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 use them to book your vacations, rent cars, and get your yearly eye check-up. Honestly—what can't you get at Costco? And 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.
Yes, you can buy your home via "The Mortgage Program for Costco Members," a benefit that's been around since 2011 (though I'm just hearing about it now!) If you're a little worried about making the biggest purchase of your life through the savings superstore, don't be alarmed: Costco doesn't directly act as a lender—instead they work with First Choice Loan Services (a Berkshire Bank Company) to offer special interest rates and capped fees to members who are purchasing a house with a conventional, FHA, jumbo, or VA loan, or refinancing their home.
To do this, Costco acts as a lead aggregator (like LendingTree), but instead of sending your inquiry to more than 50 banks, the program only sends it to only nine lenders. Each of the lenders have agreed to strict pricing and fees requirements in order to be part of the program. For example, lender fees (what they define as fees associated with closing on a mortgage that include application, commitment, and processing fees, but not property valuations or credit reports) are capped at $350 for Costco's Executive Members and $650 for Gold Star members. According to ValuePenguin, the average lender's fee from the four largest banks is $1,387. These savings (combined with lower rates) has the store claiming that Executive Members can save almost $6,000 over the life of the loan compared to the average mortgage.
According to the Costco website, more than 105,000 loans have been funded through the program and 92 percent of members gave it a positive rating. Though we can't personally say how using the service turns out, users who had used the program raved about it in a Reddit post from earlier this month. One Redditor wrote that they had completed three mortgages with Costco and that the program always provided them the best deal. Another said that the process was smooth and easy—after having a mortgage fall through two weeks before close, a lender they found via Costco was able to service and only delayed closing by four days.
And, 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 these handful of lenders (no one else!). 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.
Have you gotten a mortgage through the Mortgage Program for Costco Members?