Costco shoppers can buy gallons of ketchup, two-pound bags of potato chips, office supplies and now mortgages for their homes.
The wholesale company has developed a full-service mortgage lending program website. A New Jersey-based bank, First Choice, has partnered with Costco on this project along with ten other lenders including CapWest Mortgage, WestStar Mortgage, and Wyndham Capital Mortgage among others.
More than 10,000 Costco members have turned to Costco’s new mortgage program. This number is supposed to increase dramatically as Costco begins to market First Choice more aggressively to the millions of store members.
After plugging personal information, the site quickly shows offers from multiple lenders showing their rates, closing costs and terms.
One shopper from Georgia told CNN Money his monthly payment was reduced by nearly $500 after using First Choice’s mortgage program. This allowed him to refinance his $170,000, 15-year fixed mortgage with a 4.25% rate to a 30-year loan with a 4% rate.
LendingTree and other lead-generating sites offer some of the same type of services; a consumer fills out information and lenders give competitive quotes. With these other sites, applicant’s information is available to any lender who can then send out marketing communications without restrictions. First Choice does not reveal the borrower’s identity until after they select one of the lenders.
First Choice is responsible for monitoring lenders to ensure they comply with Costco’s policies. Some of these policies include giving accurate rates and terms and quickly responding to questions and requests. Like many of these comparative lending sites, it is important for consumers to do their own research.
Costco does not make a profit off of the lending itself but receives payment for marketing the First Choice’s services.
The wholesale club offers many financial services to members such as recreational vehicle loans, auto insurance and stock brokerage services.
Customers of Costco are used to being presented with good deals on what they buy and their mortgage program is no different.