Now on Sale at Costco: Mortgages

By Les Christie@CNNMoney

NEW YORK -- Not only can Costco shoppers find bulk-packs of chicken wings, 24-rolls of toilet paper and large-screen TVs at a discount, they can now land themselves a mortgage.

After a year of testing, Costco is rolling out a full-service mortgage lending program on its website in partnership with First Choice Bank, a New Jersey-based community bank, and 10 other lenders.

Costco's partners have issued more than 10,000 mortgages to members under the program. But Lauren Kutschka, Costco's manager of financial services, expects that number to swell as the warehouse retailer markets the service more aggressively to millions of members in its stores and in its weekly publication Connection.

"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 percent rate into a 30-year loan with a rate of 4 percent. The move lowered his monthly payment by nearly $500 to $811 a month.

Mortgages are just one of several financial products available to Costco's members. The warehouse club also offers health and auto insurance, as well as stock brokerage services, said Kutschka.

"We've always known that our members wanted more financial services," she said. "Right now, we offer recreational vehicle and boat loans, and we're going to add auto loans to that. We're also looking to offer student loans."

Costco had started offering mortgages a couple of years ago, but the service provider it was using didn't share enough details about how it was dealing with Costco's members, said Kutschka. So Costco started over from scratch, partnering with First Choice Bank to build a new mortgage lending portal.

Much like LendingTree, the site gathers quotes from various lenders. However, there is one key difference. Under the Costco program, the borrower's identity is revealed only after they officially select the lender, said John Alexander, business development director at First Choice.

With many other lead-generation sites, the consumer fills out an application and any lender can make an offer and begin sending marketing communications to the applicant without restrictions.

Costco members will still need to do their homework and compare offers, though, said Keith Gumbinger of mortgage information company Even after a year of testing, Costco's service is still new.

First Choice said it will police the other lenders to ensure they comply with Costco's policies, which include giving accurate rates and terms, and following up quickly on questions and requests. The technology enables Costco to monitor individual applications and make sure that they are handled properly and expeditiously.

Costco takes no profit on the lending itself, but it does get paid to market the service.

In Sheets' case, his lender, Bank of the Internet, sent a representative -- an attorney -- to his home to close on the loan, he said. She answered all his questions and explained all of the legal terms in the contract.

"There were no surprises," he said.

Gumbinger said the service may prove better for people like Sheets, who are refinancing than those who are purchasing homes.

"The mortgage origination process is still a hands-on, face-to-face process," he said. "It involves a comfort level and you don't get that with an online service."

That may be true in the initial stages of the borrowing process, but once a Costco borrower has chosen a lender, the level of service steps up, as in Ray Sheets' case.

Given the size of Costco's footprint and its ability to squeeze great deals out of vendors, Costco members should at least "include the site in their search plan," said Gumbinger.

Read more on CNNMoney:
America's Cleanest Cities
Foreclosure Logjam Breaking Up
Best Deals on Renovating

Luxury Shelters With No State Income Tax
See Gallery
Now on Sale at Costco: Mortgages

With Tax Day just around the corner, Americans all around the country will soon settle up with the federal government. 

But for the lucky ones the payout stops there: In nine states Americans don't have to pay a dime in state income tax. 

Click through our gallery to see a premium property in each one of them. 

Location: Fall City, Wash.
Price: $5.998 million
Beds/Baths: 4/7
Sq. Ft.: 7,500

This luscious house isn't just the perfect pastoral retreat; since it's in Washington, it also provides refuge from the taxman -- you don't pay them (well, excluding sales taxes) in the Evergreen State.

See the listing for more details.  

The home has a cavernous great room with vaulted ceilings and floor-to-ceiling glass on both sides of its stone fireplace. 

See the listing for more details

A verdant swath of the home's 80 acres is viewable through the home's dining room windows. 

See the listing for more details

Location: Las Vegas 
Price: $1.999 million
Beds/Baths: 6/9
Sq. Ft.: 7,679

The state's home prices may have taken a beating in recent years, but Nevadans can still take comfort in the fact that they take less of a hit when tax season rolls around. This estate has the hallmarks of a Tuscan villa, with extensive stonework and elaborate landscaping, the listing says.

