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- Obama Extends the HARP Refinance Program for 2013
- IRS Supplies Guidance on Home loan Modifications
- Indiana State Mortgage Help for Those in Danger of Foreclosure
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- Wisconsin Mortgage Assistance Programs
- How to Write the Mortgage Hardship Letter
- CHFA EMAP Program for Homeowners
Yep. You can now shop at Costco for just about anything. True story: a man ran into Costco for his weekly supply of nutri-grain bars and potato chips in bulk packs, and saw a brochure for Costco’s new Mortgage Lending offering. He went home, researched it, filled out an application online, and received a few replies from the data base of lenders involved. He ended up refinancing his 170,000 15-year fixed loan into a 30-year fixed at a lower interest rate, saving him a whopping $500.00 a month on the payment. All from his need for potato chips!
After a year of testing, Costco now offers mortgage and refinancing financial services, as the marketer, for New Jersey based First Choice Bank. Costco does not make a profit from the borrower either from an origination fee or percentage of loan amount of the lender; they only make money by offering and marketing the product, however they maintain the rights to oversee the process and have some strict guidelines that participating lenders must adhere to.
Costco’s business and brand size is conducive to getting good deals, and they hope that this service will stay true to the trend. It is estimated that borrowers can save big mostly on closing costs and the convenience factor. It will behoove the borrower and customer of Costco to do some checking and comparing in the mortgage arena before making a decision. The process is pretty simple:
- Pick up the informative brochure or talk to a representative in the Costco store near you.
- Go online to the www.costcofinance.com website or www.costco.com and select their services, mortgage option.
- Fill out the application form.
- First Choice Bank works like a broker and will compare your needs to the best fit of their participating lenders:
- Bank of the Internet
West Star Mortgages
Capital West Mortgages
Premium Source Bank
Real Estate Mortgage Network
First Century Bank
- You will then receive and work with the quotes provided and make your decisions.
- Your data is guaranteed confidential and protected and there is no obligation.
- Once you agree to terms, a fee will then be assessed and your communications are then directly and only with the lender.
Costco monitors the process, and does not reveal the name of their customer until a lender is selected. They also have a cap on the closing costs depending if you are an Executive member ($600.00 maximum) or Gold Star member ($750.00 maximum). It is perfectly acceptable to upgrade to Executive for $50.00 to save $150.00 if you wish.
Their guidelines for the mortgage process called “First Choice Bank Costco,” or “Costco-Mortgage and Refinancing,” and/or the tongue in cheek reference, “Bank of Costco,” are:
- Information must be accurate on all ends.
- The lenders must respond quickly.
- Costco representatives must be allowed to monitor the process.
- No profit is received by Costco from the actual lending – only in the marketing end.
- They offer refinancing options, mortgage loans and home financing for vets.
- They offer conventional, FHA, VA and jumbo loans.
- They offer streamline refinancing options:
borrower must be current on payments
no cash out options
lower credit scores accepted
easier income and asset verification
the refinancing MUST help the borrower
will convert adjustable mortgages to fixed with a drop in the interest rate
- They offer Home Affordable Refinance Programs (HARP20) programs for borrowers who are “under water” with their mortgages:
no loan-to-value (LTV) limits
must be Freddie Mac or Fannie Mae owned or guaranteed loans
loan must have originated before 5/31/2009
borrower must have had no previous HARP loan
the LTV must be larger than 80%
borrower must be current on payments
borrower must have no late payments in last six months
borrower can only have had a max of one late payment in last year
- Standard closing costs in Costco’s Mortgage market is $600 to $750 where the normal amounts in the industry are around $1,000 to $2,000.
- Borrowers will be responsible for appraisal fees, and all title and credit reports.
- Borrowers must have a home in mind or know the value they want and down payment they can afford before filling out the application.
First Choice Bank has five branch offices and all are located in New Jersey, however they deal directly with lenders in Arizona, Colorado, Florida, Maryland, Pennsylvania and Texas.
Consensus from the public is mixed from those who feel Costco doesn’t need to add a financial wing to their already over-loaded menu of offerings, and deem it greedy and disgusting; to those who embrace the program with a hefty discount of closing costs. Costco definitely is one step closer to be a “one size fits all” environment. At present, one can take their Costco membership card with them and with enough time and energy to navigate the enormous size of the Costco store, be able to:
- Buy food and household products in bulk
- Buy clothing, furniture and household appliances
- Get prescriptions filled, pick up vitamins and have their eyes checked
- Buy insurance for home, auto, health or travel
- Get identity protection and investment advice and pick out banking checks
- Have water delivered to their home, pick out patio furniture and install a humidifier
- Buy flowers and plan weddings and funerals, and buy tickets to events
- Set up business applications and services and buy computer equipment and software
This does not even touch on simple pleasures like Holiday décor, books and ordering specialty cakes. What does one more offering like mortgage services really matter in the large scheme of life?
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