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Costco Wholesale Employees and the Hidden Housing Opportunity: Understanding Assumable Mortgages in a Higher-Rate Market

“Assumable mortgages can occasionally create opportunities in a higher-rate environment, but Costco Wholesale employees approaching retirement should evaluate how housing decisions fit into their broader financial picture before making a move,” – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

“During periods of higher mortgage rates, assumable mortgages can become part of the conversation, but Costco Wholesale employees nearing retirement may benefit from viewing housing choices within the context of long-term income planning, health care costs, and overall retirement readiness,” – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How assumable mortgages work and why they are being discussed more often in today’s higher interest rate environment.
The eligibility requirements, limitations, and financial considerations involved in transferring an existing mortgage.
How housing decisions may connect to broader retirement planning considerations for Costco Wholesale employees.

By Wealth Enhancement's Neva Bradley, CFP®

Many Baby Boomers who built long careers with companies like Costco Wholesale love their homes but quietly recognize that they may no longer need as much space. Once the nest empties, the four-bedroom house that once held children, pets, and holiday gatherings can begin to feel oversized.

At the same time, many younger families are searching for larger homes that better meet their needs. This housing dynamic may set the stage for the use of assumable mortgages, an arrangement that allows a homebuyer to take over the seller's existing mortgage.

Costco Wholesale employees approaching retirement could benefit from this strategy, particularly for those who may have locked in historically low mortgage rates, like that those prevailed in 2020 and 2021. During that period, 30-year fixed mortgage rates briefly dropped below 3%, and many homeowners obtained loans below 4%. ¹

In today’s higher rate environment, sellers could arguably use the leverage of an assumable mortgage to secure a higher purchase price on their homes in exchange for allowing the buyer to take on a mortgage at rates lower than current market averages.

What Is an Assumable Mortgage?

An assumable mortgage allows a buyer to take over the seller’s existing loan rather than obtaining a new mortgage. If the lender approves the transaction, the buyer may take on the loan’s existing interest rate, remaining balance, and repayment terms, something that could benefit Costco Wholesale employees who obtained home loans during a lower rate period.

Instead of obtaining a new mortgage at current rates, a qualified buyer could potentially assume a homeowner’s mortgage that originated during the pandemic-era housing market at a rate near 2.75% or 3%. This feature sometimes becomes relevant when Costco Wholesale homeowners evaluate potential selling strategies.

However, this is only possible if the buyer meets the lender’s qualification requirements and the mortgage itself allows assumption. In many cases, the lender still reviews the buyer’s credit profile and financial standing, which may influence the practicality of this option for Costco Wholesale employees.

Loans That May Be Eligible

Not every mortgage can be assumed. Government-backed loans often allow assumptions, including:

- FHA loans

- VA loans

- USDA loans

Conventional loans backed by Fannie Mae or Freddie Mac typically do not allow assumptions, although certain adjustable-rate mortgage structures may permit limited forms of assumption depending on the loan terms. This distinction can matter for Costco Wholesale retirees evaluating potential buyers.

Even when a mortgage is assumable, the buyer generally must still qualify with the lender or loan servicer. Credit review and financial verification are normally required before an assumption is approved, something Costco Wholesale employees should understand when exploring this strategy.

An Important Detail: Seller Liability Release

One of the most significant—and sometimes misunderstood—aspects of mortgage assumptions is the release of liability.

If the lender does not formally release the seller from responsibility, the seller may remain legally liable for the mortgage even after the loan has been transferred to the buyer. This detail can be important for homeowners considering this type of transaction.

If the buyer later defaults and the seller was not properly released, the seller could still face financial consequences related to the loan. For that reason, lender approval and proper documentation are essential parts of the process for Costco Wholesale employees considering an assumable mortgage sale.

The Reality of the Down Payment

One practical challenge with assumable mortgages is home equity.

Home values have increased significantly over time. For example, if a home originally purchased for $500,000 is now worth $700,000 and the remaining mortgage balance is $420,000, the buyer must pay the difference between the home’s price and the remaining loan balance. This type of equity gap may be something Costco Wholesale employees encounter when selling a property.

That difference may require:

- A significant cash down payment

- A second mortgage to cover the remaining amount

This can create challenges for buyers, particularly first-time buyers, which may influence how sellers structure potential transactions.

