no other debt but my car loan at this point. I would like to buy now as oppose to waiting to gather a down payment.

What are your opinions, ideas on the deal and perhaps how to make it very much a win win situation? Also do you think a letter with my application explaining the sale would be a good idea.

Thanks :)

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If you can get anything under 6.00%, I'd jump on it in a heartbeat. Rates are reeping up right now. My corner bank always has fantastic rates and they are now starting to list mid to high 6s.

Credit unions are always the way to go if you can get funding through them. They are generally more forgiving and don't beat you over the head with fees.

If you can't get decent financing through a CU, then maybe you want to talk to a broker. A GOOD broker will have access to hundreds of lenders and programs and so you'll probably do better long term.

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I agree, go with the CU if you can get approved with them. I find it hard to believe they can offer that rate with no points.

Buying from family is considered a non-arms-length transaction.

Read about it here:

http://www.investopedia.com/terms/a/armslength.asp

Most lenders will only offer 80%-85% financing in that case. If you have different last names, it is up to you to disclose that the seller is your sister.

Disagree with going to a broker. Shop the CU and 3 different banks with a 680 score, and compare Good Faith Estimates.

http://www.rld.state.nm.us/FID/PDFs/Good%20Faith%20Estimate.pdf

They might all offer 6.5%, but what does it cost to get that rate? You want to compare numbers in the 800 section. Some lenders quote low third party fees to make their bottom line look better. The lender fees in section 800 are all they really control.

Good luck with your purchase:)

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Thanks for the information - I figured that I probably would have a better shot with my CU.

My sister and I do have different last names, but I thought disclosing that in my letter with the application that we are sisters would make the transaction easier and move the approval through faster.

Especially since we both belong to the CU and do the majority of our banking there. And she is the reason I was able to join the CU as she use to be a State employee as well - she's retired now.

Again thanks to you both for the advise and thanks Goose for letting me know the termonogy :confused: for the sale. I hope buying from a relative makes the process easier. I'll keep you posted

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