For many credit union members, the mortgage process seems complex. They’re unclear about how all the puzzle pieces fit together.
Rates get the headlines, but confusion usually starts earlier with terminology and the overall process.
“Many first-time buyers do not understand the difference between pre-qualification and pre-approval, how credit impacts options, or what happens between application and closing. When those basics are murky, everything else feels overwhelming,” said Clorissa Ritchie, Senior Content Manager at Westerra Credit Union.
Education and communication early in the process can make a significant difference in helping buyers feel prepared and comfortable moving forward.
After all, knowledge is power, and it’s our job to educate and communicate with members long before they apply for a mortgage. This can ensure they feel prepared and comfortable moving forward.
Most first-time buyers are solely focused on the mortgage interest rate, and while that matters, it’s often not the most important variable in their situation. The terminology compounds the problem.
“When someone hears DTI, LTV, escrow, and PMI for the first time in the same conversation, they can easily become confused,” explained Todd Newpher, Origination Manager at PSECU Lead Mortgage.
In many cases, the rate question is a deflection. It is the one piece of vocabulary members have picked up from advertising, so it becomes the go-to question. Since that is the only question they often know to ask, they miss out on many other important variables that can make or break their mortgage experience.
“We have to show them the overall big picture and guide them down the best path to homeownership,” Newpher added.
When members work with a credit union that fails to truly understand their homeownership goals, they may end up in the wrong loan product.
They often default to conventional 30-year fixed loans because that is what they have heard of. While these mortgages aren’t always the wrong choice, there are often better options available for first-time homebuyers that never get recommended.
“Worse than choosing the wrong mortgage, some members may believe homeownership is out of reach altogether,” explained Rachel Rathman, VP of Lending at Loyalty Credit Union.
This is unfortunate, as there are many mortgage programs available that can help first-time homebuyers succeed, including down payment assistance and low-down-payment options.
Taking the time to educate borrowers and review all the options available to them is critical to helping them avoid hesitation and achieve their dream of homeownership.
Digital mortgage resources, such as calculators, educational articles, and pre-approval tools, can help homebuyers explore mortgage options on their own time, at their own pace.
Access to quick information may help build confidence early on, especially for first-time homebuyers.
“Large banks invest heavily in digital content and outreach that reaches a future buyer 18 to 24 months before they are ready to apply. Credit unions, on the other hand, tend to wait for the member to come to them. By the time they do, someone else has already framed the conversation, and we are starting from a deficit,” explained Newpher.
The key takeaway is that credit unions that lack these resources should consider investing in them. These tools help minimize confusion and encourage members to take the next step and initiate the mortgage process.
Most mortgage education usually begins when someone submits an application to get prequalified/pre-approved for a loan.
However, the borrowers who feel most confident and at ease during the mortgage journey are the ones who understood the basics a year or two before they were ready to buy.
“Credit unions have the credibility to deliver that kind of pre-market education. They just need to be more deliberate about reaching people before they are in the process,” Newpher said.
Contact consistency is also key. Too many borrowers feel handed off, moving from one person once their loan request has been submitted to underwriting, processing, and closing.
One consistent point of contact, or at a minimum, a genuine warm handoff each time, would do more for borrowers' confidence than almost any other single change.
The goal is to communicate early in the mortgage process and set clear expectations from the very beginning.
According to Ritchie, credit unions are often misunderstood.
“Many people think of them primarily for savings rates or simple financial needs and then turn to larger lenders when it comes to bigger purchases like a mortgage,” Ritchie explained.
They assume credit union mortgage products can’t be as competitive as those offered by larger financial institutions. As a result, they may turn to a larger, big-name bank instead.
“This is a common misconception that we really need to continually debunk,” said Ritchie.
Credit unions must position themselves as trusted mortgage partners that can offer competitive rates, personalized service, and a localized lending experience. Doing so can attract borrowers who may have initially overlooked credit unions for their mortgage needs.
Mortgage education shouldn’t stop here. Access more credit union lending insights, marketing ideas, and member engagement strategies at acuma.org.
