Getting investment property loans from credit unions can be a great financing option for real estate investors. Credit unions typically offer very competitive interest rates compared to big banks or online lenders. They also provide more flexibility on loan terms for investors. In this article, we will compare credit union investment property loan rates, examine their loan products, understand credit union lending criteria, and learn how investors can get the best deals.
Credit unions offer below market rates on investment loans
Credit unions are non-profit organizations owned by their members, so they can provide loans at cost without needing to generate profits. A recent survey shows average 30-year fixed investment property rates around 5.5% at credit unions, compared to 5.8% at banks. Adjustable rate mortgages are even lower, with 5/1 ARM rates averaging 5.1%. Terms under 5 years like 3/1 or 7/1 ARMs can be below 5%. Credit unions want to retain business so they aim to beat competitors’ rates.
Flexible loan terms tailored for real estate investors
While big banks follow strict lending guidelines, credit unions offer more flexibility for investors on loanto-value ratio, debt-service coverage, credit scores, etc. Many credit unions allow higher LTVs up to 80-85% for investment properties. They may accept lower DSCRs of 1.0-1.15x because of strong applicant credit profiles. Minimum credit scores can also be lower at 640+. Terms may be extended to 30 years or interest-only periods allowed to ease payments.
Investment property lending driven by member-focused mission
Credit unions approve investment property loans more easily because their mission is to serve members, not maximize profits. They aim to build long-term relationships by financing wealth accumulation goals like real estate investing for their members. This member-centric approach means understanding investors’ financing needs and offering flexibility to better compete against banks.
Tapping home equity loans a cost-effective option
A cost-effective way to finance investment properties is via home equity loans from credit unions when you have equity available. HELOC rates today average 7.5% vs. 30-year mortgage rates approaching 6%. This 2% savings on rate can add up over years of payments. Credit unions may offer HELOCs upto 90% CLTV for Prime borrowers. The interest may also be tax deductible when used for investments.
In summary, credit unions provide very attractive rates and flexible terms on investment property loans that investors should consider first before other options. Their non-profit structure and focus on members allow custom lending not driven by profit goals. Checking rates and preapproving at multiple credit unions will enable investors to secure the best financing deals.