How do you feel about getting milk, bread, grapes, and a mortgage all under one roof? This is the case for some Costco members who can now take advantage of the financial services to buy or refinance a home. This is not your typical mortgage lender, in fact I would place them as an alternative mortgage lender category. When I saw this ad in the Costco connection magazine I immediately thought I might use them to see how good they really are for providing a lending experience. Just to let you know I have never used Costco to book a vacation, buy a car, or any other service above grocery shopping so I am a bit skeptical. Costco has a great customer service reputation for in store members, but will this really translate well towards getting a mortgage done the right way. I have heard great things about their travel booking experience, but I am not sure that this great service will branch over to mortgage lending.
The picture that came with the ad shows a young couple with a huge smile standing next to a sold sign in front of a beautiful house. What a perfect picture scenario did they paint right there for all the club members to see, that you too can be a happy homeowner one day if you get a mortgage from Costco. Do you want to know what we really see in the ad? How much money will Costco really save me with fees? One thing that is synonymous with Costco is getting a lot for a bargain. After reading the ad I did see a great plug for the program on the side of the flier it basically stated, Costco set caps on fees and margins and the participating lenders will adhere to this policy. The lender fees cannot exceed $600 for executive members and $750 for all other members.
The whole process is done online, beginning with an initial application, and then from that point on you will deal with the lenders by email or telephone. The next step as per the flier is selecting the preferred lender you will desire to work with based on the variables important for you. Examples for the selection process can be the lowest interest rate, lender / point fees, program term, and who is actually licensed in the state you want to buy in. I wonder how much of a cut Costco will get after each closing has been completed.
After filling out a small Quote Request form on the Costco Finance site, I selected two lenders with the least amount of fees, as you can see the rate offered is for a 30 year mortgage. Below you will see the disclosure information about the fees given after a quote request is submitted.
| Lender | Program | Interest Rate | APR | Loan Details |
|---|---|---|---|---|
| Conf 30 yr Fixed Full Doc | 3.500% | 3.529% | Mon. Payment: $988 Est. Total Cost: $825** | |
| Conf 30 Yr Fixed Full Doc | 3.500% | 3.535% | Mon. Payment: $988 Est. Total Cost: $950** |
** Estimated Total Cost is a combination of lender fees and third party fees. Lender fees include application, commitment and processing fees and are not to exceed $600 per transaction for Costco Executive Members, and $750 for Gold Star and Business Members. Third party fees are expenses for services which are required and are provided by someone other than the lender. Third party fees include items such as appraisal, flood certification, credit report, etc. Additionally, due to the complexity of state by state charges, Estimated Total Cost provided above does not include title, escrow, transfer tax, or recording fees.
After placing a quote request I would not mind getting a mortgage for 3.5% with fees totaling less than a thousand bucks.
Comment if you can see yourself applying for a mortgage loan through Costco?
Rich Uncle EL
I hope we have something like that here in the Philippines.