Yes, I was assuming this was a flexible loan or something similar to a line of credit. Hopefully the reader realizes that his monthly payment would vary with the loan if it's a traditional fixed term product - but the loan costs (rate, points) should be the same. There are some loan products that offer pick-a-payment options (reduce the payment to match the true balance). Comparing the two loan options side by side with their good faith estimates would be very important before making a decision. If the loan is not flexible, then the customer would make the higher payment, but for a significantly shorter period of time. I would also ask to see the amortization schedule for both loan options with the extra large pay-back amount reflected in the table to compare total costs.

As for me, I do not charge a premium for a mileage earning mortgage. The rate is the same either way. Paying the travel incentive for me is a simple marketing cost. Most brokers spend money on buying leads - by the time a deal is reached, a typical broker might have spent almost $400 on leads. I prefer to work more efficiently. Rather than pay the $400 of my revenue to a lead source, I offer travel rewards, so hopefully the customers come to me. I rebate back a portion of my commission to the customer in the form of a travel incentive. The lender has no interest in this, nor do they even know or care this happens - so they do not adjust the rate. My yield spread rebate remains the same regardless if customer wants miles or came to me through a referral and is not interested in miles. There is no difference in loan price, except the referral who does not want miles would result in more income to me. My average gross earnings on a loan is about 1 to 1.25%, which is a fair and reasonable target.

As someone who is an admitted novice in this world but is in the market for a mortgage, may I pose the following q? Can any of these get miles for mortgage lenders possibly be cheaper (rate, apr, closing, no pre-payment penalty et al.) than just going to bankrate.com and finding the least expensive mortgage for your, with your terms? I mean this honestly as I really do not know. Will these brokers/lenders (or whatever they are) match my cheapy no name mortgage?

The lenders I work with generally offer the lowest wholesale rates, so if a customer received a rate quote from another broker, I should be able to match it - if the quote was real. Keep in mind that many brokers will "low ball" a rate to keep you interested, then as the application moves along, the rate mysteriously rises. With your time and work invested, they are counting on you not jumping to another broker. Sometimes my quotes might sound abit higher, and I never commit to a rate until an application can be written up so the lender will "lock" the rate - that way I am honest with my quotes and I stay out of trouble with my customers. I checked the bankrate site and whereas bankrate is showing a rate of 5.97 for my area, alot of lenders are still quoting as low as 5.7 - which is pretty much impossible, so they are publishing teaser rates.

About a year ago I used a United Airlines/ Wachovia Bank "miles for refinance" program. The interest rate and closing costs I got from Wachovia were very competitive with the rates and terms being offered by several local institutions here, including banks, credit unions, loan brokers, and Savings & Loans. In fact I had just signed a commitment with Wachovia to refinance at a local branch when the same day I received in the mail a notice from United that mentioned their refinance/ mileage deals. I had to have the loan transferred from the local Wachovia office to an office in NC that was handling the program. In the end, by transferring the loan, I got FF miles and a 1/4 percentage point reduction in the interest rate. This was certainly a bonus. I might add that I had checked with Lending Tree first and the rates and conditions quoted by them were not the most competitive. You should really research to find out which financial institutions your airline has programs with. Right now United has programs with Chase, Washington Mutual, Citicorp, and Wachovia, as well as with E Loan, and Lending Tree.

We shopped around enormously when getting a mortgage last year and found that the offers we got through Lending Tree were at significantly higher interest rates/points than we were offered elsewhere, so we ended up not going through Lending Tree for the mortgage.

However, we did use Lending Tree to find a real estate agent and ultimately bought a home using her services and were quite pleased, not only with her services but with the huge number of FF miles we got as a result. In fact, we are both flying in business class to Thailand later this year using those miles (and still have some left over). It took some doing to get the miles credited, and they took quite a while to post, but ultimately we were very happy.

Thank you, wofcol28 and bocastephen, for your informative responses. I will now wait for my reader to tell me about the actual deal he received, which he promises to do after he receives the paperwork.

lmk-
I have read a couple times on Flyer Talk that people have felt that it took too long to receive their miles. Just to clarify, if you submit through the proper site (branded with LendingTree and the airline partner) or call the number provided (service rep will ask for FF # before beginning request), you should automatically receive your miles 6-8 weeks after closing. If have the time I would be interested in your experience because we are always looking for ways to improve our service/program. If you would like to, please send me a private e-mail, but don't feel obligated.

