Author Topic: Costco mortgages  (Read 3807 times)

tede02

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Costco mortgages
« on: February 14, 2020, 07:05:42 AM »
Has anyone out there obtained a mortgage through Costco's mortgage program? The origination fees are supposedly capped at $350 or $650 for Coscto members. That sounds quite attractive at face value but I'm naturally weary of something that sounds like an almost too good deal.
« Last Edit: February 14, 2020, 07:28:27 AM by tede02 »


Gregmal

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Re: Costco mortgages
« Reply #1 on: February 14, 2020, 08:13:00 AM »
Ive never used Costco for this, but in my experience with mortgages, any decent broker will waive both the origination fee(typically 1% of LV) and application fee (about $500-1000). Most of the time all you have to do is ask. Other times, they'll waive them contingent upon the loan closing.

tede02

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Re: Costco mortgages
« Reply #2 on: February 14, 2020, 08:29:47 AM »
Really? How is the broker getting paid if they waive the origination fee?

Gregmal

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Re: Costco mortgages
« Reply #3 on: February 14, 2020, 08:33:24 AM »
Selling the loan

tede02

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Re: Costco mortgages
« Reply #4 on: February 14, 2020, 08:41:59 AM »
Interesting. I don't know much about the behind the scenes of mortgages. Am I correct in assuming a bank/insurer or Freddie/Fannie buy the mortgages at a premium to capture the spread over treasurys? The mortgage originator then captures the premium as profit?

Gregmal

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Re: Costco mortgages
« Reply #5 on: February 14, 2020, 08:51:15 AM »
There's a few different things that can happen. As we saw a decade ago, many are sold and then packaged into a security. Some are held on the books.

The fellows I know say it's typically about 2% commission per closed loan.

Castanza

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Re: Costco mortgages
« Reply #6 on: February 14, 2020, 09:12:51 AM »
I don't have experience with their mortgage department but I have purchased a vehicle through their auto buying program and had a good experience. Absolutely zero hassle and a really good price. 
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tede02

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Re: Costco mortgages
« Reply #7 on: February 14, 2020, 09:48:15 AM »
Thanks guys. Appreciate the perspective. Spoke with a friend of mine who was a mortgage guy for several years. He recommended asking for a loan worksheet to compare costs. He said a lot of mortgages currently are being written "without origination fees" but what often happens is the fee is really just built into a slightly higher interest rate. Sounds like a game like everything else.

oddballstocks

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Re: Costco mortgages
« Reply #8 on: February 14, 2020, 10:15:31 AM »
The slightly higher rate is norm. 

Know someone who's bank does this, I think it's a $400 flat closing fee.  Bumps the rate 1/8th of a percent.  Said he earns his fees back in 6mo.  More of a commentary on the US consumer over anything else that they'd rather save a little upfront and pay a little more for 20-30 years.
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fareastwarriors

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Re: Costco mortgages
« Reply #9 on: February 14, 2020, 10:19:09 AM »
Like everything, you have to account for "all in" cost...

If you're lazy or do like doing some math, then yes you probably pay more. Think we all have accepted that...