Costco Mortgage Loan Service

In June of this year when mortgage rates dropped to historical levels I thought it was about time to run the numbers again on mortgage refinance options. At the time I was locked into a 5.5% 30 year residential mortgage that still had 20 years of payments left. I had been paying extra towards the principal every month to pay it off early but it was still a slow slog. As mortgage lending rates continued to drop over the last few years I would run the numbers occasionally to see if it made sense to refinance my residential mortgage. I probably looked at the numbers differently than most people that are looking at mortgage refinance options. I was not looking for a lower monthly payment or starting over on a 30 year mortgage. My goal is to pay off my home as quickly as I can, while not raising my payment to a level that will strap me to a high mortgage payment. I have been waiting for the 15 year mortgage rate to drop to a level that would allow me to refinance and not raise my monthly payment above what I am was currently paying. In June of this year that happened! I was listening to the news and heard that the 30 year rate was down to 3.69%. I immediately looked into the 15 year rate and discovered that it was 3.125%. I called my bride and told her what I was thinking and she said go for it. I made a few calls and requested a couple of good faith estimates. In the past I have always used a friend of mine named Paul Ramsey, who owns Quantum Mortgage Northwest. He always has the best rates, lowest costs and is a joy to work with.

Paul had the best offer like usual but then I thought of something. Why not check Costco? Years before I secured a 3% car loan through Costco. I jumped on the Costco.com web site and looked under the heading ‘services”, Low and behold they offered a residential mortgage service and if you are an Executive Member the loan “fee” is capped at $600 ($750 for Gold Star Members)! Most lenders charge a 1% loan origination fee, in my case that would have been $1300. (Of course Paul’s fee was less than that, at $995.) It takes about 2 minutes to enter the information needed online at the Costco web site. Typical things like name, address, mortgage amount, etc. and then you hit the send button. This is no exaggeration, I received a phone call in 60-70 seconds from the time I hit the send button! I was greeted by a very helpful loan officer from Central Mortgage Company. After a 20 minute question and answer session, I was pre-approved over the phone for a 3.125% 15 year mortgage! I received two additional calls from other mortgage companies within the hour, but the rates and fees were lowest with Central. After talking to my bride about the details I moved forward with Central Mortgage Company. Communication with my loan officer was very efficient and everything went so smoothly that I was that it exceeded my expectations. Everything was done via fax or e-mail with the exception of the closing which needed to be done by a local closing agent. The total process from initial phone call to closing was 28 days. I could not have been more satisfied with Costco or Central Mortgage Company during the whole closing process.
Here is what I ended up with:

15 year loan at 3%

Previous payment             $1243 per month         New payment     $1248 per month

Principal gain                      $300 per month                                  $600 per month

So my cost to live in my home (before maintenance) is $648 per month, since the rest is going to principal! I can’t rent a nice apartment for that price. And I live in an above-average home and neighborhood.


Furthermore, I continue to pay the additional principal payment each month that I was making before which makes this 15 year loan a 13 years loan. To quote James Brown “I feel good!”


The Costco mortgage loan service is one of many services offered by Costco that a lot of people are not familiar with. Before I make any large purchase or financial decision I always go to the Costco web site to see what they have to offer. Typically they offer the best product or service for the best price. When you are shopping for something go to Costco.com first. I can almost guarantee that you will leave happy!

Credit Cards Are Bad!

I believe that I am in a very small demographic that has never carried a balance on a credit card.  My father taught me that cash is king and debt is bad.  I took this to heart at a young age and have been fortunate enough to never wavered from my father’s teaching.   Of course I have a mortgage and I do have a car loan from time to time.  My last car loan was for a 2010 Subaru Legacy at 1.9% and we put half down and paid the balance off in 3 years.  I think the total interest paid was just over $400.  That seemed like a reasonable amount of interest to me and my bride.   I truly believe that I have lived at a higher standard of living than other people in my income bracket because I have stayed out of debt.  I have been unexpectedly unemployed twice in the last ten years and have never been hurt financially because I didn’t have several minimum monthly payments on credit cards to worry about.  All of that being said, I do have two credit cards, an American Express and a Visa.  Next week I will tell you how I use these two cards and a change that I am considering making to my current strategy.