In addition to gallons of mayonnaise and the many other bulk items that you can get when shopping at Costco, the wholesale giant is now giving their members an opportunity to get a mortgage loan while visiting the store.
The idea has already been in a testing phase for about a year and it is getting some very positive feedback from members. Costco is working with major nationwide lenders to offer this service. In the last year, more than 10,000 Costco members have applied for mortgages under the program and those numbers are expected to increase as the program becomes more known. According to Lauren Kutschka, the manager of financial services at Costco, the company plans to aggressively market the mortgage plan in the upcoming months by putting more prominent displays in the stores and by advertising it in the weekly Costco publication – Connection.
Here’s how the mortgage lending program works through Costco: Log on to Costco’s website and look for the mortgage loan section of the site. Enter the information that it asks for and wait for the offers to come in. You could receive offers from any number of the 10 mortgage partners that the wholesale company is working with if you qualify under their standards. These offers will include information about closing costs, mortgage rates, loan terms and more right upfront. According to some members who have already tried the program, the closing costs that were offered by these lenders was only about a third of what other lenders were charging outside of the Costco program.
If this Costco program sounds familiar, it may be because the company tried entering into the mortgage lending industry a couple years ago. However, the service provider that Costco was working with simply wasn’t working out. So Costco started from scratch with this new program. One of the ways that the Costco program is different than other mortgage lending programs online is that the applicant’s identity is not revealed to the potential lender until the applicant chooses a mortgage company to go with. When using other websites, the information you fill out on your loan application is accessible by a multitude of lenders who can then start sending advertisements and marketing materials to you right away.
Just because it is so easy to use and the lenders that are partnering with the program are trusted by the Costco company does not mean that the borrower doesn’t have to do their homework, though. You will still need to compare the offers and the companies before making your final decision. Costco does try to police the lending partners to make sure they are complying with certain policies that are set forth by Costco, including giving accurate information about the rates that a borrower can qualify for and providing accurate information about mortgage terms. With the technology that is used, Costco is also able to monitor each application to ensure the lenders are handling each case property and efficiently.
In case you’re wondering, Costco is not making any profit from the home loans themselves. The company is only getting paid to market the service to its members. If you’re looking for a home loan, would you feel comfortable getting one through this program?