State Employees’ Credit Union, which primarily serves the residents of North Carolina, was founded in 1937 with less than $500 in deposits and just 17 members. Today, SECU, whose membership comprises state and public school employees and their families, has $37 billion in assets and more than 260 branch locations.
What’s it like to get a mortgage from State Employees’ Credit Union? Here’s what we found.
AT A GLANCE
- Second-largest mortgage lender in North Carolina
- 24/7 customer support available by phone; not online
- Doesn’t offer government loans, such as FHA, VA or USDA
A commanding presence in North Carolina
SECU is the second-largest mortgage lender in North Carolina by loan volume as of 2016, the latest data available. That’s impressive.
Credit unions typically battle for a just a sliver of home lending market share with banks and non-traditional lenders, such as online providers. Yet in home loan volume SECU is second in the state only to Wells Fargo — and outpaces contenders such as Quicken Loans, Bank of America and SunTrust.
In fact, SECU is the second-largest credit union in the nation by assets. SECU has about 2.3 million members and offers mortgage products for members who reside in North Carolina and the bordering states of Georgia, South Carolina, Tennessee and Virginia, though some restrictions may apply.
SECU mortgage loan products
SECU’s mortgage loan lineup has a few quirks. First, the credit union doesn’t offer 30-year fixed mortgages, a staple of the home loan industry. You can get a 10- or 15-year term, but not a 30.
It’s not a consumer-driven decision, but an SECU business decision.
“As SECU currently maintains all of its mortgage loans in portfolio, we prefer to avoid the long-term interest rate risk exposure of 30-year fixed-rate mortgages,” Mark Coburn, senior vice president of lending development, says.
That means, unlike most lenders, SECU doesn’t sell its mortgages to investors such as Fannie Mae and Freddie Mac. Because SECU holds all loans on its books, it has to manage the risk. In this case, it’s a matter of matching what SECU makes in interest on loans with what the credit union pays in interest on deposits to customers. Thirty-year loans have a long shelf life, and SECU is not confident that it can issue such a long-term loan and maintain its profit margin.
Also, SECU doesn’t offer government-backed loans, such as FHA, VA and USDA mortgages.
» MORE: Best lenders for FHA loans
SECU does offer jumbo loans, but doesn’t call them that on its website. That’s because SECU does not have separate underwriting standards for loans over the Federal Housing Finance Agency’s county limit, as most lenders do. You can get a home loan up to $1 million.
Another interesting note on its product menu: SECU offers just one adjustable-rate mortgage, a five-year ARM. Not a 5/1 ARM — a five-year, or 5/5, ARM. The interest rate is reset only once every five years, as opposed to once a year.
However, being a financial institution with customer deposits allows SECU to offer a home equity product that nonbank lenders generally don’t have. SECU has a home equity line of credit that enables you to tap up to 90% of your home’s value.
For borrowers who’ve hit a bumpy financial road, the credit union offers a Mortgage Assistance Program. After consultation with a senior financial officer, the program may allow modification of the payment amount, deferment or a change to the loan terms. The solution may also be as simple as providing a one-month extension on your loan payment or perhaps a debt consolidation loan.
Down payment help for first-time borrowers
Low-down-payment borrowers will appreciate this: SECU does not require private mortgage insurance on loans with down payments of less than 20%.
SECU provides first-time home buyers loans up to $400,000 with no down payment required. Borrowers may also qualify for $2,000 to apply to closing costs.
Another loan program, in association with the Federal Home Loan Bank of Atlanta, provides grants up to $5,000 to help with closing costs and the down payment. The assistance is a second mortgage that doesn’t have to be repaid, subject to borrower eligibility.
One potential downside: Both of the first-time home buyer programs are tied to adjustable-rate loans, which can be an issue for long-term borrowers when interest rates are rising, as they are now. You would probably want to refinance your loan to a fixed-rate mortgage before interest rates climb much higher.
SECU also provides loans for manufactured housing, construction-to-permanent mortgages and financing for homes that fall under state or local historic preservation guidelines.
SECU mortgage loan process
Like most credit unions, SECU’s website isn’t flashy or sporting the latest technology. An online loan application is not readily apparent, but it’s available with member access.
Services that are becoming common among the largest lenders are lacking — including online document exchange, online loan process updates, online pre-qualification and e-signature. SECU says the technology gap is among the issues it’s most interested in improving.
Owned by members, credit unions often claim to excel in customer service. To its credit, SECU offers 24/7 customer service via a toll-free support line. It also has a massive number of branch offices, with more than 260 across North Carolina.
Considering SECU mortgage fees and interest rates
SECU does a good job of providing interest rates. Each mortgage product page not only explains how the loan works but offers current interest rates for various loan terms. Coburn says no rate estimation tools are necessary to determine your “custom” rate — the interest rates you see on the website are the rates members pay on each loan product, regardless of credit score.
As for fees, SECU levies a 0.75% loan origination charge, capped at $1,500.
What SECU does best
- Provides first-time home buyer no-down-payment programs
- Underwrites low-down-payment loans without requiring private mortgage insurance
- Unique loan products include a five-year ARM and financing for historic-district homes
Where SECU falls short
- No 30-year fixed-rate mortgages
- Trailing in tech-based conveniences
- Doesn’t offer government-backed loans, such as FHA, VA and USDA
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