Costco rolled out a full-service mortgage program on Friday, adding an unusual item to its bulk-sales enterprise. The company tested the mortgage program for about a year before its launch last week via its website.
The program promises great rates and lower closing costs compared to most lenders. The company partnered with 11 lenders to offer loans, including First Choice Bank out of New Jersey.
CNN reports an example of Costco's ideal customer:
"I went in to buy some bottled water, big bags of chips, cereal and some Nutri-Grain bars that I eat on my route," said Ray Sheets, a FedEx courier from Canton, Ga. "I saw a home loan brochure on my way out and picked it up."
Sheets went onto Costco's site, put in his information and quickly accessed offers from four lenders. The rates, closing costs and terms were listed up front. And the closing costs -- of about $2,500 -- were about a third of what he would have had to pay through other lenders, he said.
Within a few weeks, Sheets refinanced his $170,000, 15-year fixed mortgage carrying a 4.25% rate into a 30-year loan with a rate of 4%. The move lowered his monthly payment by nearly $500 to $811 a month.
Although it's not exactly a sign of complete turnaround in the lending marketplace, this news is a positive for the real estate community. The fact that smaller lenders are on board too makes this appealing to a residential home marketplace, which often lacks the personal interaction necessary to make case-by-case loan approvals.