Additional Factors to Consider

Several other factors can affect how practical an assumable mortgage strategy may be.

Approval Timelines

Certain mortgage programs include timelines for evaluating assumption requests. For example, some FHA and VA guidelines outline how quickly lenders should review completed applications, though actual timelines may vary for buyers interested in properties owned by Costco Wholesale retirees.

Delinquency Restrictions

Many mortgage programs require the loan to be current—or brought current during the transaction—before the assumption can be approved. This requirement may apply to properties owned by Costco Wholesale employees considering a sale.

VA Loan Eligibility

With VA loans, the original borrower’s VA entitlement may remain attached to the property unless it is properly substituted. This detail could affect the seller’s ability to use VA benefits for a future home purchase, something that may matter for some Costco Wholesale employees who are veterans.

Fees

Assumable mortgages may include administrative or transfer fees charged by the lender or loan servicer. While these costs may be lower than those associated with originating a new loan, they still need to be considered by buyers and sellers.

Second Mortgage Considerations

If the buyer needs a second loan to cover the difference between the purchase price and the assumable balance, coordinating with multiple lenders may make the transaction more complex. This situation occasionally arises when Costco Wholesale employees have accumulated significant equity in their home.

Retirement Planning and Housing Decisions

Housing decisions often connect to broader financial planning considerations.

For individuals approaching retirement, downsizing may involve more than simply reducing square footage. Factors such as cash flow, liquidity, investment allocation, taxes, and long-term planning often become part of the conversation for long-tenured Costco Wholesale employees preparing for retirement.

At The Retirement Group , housing decisions are frequently reviewed alongside:

- Retirement income planning

- Tax considerations

- Health care planning

- Estate planning

- Long-term portfolio management strategies

For many households, a home represents one of their largest financial assets. Decisions about downsizing, selling, or financing a future home purchase can play an important role in retirement planning for Costco Wholesale employees.

Thinking About Moving?

If downsizing is part of your retirement considerations, it may help to review your full financial picture before making a decision.

The Retirement Group often discusses housing decisions with individuals and families within the context of broader retirement planning.

To learn more about how housing decisions may fit into your overall retirement strategy, you can speak with a member of The Retirement Group at (800) 900-5867 .

Downsizing is not only a real estate decision—it can also become an important element of long-term financial planning.

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Sources:

1. Federal Reserve Bank of Philadelphia. ' The Pandemic Mortgage Boom ,' by Natalie Newton, James Vickery. Q3/Q4 2022.

2. Freddie Mac. Market Watch: Housing Trends Report . Freddie Mac Single-Family Division, 2022, p. 17. https://sf.freddiemac.com/docs/pdf/other/market-watch-housing-trends_rrs22.pdf.

3. United States, Department of Veterans Affairs, Veterans Benefits Administration. Circular 26-23-10: VA Loan Assumption Updates . 22 May 2023, p. 1. https://www.benefits.va.gov/HOMELOANS/documents/circulars/26-23-10.pdf.

4. United States, Department of Agriculture, Rural Development. HB-1-3555 Single Family Housing Guaranteed Loan Program Technical Handbook . USDA Rural Development, rev. 14 Apr. 2025, pp. 17-14–17-15. https://www.rd.usda.gov/media/file/download/hb-1-3555-consolidated.pdf.

5. Stucki, Barbara R., Jane Tavares, and Marc A. Cohen. Using Home Equity to Sustain Cash Flow for Aging in Place . National Council on Aging, Apr. 2021, pp. 3, 5, 7, 21, 27. https://assets.ncoa.org/ffacfe7d-10b6-0083-2632-604077fd4eca/3c1dd0cf-08a8-46ed-812c-5a56fdf6ded4/2021-NCOA_Home%20Equity-Report%20TWO_5-5.pdf .

How does Costco implement its 401(k) retirement plan for employees, and what specific contributions does Costco make to this plan? In the context of retirement planning, understanding the structure and benefits of the 401(k) plan is crucial for employees as they approach retirement. Costcoâ€™s approach in this regard offers an insight into how the company supports its employees' retirement financial goals. This question invites an exploration of plan details such as contribution options, matching contributions, and the vesting schedule.

