You probably head to Costco to pick up supersized EVOO, fiddle leaf figs, or even luxury-brand towels. And, if you’re a super user, you probably also book your vacations, rent cars, and get your yearly eye check-up at the big-box store. Honestly — what can’t you get at Costco? The Venn diagram of things you need and things you can get there is becoming more of a circle every day because — surprise! — they even offer mortgages. So whether you’re picking out a starter home or planning to transform a new house into an Airbnb, Costco really has you covered.
Does Costco have a mortgage program?
Yes, you can buy your home via “The Mortgage Program for Costco Members,” a benefit that’s been around since 2011. However, Costco is not the one lending the money here. Instead, the company is marketing home loans for its lending partners.
How does the Costco mortgage work?
If you’re a little worried about making the biggest purchase of your life through the savings superstore, don’t be alarmed. Like I mentioned before, Costco isn’t technically a lender — instead they work with a company called CrossCountry Mortgage to offer special interest rates and capped fees to members who are purchasing a house with a conventional, FHA, jumbo, or VA loan, or those refinancing their homes.
The Mortgage Program for Costco Members is basically acting as a lead aggregator here, similar to the way sites like LendingTree do. But instead of sending your inquiry to hundreds of banks, the program only sends it to the select few lenders who’ve opted in to Costco’s program.
If you’re interested in applying, you’ll need to submit your membership information through Costco’s site. After you’ve done this, you can compare rates, select up to four lenders, and request mortgage quotes. Then, a representative will call you to answer any questions you may have.
What are the benefits of a Costco mortgage?
The participating lenders, like Mutual of Omaha Mortgage and NBKC Bank, have agreed to strict pricing and fee requirements in order to be part of the program. What does that mean, exactly? It means you might get a deal.
Lender fees are capped at $250 for Costco’s Executive Members and $550 for Gold Star Members. The company defines lender fees as the costs associated with closing on a mortgage, such as application, commitment, and processing fees — they don’t include things like fees for property valuations or credit reports.
According to ValuePenguin, a consumer spending site, the average lender fee total from the four largest banks is $1,387. That’s about $1,000 in savings right off the bat with a Costco mortgage, right? Coupled with lower interest rates, the company claims that Executive Members can save an average of $8,098 over the typical life of the loan compared to the average mortgage. Plus, per Costco’s website, more than 190,000 loans have been funded through their program.
What are the drawbacks of a Costco mortgage?
But of course, there are some downsides: Though Costco doesn’t receive your data, they do get a kickback if people get a mortgage through them. Also an annoying caveat: Much like other lead aggregators, if you request a mortgage rate, you’re also consenting to be telemarketed by lenders they work with — but only this small group of lenders. (You can read more about mortgage trigger leads here if you’d like.) Additionally, since you’re going through an online lender, you might be losing the personal touch you would have with a local one, since much of the process is automated. However, your lender will provide a loan officer for your questions.
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