tede02 Posted February 14, 2020 Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
Gregmal Posted February 14, 2020 Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
tede02 Posted February 14, 2020 Author Share Posted February 14, 2020 Really? How is the broker getting paid if they waive the origination fee? Link to comment Share on other sites More sharing options...
Gregmal Posted February 14, 2020 Share Posted February 14, 2020 Selling the loan Link to comment Share on other sites More sharing options...
tede02 Posted February 14, 2020 Author Share Posted February 14, 2020 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? Link to comment Share on other sites More sharing options...
Gregmal Posted February 14, 2020 Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
Castanza Posted February 14, 2020 Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
tede02 Posted February 14, 2020 Author Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
oddballstocks Posted February 14, 2020 Share Posted February 14, 2020 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. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 14, 2020 Share Posted February 14, 2020 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... Link to comment Share on other sites More sharing options...
oscarazocar Posted February 14, 2020 Share Posted February 14, 2020 If you have stocks or cash that you can shift around, the way to get the best rate is through "relationship pricing" via the private bank arm of the major banks. All the big banks have this (Citi, Wells, B of A, etc) and have gotten much more aggressive recently. By moving $250k to $2m of assets over you can get up to 0.625% off the rate on a 30 year fixed loan. A friend of mine got a 2.625% 30 year fixed with 80% down at Citi on a $1m+ mortgage this fall. You explicitly only need to keep the money in the account for the closing and can transfer it out the next day, and the reduction is for the life of the loan. You don't need to know anyone, you can just find a mortgage banker at the private bank (Google, or I can email you some names) and they will give you a quote in short order. https://online.citi.com/US/JRS/portal/template.do?ID=relationship_pricing_landing https://www.wsj.com/articles/when-lenders-take-relationship-pricing-to-the-next-level-11564047003 Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 14, 2020 Share Posted February 14, 2020 If you have stocks or cash that you can shift around, the way to get the best rate is through "relationship pricing" via the private bank arm of the major banks. All the big banks have this (Citi, Wells, B of A, etc) and have gotten much more aggressive recently. By moving $250k to $2m of assets over you can get up to 0.625% off the rate on a 30 year fixed loan. A friend of mine got a 2.625% 30 year fixed with 80% down at Citi on a $1m+ mortgage this fall. You explicitly only need to keep the money in the account for the closing and can transfer it out the next day, and the reduction is for the life of the loan. You don't need to know anyone, you can just find a mortgage banker at the private bank (Google, or I can email you some names) and they will give you a quote in short order. https://online.citi.com/US/JRS/portal/template.do?ID=relationship_pricing_landing https://www.wsj.com/articles/when-lenders-take-relationship-pricing-to-the-next-level-11564047003 +1 My friend did that with Citi recently. I don't remember the rate but it was a lot lower than she can get everywhere else publicly. Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 14, 2020 Share Posted February 14, 2020 There are alternatives, with a lot less fuss. https://www.lendingloop.ca/lenders It is also a Toronto based company, and the only one of its type approved by regulators to operate in all provinces of Canada. The loans/payments are processed on a blockchain via smart contract, using Etherium registry token. Not your grandpa's lending, and not your dad's either! SD Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 14, 2020 Share Posted February 14, 2020 There are alternatives, with a lot less fuss. https://www.lendingloop.ca/lenders It is also a Toronto based company, and the only one of its type approved by regulators to operate in all provinces of Canada. The loans/payments are processed on a blockchain via smart contract, using Etherium registry token. Not your grandpa's lending, and not your dad's either! SD Isn't this for business only? Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 14, 2020 Share Posted February 14, 2020 Any lender to any borrower. Most of the individual lending/borrowing is for amounts < 7,500. The two owners are also about 30, and built the platform in their 3rd year of business school. And not Harvard, or MIT etc., but the way more humble University of Western Ontario. SD Link to comment Share on other sites More sharing options...
Spekulatius Posted February 14, 2020 Share Posted February 14, 2020 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. Yes, but you have the optionality to refinance over and over again at virtually no cost. I just refinanced mine for 3.375% and minimal cost. My last refinance was last year, same thing. I refinance every half % rate change. It’s so easy now, from start to finish in 8 days Link to comment Share on other sites More sharing options...
LC Posted February 15, 2020 Share Posted February 15, 2020 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. Yes, but you have the optionality to refinance over and over again at virtually no cost. I just refinanced mine for 3.375% and minimal cost. My last refinance was last year, same thing. I refinance every half % rate change. It’s so easy now, from start to finish in 8 days Really? Do you mind who you used? I refinanced recently and it took a damn month with some (unbeknown to me) Mickey Mouse shop. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 19, 2020 Share Posted February 19, 2020 I looked into the Costco thing a few years back. Wasn't favorably impressed. Found a better rate (counting points) elsewhere (smaller broker). Also got several annoying calls from two lenders via the program. Link to comment Share on other sites More sharing options...
johnny Posted March 9, 2020 Share Posted March 9, 2020 I have a little experience with the Costco CAR buying program, which is a great way for somebody who doesn't want to become an expert in the car world to be reasonably sure they're not getting totally abused in a transaction against somebody who knows way more than they do. I imagine the mortgage stuff is much the same. My guess is it'd be much less attractive to anybody who posts on this forum because everybody here already knows a bit too much about the topic to benefit from the total-ignorance-protection services implicitly offered. Especially since, as mentioned above, BofA, Citi, Wells, and the rest are all aggressively underpricing in order to secure seven digit account transfers. If you know the difference between APY and APR and can describe some interesting stuff that happened to the ten-year treasury in the past few weeks, you're probably in the top tenth of a percentile of mortgage customers from an information perspective and therefore not in a position to benefit from the guardrails Costco puts in place with its partners. Link to comment Share on other sites More sharing options...
chrispy Posted March 16, 2020 Share Posted March 16, 2020 I have received two quotes for 3.375%, ~3500 rolled in with fees and $500 cash fee and we are in the mortgage insurance category. Holding off for now but the fees would be paid off in <2 years of decreased payment amount Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 16, 2020 Share Posted March 16, 2020 I have received two quotes for 3.375%, ~3500 rolled in with fees and $500 cash fee and we are in the mortgage insurance category. Holding off for now but the fees would be paid off in <2 years of decreased payment amount Yea, honestly I've been shocked by the RISING mortgage rates, but it seems to make sense. Lenders are overwhelmed with demand and are raising them to uncompetitive levels to lessen the demand while they work through the backlog. Also, secondary markets have mortgages trading wide of Treasuries. Both of these should be remedied with a little time - particularly now that short-term rates are 0% and the Fed is buying mortgages. Before I was hoping for sub-3%. Now I'm wondering if I should be greedy enough to wait for 2.5% Link to comment Share on other sites More sharing options...
Jurgis Posted March 16, 2020 Share Posted March 16, 2020 Before I was hoping for sub-3%. Now I'm wondering if I should be greedy enough to wait for 2.5% I am wondering the same thing. 8) Link to comment Share on other sites More sharing options...
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