Refinancing? Here’s Why You Should Apply At A Credit Union

If you bought a home when rates were at their peak, or if you’re considering tapping your equity, you may be ready for a refinance. As you’re shopping around for a lender, consider adding a credit union into the mix.

Only eight of the top 100 mortgage lenders by market share are credit unions, according to 2024 HMDA data. Yet, member satisfaction at credit unions is significantly higher than at retail banks, according to a 2025 J.D. Power study.

Here’s why you may want to refinance your mortgage at a credit union.

What is a credit union?

At first glance, a credit union and a bank may look the same. They offer similar services: checking and savings accounts, mortgages, auto loans and more. But how they function is a different matter.

“A credit union is a member-owned financial institution,” says Mark Burrage, senior vice president of home loans at PenFed Credit Union. “We don’t have shareholders. We’re also a not-for-profit.”

Unlike commercial banks, who have shareholders, credit unions reinvest any profit back into the organization or pay it to members as dividends.

While there’s a perception that credit unions are small, local institutions — and many are — there are several larger credit unions, just as there are smaller, regional and larger, national banks. And like banks, credit unions may also be online-only or have branch locations.

Keep in mind that, unlike most banks, some credit unions are open only to certain groups. For example, Navy Federal Credit Union focuses on active-duty military, veterans, Department of Defense employees and their immediate family members. That said, many credit unions are easy to join, requiring only a minimum deposit or a donation.

Why choose a credit union over a bank or online lender?

Because credit unions are nonprofits, they can focus on service and transparency, says Dan Bauer, head of residential lending for Alliant Credit Union.

“At Alliant, we use the same underwriting standards as other lenders, but focus on making the process smooth and member-friendly,” Bauer says. “We’re here to help members make smart, informed decisions — not rush into a loan that’s not the right fit.”

That means having mortgage experts to work through any complications, as well as offer guidance on whether it’s the right time to refinance. And if your credit union specializes in a certain type of loan — like VA loans — that could smooth the refinance process.

Credit unions beat out retail banks when it comes to trust, convenience and resolving problems in J.D. Power’s study. According to Burrage, this is about where they spend money — and where they don’t spend money.

“From a marketing standpoint, you’re not going to see us come out and spend $100 million [on a] marketing campaign and have Marvel characters and everything associated with it,” Burrage says. “We’re relationship based.”

Can you get a lower refinance rate at a credit union?

When you’re shopping for a refinance lender, great customer service is helpful — but ultimately, you’ll want to make sure the numbers work in your favor. The less you pay to refinance, and the better the rate you can get, the sooner you’ll actually see savings from the process.

According to data from the National Credit Union Administration, credit unions beat banks by an average of 16 basis points on 30-year mortgage rates between the first quarter of 2024 and the first quarter of 2025.

Some credit unions also have affiliated companies that allow you bundle discounts. “If somebody comes in, and they buy a home with us, and they use PenFed Mortgage, but they also use PenFed Realty … they could have a reduced refinance [rate] down the road,” Burrage says.

Considerations before refinancing with a credit union

• Accessibility: Many credit unions are small, local institutions, and some allow only certain groups of people to join.
• Specialization: In some cases, your local credit union may specialize in a loan type not everyone qualifies for, such as VA loans.
• Tighter lending standards: Because of their relative size, many credit unions are more choosy in their lending criteria, and you may struggle to get a good rate if you have a lower qualifying credit score.
• Older technology: While there are certainly tech-savvy credit unions, many smaller credit unions haven’t invested in tech as heavily as big banks.

It pays to shop around

If you’re considering refinancing your mortgage, one thing is for sure: Shopping around is crucial to ensure you’re getting a solid deal. “Purchasing a home is more of an emotional decision,” Burrage says. “Refinancing is a math equation.”

Whether that deal comes from a credit union or a bank, getting multiple offers is a big part of getting the best mortgage rate, no matter what your financial situation.

“Don’t wait for the ‘perfect” rate’ — focus on your overall financial goals,” Bauer says. “Refinancing can be a powerful tool to reduce monthly payments, pay off your loan sooner or access equity for other needs.”