Costco mortgage program review 2021

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Costco is a warehouse-style store that sells everything from garden furniture to wholesale groceries and oversized packages of home furnishings. You can now also complete your mortgage purchase through the company’s mortgage lending program, which is available to members and non-members nationwide.

The retail giant is not actually a source of mortgages; instead, it connects you to the lending market where you can compare mortgage rate quotes and apply to buy a home or refinance with participating mortgage companies. Lender fees are capped for Costco members, which can potentially save you thousands of dollars. Here’s what you need to know about the Costco mortgage program.

Pros and cons of the Costco mortgage program

pros

  • Costco Members Receive Discounts on Lender Commissions

  • Applicants can compare loans from multiple lenders.

  • The mortgage application process is fast and automated

Minuses

  • Commission discounts are only available to Costco members.

  • Not a direct lender, but a market program

Costco mortgage program: loan types and products

To apply for a mortgage, you need to go to Costco financial lending platform, enter your membership and home buying information, and request a quote. The platform uses the information to provide you with multiple offers from participating lenders. You can compare up to four lenders, and with your permission, company representatives will contact you. From there, you can compare loan details, select a lender, and apply for a home loan.

Here are the participating Costco lenders as of June 2021:

  • Home loan box
  • Consumer direct mortgage
  • Interstate mortgage
  • Intercontinental Capital Group
  • Lending.com
  • Omaha Mutual Mortgage
  • Housing loans of the National Academy of Sciences of Belarus
  • NBKC Bank
  • Strong mortgage

Loan options depend on the lender, but most offer regular mortgage loans, Federal Housing Administration mortgage loans (FHA loans), Office of Veterans of Mortgage (VA credits), giant loans, refinancing, and the choice between fixed rate loans adjustable rate mortgages (Weapon). Participating lenders may offer other options as well.

The minimum requirements for a borrower’s credit rating, down payment, and debt-to-income ratio also vary from lender to lender, but it helps to know the general underwriting rules in advance. Borrowers seeking a regular loan usually require a credit rating of at least 620, an initial payment of 3% and a debt-to-income ratio of at least 43%. For FHA loans, the credit rating requirement goes down to 500 or 580, depending on how much you can deposit.

Costco Mortgage Program Transparency

Affinity Partnerships developed and operates the Costco lending platform under the supervision of CrossCountry Mortgage. The platform is easy to navigate, reveals important information in clear language and helps you compare multiple loan offers. You will receive a quote within a few seconds, but you will not hear from the lender unless you specifically give permission to contact. Once you apply for a pre-approval or mortgage, the lender will provide you with a more specific annual interest rate and a list of fees you can pay.

Costco Mortgage Program: Rates and Fees

The Costco Mortgage Program announces daily refinance and purchase rates for 15 and 30 year loans if you provide a few details about what you are looking for. These rates are subject to change every day and only the most qualified borrowers will receive the best conditions.

Costco also advertises discounts to lenders that can help members save thousands of dollars up front. Loan disbursement fees – such as application fees, underwriting fees, and processing fees – do not exceed $ 250 for Executive Members and $ 550 for other members. The company is pricing in a discount on commissions plus access to competitive interest rates. save the participants an average of $ 9,745 over the typical loan term.

All borrowers still have to pay third party fees such as title insurance, appraisal fees, tax service fees, and escrow fees, which are detailed in Loan appraisal.

If you decide to take out a mortgage through the Costco program, be sure to ask questions to each lender before applying for a home loan. For example:

  • Do you charge prepayment penalties?
  • Does my rate include discount points?
  • Whether there is a minimum credit rating demand?
  • Are there others mortgage fees What should I know about?
  • Can I lock my bet for free?
  • How long does it take to close a home loan?

Refinancing with Costco Mortgage Program

Refinancing allows you to replace your current mortgage with a new loan, usually on terms that better fit your budget. Depending on the lender you choose through the Costco mortgage program, you may have the following options:

  • Refinancing rate and term, which gives you a new home loan with a new interest rate, a different loan term, or both.
  • Refinancing of cashing out, when you take out a mortgage for more than your current debt and use the extra cash to cover any expenses.
  • FHA Refinancing Optimization, which is available to homeowners with an existing FHA mortgage. Borrowers can skip the home appraisal and credit check process.
  • VA Downward refinancing loan (IRRRL), designed for VA loan borrowers looking to lower the interest rate or switch from a regulated to a fixed rate.

When talking to a lender, ask the following questions to understand your loan options:

  • What types of refinancing do you offer?
  • How long does it take to close a refinancing loan?
  • Does the interest rate include discount points?
  • Do you offer special discounts or offers for regular customers?
  • Are there any fees associated with refinancing?

Costco Mortgage Program Compared to Other Mortgage Lenders

Costco mortgage program New American funding Fairway Independent Mortgage Corporation
Minimum credit rating Costco Mortgage is a marketplace; minimum credit score requirements vary by lender 580 620 for conditional loans; 660 for large loans; 600 for FHA loans; 600 for VA credits
Minimum down payment Depends on the lender From 0% to 5%, depending on the mortgage program From 0% to 5%, depending on the mortgage program
Where does the lender work? Fee discount is available in all 50 states and the District of Columbia. Washington DC and all states except New York and Hawaii. All 50 states and Washington DC
Main types of loans Applicants can usually buy conventional loans, FHA loans, VA loans, large loans, fixed rate loans, adjustable rate loans, and refinancing. Regular, Large, VA, FHA, USDA, Renovation Loans, Adjustable Rate, Fixed Rate, Refinancing, Refinancing Cash Payable, Reverse Mortgage, Home Equity Lines Regular, Large, VA, FHA, USDA, Miscellaneous Renovation Loans, Adjustable Rate, Fixed Rate, Refinancing, Cash Payout Refinancing, Reverse Mortgages, Real Estate Loans, Home Equity Loans

How to shop around to get the best mortgage rate

If you are looking to save some money, the best thing you can do is to shop around. This is one of the main advantages of the Costco mortgage program: after submitting your information, you will instantly receive offers from multiple lenders. After seeing what is out there, you can choose the best deal or use the offers to negotiate with other lenders. This can provide significant savings.

Take a look at one example: Let’s say you want to buy a $ 250,000 home with a 5% down payment and a 15-year mortgage. You get quotes from two different lenders; both charge the same closing cost, but one offers a lower interest rate:

  • With interest rate 3.5%, your monthly payment of principal and interest is USD 1,697
  • Speed 3.25% brings a monthly payment of the principal and interest in the amount of USD 1,640

The lower rate saves you $ 57 per month – and while it may not sound like a lot, overall, you will save $ 20,520 over 15 years.

Bottom line

Costco’s mortgage program allows you to check multiple loan offers and get an idea of ​​the types of home loans that you can qualify for. Costco members get a break from paying lenders’ fees, which may be enough to make this loan program pay off for you. However, it is recommended that you rate these offers along with others to ensure you are getting the best deal. Since a home may be the biggest purchase you’ve ever made, saving money on your mortgage is an important goal.

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