If you’re reading this article, there’s a good chance you already buy everything for your house at Costco — from groceries to cleaning supplies to furniture.
So why not go the extra mile and actually buy your house through the Costco mortgage program?
In this article, we’ll explain the basics of getting a Costco mortgage and tell you how much money this little-known program can save you.
A look at the Costco mortgage program
Though not many shoppers know it, the Mortgage Program for Costco members is a real thing.
Here are some quick facts about the program:
- More than $30 billion in successful loan originations since 2011
- 132,000+ loans made
- Customer satisfaction ratings of more than 92%
Take a look at what you need to know before exploring the idea of getting a Costco mortgage…
Costco itself isn’t the loan originator
The first thing to know about getting a Costco mortgage is that Costco itself isn’t the lender. The warehouse club doesn’t take loan applications, offer, negotiate, arrange or make mortgage loans or lines of credit.
What it does do is give members access to a pre-approved pool of lenders who agree to provide reduced fees and personalized services.
First Choice Loan Services Inc. oversees the operation
The actual nuts and bolts of the program, which involves mortgage lead generation and loan originations, is handled by Berkshire Bank (NMLS# 506896) and its wholly owned subsidiary First Choice Loan Services Inc. (NMLS #210764).
You can compare rates from more than half a dozen lenders
Participating lenders as of March 2019 include:
- Berkshire Bank
- ConsumerDirect Mortgage
- First Choice Loan Services
- J.G. Wentworth
- NBKC Bank
- Strong Home Mortgage
There’s a full range of loan products and low down payment requirements
The types of loans offered through the Costco mortgage program include:
- Conventional fixed rate and adjustable loans
- Jumbo mortgages
- FHA loans
- VA loans
- USDA loans
- Home equity lines of credit
There’s one kind of loan you can’t get — a reverse mortgage. And that’s just as well because money expert Clark Howard doesn’t recommend them.
Meanwhile, the Costco mortgage program only requires a 3% down-payment.
Costco members can save a bundle on loan origination fees
Probably the biggest selling point of the Costco mortgage program is that members of the warehouse club get access to preferred pricing on loan origination fees.
Most homebuyers will pay 1% of the total loan amount in origination fees when they get a loan on their own. On a $200,000 home loan, you would pay $2,000 in loan origination fees. But not with Costco!
Through the Mortgage Program for Costco Members, loan origination fees are capped at $350 for Executive members and $650 for regular Gold Star and Business members. That’s a really big savings.
You can upgrade your membership to Executive here.
Meanwhile, the Executive membership also gives you access to slightly better mortgage interest rates than a Gold Star member.
Below are some sample numbers Costco offers on its website. This is for a $250,000 home in California with a $50,000 down payment on a 30-year loan.
|Membership level||Interest rate||Savings over 7 years|
Non-members can use the service, too
The great thing about Costco’s mortgage marketplace is that you don’t have to be a member to get great low rates.
Non-members can shop through The Mortgage Services for Costco Members program and get the same low rates, too. They just won’t have access to those great caps on loan origination fees that Costco makes possible for members.
Check out this experience a member of Team Clark had with the Costco mortgage program
Team Clark’s Deals editor Charis Brown and her husband refinanced their home through the Costco mortgage program in 2017.
“Costco had a selection of banks to choose from, and we researched the reviews of the bank we chose before moving forward,” Charis says.
They ultimately settled on doing a refinance with NBKC Bank.
“Everything was done online and by phone, and we met a notary at a Chick-fil-A to sign the paperwork.”
Being a Costco member and going with one of the preferred lenders through the Costco mortgage program meant that Charis and her husband got a $400 discount on NBKC’s standard origination fee of $675.
So in addition to getting a great rate, they only paid $275 in origination costs!