See the listing for more details.  

Pictured is the home's lavish "oasis," furnished with a swimming pool, spa, waterfalls, fire pit and outdoor kitchen.

See the listing for more details

Other amenities include an entertainment center, balcony patio, home theater, office, wine room and gourmet kitchen. 

See the listing for more details

Location: Jackson Hole, Wyo. 
Price: $24.25 million
Beds/Baths: 4/7
Sq. Ft.: 7,742

Out in Wyoming is the River Bend Ranch, a sprawling 395-acre property whose pastures border the Snake River. 

See AOL Real Estate's article on the home, or see the listing

The ranch home's 7,742-square-foot interior features wood-burning fireplaces, soaring ceilings and a wood-and-granite motif.

See AOL Real Estate's article on the home, or see the listing

Location: Sioux Falls, S.D. 
Price: $1,149,500
Beds/Baths: 4/5
Sq Ft: 5,572

For just over $1 million, you can snatch up this 1.23-acre plot, and it's contemporary home. The home's stylish asymmetry makes it a riveting example of modern architecture.

See the listing for more details

The home's edgy style doesn't end at its wood and glass exterior, as the interior pushes the boundaries of conventional decor. 

See the listing for more details

The striking contemporary stretches a total of 5,572 feet, has four balconies, and affords  panoramic views of lush surroundings.

See the listing for more details

Location: Austin, Texas
Price: $4.995 million
Beds/Baths: 6/9
Sq. Ft.: 7,210

This Lone Star State home offers 220 feet of Lake Austin waterfront, and has a two-stall boat dock  and party deck to take full advantage of its setting.  

See the listing for more details

Commanding nine acres of richly landscaped property, the home features a breathtaking two-level pool that looks out onto Lake Austin. Rivaling a resort in its level of luxury, the pool has waterfalls, swim-up bars, grottos and a slide. 

See the listing for more details

It features two game rooms, a media room, an exercise room, an office, a private patio and five-car garage. 

See the listing for more details

Location: Nashville, Tenn. 
Price: $2.999 million
Beds/Baths: 4/6
Sq. Ft.: 5,598 

This Nashville modern nestles into hillside with windows that look out onto the property's nearly three acres of lawn and woods. 

See the listing for more details

Through floor-to-ceiling glass, the home overlooks a sweeping pool that is tantalizingly close to its rear exterior. The home rises four stories, and has a total of 14 rooms. 

See the listing for more details

The house is mostly minimalist in layout and decor, but offers streaks of boldness in the color of its walls.  

See the listing for more details

Location: Miami Beach, Fla. 
Price: $3 million
Beds/Baths: 5/8
Sq. Ft.: 6,681

This mission-style residence boasts a modern interior that complements its traditional facade. Amenities include a three-car garage, bar, pool with whirlpool, marble floors and French doors.

See the listing for more details

There's no shortage of bathrooms in this lavish house, which has eight.

See the listing for more details

The home's interior features marble and wood floors along with recessed lighting throughout.

See the listing for more details

Location: Anchorage, Alaska
Price: $849,000
Beds/Baths: 8/6
Sq. Ft.: 6520

It’s north to the future with this capacious home, which offers majestic views of hill and mountain, as well as the city of Anchorage. The property also has a four-car garage and RV parking space.

See the listing for more details

Inside is a two-story great room designed for maximum comfort.

See the listing for more details

Alaska's scenic beauty forms the backdrop of its elegant master bath.

See the listing for more details

Location: Gilford, N.H. 
Price: $10.5 million
Beds/Baths: 6/10
Sq. Ft.: 11,120

This breathtaking home lies on the lakefront side of a woodsy 2.82-acre plot. 

See the listing for more details

The home's exquisite interior spreads over 10,000 feet, done in a palette of fine finishes. 

See the listing for more details

The features beyond its striking appearance include a children's wing, library, conservatory, hobby room, spa, theater and golf room.

See the listing for more details


More on AOL Real Estate:
Find out how to
calculate mortgage payments.
homes for sale in your area.
foreclosures in your area.
See celebrity real estate.

Read Full Story

Find a home

Powered by Zillow