The forms? The same. The appraisal? The same. The closing process? The same. Indeed, when it comes to mortgage lending, credit unions and banks do many similar things.

But home buyers may find that member-based lenders offer a wider variety of customized loan options and personalized service they can't get elsewhere. And while credit unions tend to charge slightly higher rates, company officials say what they offer is worth the measly five extra bucks a month somebody might end up spending on the mortgage.

"As far as the process being different, it really isn't," says Sue Cutchall, manager of the mortgage lending department at Barksdale Federal Credit Union. The Bossier City, La.-based company serves military and civilian employees of Barksdale Air Force Base and the Fort Polk Army post. "You're going to have originators and processors. It's going to go through underwriting and closing, and we use the same closing attorneys and appraisers that a regular bank or mortgage company might use.

"But from the member service aspect, we do everything that we can to work with them, depending on their precise needs," she says. "We try to look at each person individually ... and not so much look at what is the production and how many loans can we do each month."

Not all credit unions offer mortgages
Don't feel too bad if you didn't know credit unions lend money for the purchase of homes as well as automobiles. Mortgage lending has never been their central business, and indeed, only about 38 percent even offered first mortgages at the end of 1997, according to the Washington-based Credit Union National Association. Overall, first mortgages accounted for just 22 percent of their outstanding loans at that time, while new and used car loans accounted for 40 percent.

"That goes back to the old days when the auto loan was the bread-and-butter, so to speak, of the credit union industry," says Phil Porterfield, manager of lending at Tower Federal Credit Union in Laurel, Md. The company serves many federal government employees, including civilians who work for the Department of Defense.

"One of the drawbacks that the credit union would have in the mortgage arena is that credit unions are limited to who they can do business with," he adds. "A major mortgage lender, they'll take anybody who walks in the door."

Turning to a credit union that does extend mortgages can be a wise move, however. For one, experts say they tend to keep many loans in their portfolios, rather than sell them off in the secondary market to Fannie Mae and Freddie Mac. The distinction means credit unions in general -- and larger ones in particular -- offer creative mortgages that don't conform to the generic standards spelled out by those agencies.

Loan terms more creative
Barksdale, for example, will make a first mortgage up to 90 percent loan-to-value without requiring private mortgage insurance. A borrower can have a higher-than-usual total debt to gross income ratio -- as much as 38 percent -- and still qualify for a 15-year fixed mortgage. One downside: The rate is 1.5 percentage points, or 150 basis points, higher than the rate offered on the credit union's standard 15-year loan, which was 6.75 percent on March 30.

"We have conforming loan products, FHA and VA that follow normal guidelines," Cutchall says. "But most credit unions also design and offer non-conforming products that you wouldn't go out and sell in the secondary market, but meet specific needs."

Many traditional lenders also sell the rights to service mortgages along with the loans themselves. So, a borrower who goes to a bank or mortgage company may end up sending monthly payments to several different organizations during the life of the loan. That can lead to confusion, lost checks and other problems.

Portfolios retained, not sold off
"We're handling everything from start to finish," Porterfield says. "The 'servicing retained' means that the credit union that maintains the loan, that is who you make the payment to."

"The old horror story of somebody paying four different people" doesn't apply, he adds. "They want to know who they're dealing with. There's a trust and comfort level, and it's a two-way street."

Of course, credit union mortgages have their drawbacks, and the first one noticed by borrowers is the marginally higher cost. A Bankrate.com analysis of 30-year fixed loans offered by banks, credit unions and thrifts between March 1998 and last month showed that thrifts offered the lowest rates. Their average rate was 6.91 percent. Banks came in second place at 6.94 percent and credit unions had the highest of all three, with an average rate of 6.98 percent.

"I think that one of the things that you have to look at in that area, based upon size, is that typically when you're dealing with a bank or a thrift, you're dealing with a large entity, more and more so today," Cutchall says. "They have an opportunity, if they're doing mortgage loans and selling into the secondary market, to sell in huge blocks where the pricing may be a little better. They can give their customers a little better rate based upon that."

It might take longer to close on a credit union loan too, because companies haven't computerized as much of their underwriting operation, experts say. Yet borrowers may be able to avoid so-called "junk fees" other lenders sometimes sneak into the closing process. These charges go by different names, but usually are listed on the settlement statement as "document preparation fee" or something similar.

Working on their turnaround time
"They may be quicker in the turnaround time. That's possible, although credit unions are starting to make use of some of the automated underwriting," Porterfield says. "But the area where we can do something, and definitely compete with your Countrywides and others, is on the closing costs side." Countrywide Credit Industries Inc., based in Calabasas, Calif., is the nation's largest independent mortgage lender.

"Most credit unions are working on pushing down the closing costs," he adds. "Many of your mortgage brokers are getting a lot of fees."

Borrowers may want to consider one thing, however: While big credit unions can custom-build mortgages, smaller credit unions operate much like small banks. Because they have relatively few workers and customers, they also tend to have a limited selection of loan programs.

First Teachers Federal Credit Union, for instance, offers just 30-year and 15-year fixed mortgages. The Schenectady, N.Y.-based company serves area teachers and school administrators.

"You have to look at your membership base," says Gloria Friello, loan manager at First Teachers. "If the credit union's base of members is professional, like ours are, most of these people are more rate conscious and an adjustable rate is just not popular."

Still, Friello thinks mortgage borrowers get something more for their money when they go to a local credit union rather than another lender. And as a former bank employee, she says she should know.

"There seems to be a different loyalty and thought process," she says. "I see loyalty. I see more people helping people.

"You're not just a number in a credit union -- you have a face, a name, a personality, and I think that's one of the unique things."

Coming April 15

Just where does that extra mortgage payment go to each month? Sure, everybody's heard of principal and interest, but home loans require monthly escrow deposits for property taxes and insurance. Here's what you need to know about the process.