Costco implements its 401(k) retirement plan by providing eligible employees with options to save for retirement through pre-tax contributions, which are matched by the company to a certain extent. Employees can contribute a percentage of their salary, and Costco offers matching contributions to support long-term savings. The vesting schedule typically ensures employees gain full rights to these contributions over a period, promoting loyalty and retention.

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For healthcare benefits nearing retirement, Costco provides employees with a range of options that can integrate with Medicare or other post-retirement health plans. These options help employees manage healthcare expenses as part of their broader retirement planning strategy, ensuring that healthcare costs are mitigated during retirement years.

In what ways can employees at Costco leverage deferred compensation plans as part of their overall retirement strategy? Deferred compensation plays a significant role in an employeeâ€™s financial planning for retirement. This question encourages a detailed examination of how Costcoâ€™s deferred compensation plans work, including eligibility criteria, potential tax implications, and strategic considerations for maximizing retirement income.

Deferred compensation plans at Costco allow employees to defer a portion of their income, reducing their taxable income in the present and postponing tax obligations until retirement when they may be in a lower tax bracket. These plans are typically used as a part of a broader financial retirement strategy, with eligibility criteria and options varying by employee role and tenure.

How does Costco ensure that its retirement benefits remain competitive compared to industry standards, and what is the company's strategy for employee retention through these benefits? Understanding Costcoâ€™s competitive stance in the marketplace regarding retirement benefits can shed light on both employee retention strategies and the effectiveness of their benefits packages. This inquiry can lead to an analysis of how Costco benchmarks its benefits against other employers in the retail sector.

Costco ensures competitiveness in retirement benefits by benchmarking against industry standards, ensuring its offerings are attractive to both new and existing employees. By maintaining competitive benefits, including 401(k) matching and deferred compensation, Costco uses these packages to support employee retention and satisfaction.

What resources and support does Costco offer to employees as they transition into retirement, and how can employees take full advantage of these resources? This question addresses the process of transitioning into retirement, focusing on the specific support mechanisms that Costco provides. Employees will benefit from understanding the companyâ€™s available resources, which could include financial planning services, retirement seminars, or counseling.

Costco offers several resources to aid the retirement transition, including financial planning tools, counseling services, and seminars aimed at helping employees maximize their benefits. Employees are encouraged to engage with these resources early to better prepare for retirement and take full advantage of available benefits.

How does Costco floor the balance between short-term incentives and long-term retirement benefits for its employees? Balancing immediate compensation with future retirement savings is crucial for a well-rounded benefits strategy. This question prompts a deep dive into Costco's compensation structure, examining the reasoning behind their approach and how it affects employeesâ€™ financial well-being over time.

Balancing short-term incentives and long-term benefits, Costco’s strategy focuses on offering a combination of immediate financial rewards, such as bonuses, alongside robust retirement savings plans like the 401(k) and deferred compensation options. This approach ensures that employees are motivated in the present while still planning for their future financial well-being.

What role do employee contributions play in the overall retirement savings plan at Costco, and how are these contributions managed by the company? Exploring the significance of employee contributions within Costcoâ€™s retirement savings framework fosters a better understanding of personal investment in retirement funds. This question calls for a look into how employee contributions are utilized, investment options available, and company management of these funds.

Employee contributions to Costco’s 401(k) plan are managed through a system that allows employees to invest their contributions in a variety of investment options. The company matches a portion of these contributions, and employees can monitor and adjust their contributions as part of their overall retirement savings strategy.

How can employees at Costco prepare for changes in tax regulations regarding retirement benefits, particularly in light of updates from the IRS? With ongoing changes to tax codes, especially those affecting retirement income, employees need guidance on effective preparation strategies. This question opens the floor for discussing IRS updates, implications for Costco employees, and proactive planning steps.

Costco prepares employees for changes in tax regulations by providing updates through internal communications and offering access to financial planning resources. These resources guide employees in understanding IRS updates and help them adjust their retirement plans to accommodate tax law changes.

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Communication regarding retirement benefits at Costco is handled through multiple channels, including online portals, direct mail, and HR consultations. Employees can seek clarification and support through these methods, ensuring they fully understand their retirement options and any changes that occur.

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Employees can contact Costco for retirement benefits information through HR support lines, online employee portals, or in-person consultations with benefits specialists. This allows employees to stay informed about their retirement plans and any potential updates that may impact their long-term financial planning.