Do Mortgages Come in Bulk at Costco, Too?

by Houston Agent

Costco is stepping into the mortgage business with a new set of financial offerings on its website.

Costco, the popular warehouse club chain, is a great place for food, office supplies, clothing and…mortgages?

Yes indeed – Costco has partnered with First Choice Bank and 10 other lenders to offer home purchasing and refinancing products through its website in a user-driven way.

“The customer is in control; they choose who they want to call,” said Jeff Douglas, chief executive of Wyndham Capital Mortgage Inc. of Charlotte, N.C., one of the first lenders in the program. “This is a good part of our business.”

Here are some details of the new program:

  • Members input their personal info and mortgage balance/loan amount on Costco’s website, which produces a list of licensed lenders in their state.
  • There are three tiers of options, based on the level of membership the user has: all members can save up to $5,000 over the life of the loan; Gold Star Members have access to lender fees of $750 or less; and Executive Members can access fees of $600 or less.
  • As an online real estate forum pointed out, though, the loans will be treated to the same underwriting standards as conventional loans, so interest rates could change from the original rate members receive.

Christi Borden, a Realtor with Prudential Gary Greene in Katy who is on the board of directors at both the Houston and Texas Association of Realtors, said the decision of whether or not to use Costco’s services will come down to what the client’s preferences are.

“The consumer must weigh using the service referral (most likely a stranger) against whatever monetary gain the consumer is offered,” Borden said, via e-mail. “Also, for a mortgage referral, it is always wise to obtain a second Good Faith Estimate (GFE) outside this referral network to confirm the stated benefits of using the referral.”

Borden also added that despite the value and savings of such an approach, some consumers will still prefer real estate professionals they can personally interact with.

“There are many consumers who decline to utilize these services, preferring to choose their own Realtor, lender, title, insurance, etc. that they may know or who might be personally referred to them by friends, family and co-workers,” she said. “The expectation is that the expertise they will gain from this personal choice will far outweigh any financial gain being offered.”

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