Eric

I am the reader that Gary is talking about. The loan I am applying for is a Home Equity Loan from Chase. The link on Gary's site for loans to receive United Miles was: http://www.united.com/page/article/0,6722,50776,00.html
The bonus for this loan will give me 4250 mile for each 10,000 borrowed. :) When I applied via phone the agent said I can borrow the Maximum which is 500,000 and pay it off the day after the loan funds. The terms and conditions say that I will receive the miles based upon the amount of the initial funding. He then told me I could then apply for another Home Equity Loan for my rental property and pay off the first loan. The July 31, 2004 deadline is for the start of the loan application so I hope to have both loans for a total of
425,000 united miles.

Loan terms: Interest Rate is Prime +1/4 (presently 4.25%), The rate for a loan under $200K is at Prime. No points or fees and the appraisal is a drive by. There is a $75 per year admin. fee but the first year is free. Therefore the only cost will be the interest cost for a few days that I have the loan and since I will pay it off I am not that concerned about the interest rate.
I am waiting for the fed ex loan application that I will sign and send back with my 2 years of tax return, pay stub and insurance info. I will keep you posted as I progress.

That sounds like an awesome deal!

I'm considering doing this as well. Quick question: Did you have a choice of realtors in your area, or were you referred a single agent?

QuiteLion, help me understand this. Why would an agent ever offer to give the buyer a piece of the commission paid (I assume) by the seller? The agent may have said this after the fact, but I can't image such an arrangement in advance.

I cant speak for realtors, but this is exactly how I run things in my shop for mortgages. The travel award I pay is funded directly out of my commission and is simply a cost of doing business. Other brokers spend hundreds on buying leads, but it's more efficient for me to offer the miles/points for the same cost and 1/10th the effort. The realtors I am planning on working with in my program will ultimately be doing the same thing - funding the travel award from their commission share.

If I understand you correctly, you have an award program in place already? I guess my lack of understanding centers around approaching the average real estate agent, who works for a broker -- with a proposal to let them work with me to buy (not sell) a house in exchange for miles/points. I think most of them would be lost as to what to do, and would be reluctant to give a consession once they already have the "lead" (me), but maybe I'm just behind the times. I also have dealt with a fair number of agents over the years, and they all have jealously guarded their commissions and a couple of them got very angry when I suggested compromises to get deals done that would have shaved a bit off their commissions.

I have a program in place now, but I can't discuss it here (TOS). In a nutshell, virtually all realtors outside a network like lendingtree would not have a clue about airline miles. It would be a hard sell to get a realtor unfamiliar with the concept of travel rewards to work with you. I am trying to build a small network of realtors willing to work with me to offer travel awards on their side along with the rewards on my (finance) side - hopefully I will get a few 'yes' answers, but I imagine 98% of the people I talk to will say no, regardless of the chance to increase their business.

It's a shortsighted view on their part. Just like the finance side of things - the brokers in my office think of nothing spending $350 buying phone leads and wasting hours and hours calling leads, leaving messages, competing with other brokers, etc., so they can close one deal for their $350 investment. If I tell them they can offer rewards so customers come to them instead of the other way around and their workload would drop by 75% - but they would have to give up the same $350 to buy the customer some airline miles, they look at me like I am from mars. Same cost, less work, difficult concept to grasp, so the answer is 'no'.

Earning something back for real estate transactions is great, and I wholeheartedly support that approach. I will probably get flamed for this, but do consider that there are alternatives to earning miles. In my case, the cashback options is far better than miles.

For example, if you are a Costco member, then have partnered with LendingTree on both buying/selling a home as well as mortgage services.

On the buying/selling side (Real Estate Agent Services)... If you buy (or sold) a house for $500k, the cashback would be $3,700 (plus $100 if you are an Costco Executive member - see link below). Whereas, if you go through LendingTree using the United Airlines promo listed above, you would earn 3,000 miles for each $10,000 of your home’s value plus a bonus of 10,000 miles during the current promo. So, that $500k house would earn you 160,000 miles.... Since I value miles at $0.015/mile, that equates to $2,400. (even if I valued the miles at $0.02/mile, that would be $3,200).

Summary: I would much rather have $3,700 in cash than 160,000 for buying or selling a $500,000 house.

see: http://www.lendingtree.com/common/bp...9500H000000001

There is also Lendingtree.com and costco deals on home refinancing and mortgages as well. I haven't done the math on these, but my gut says that they too are better deals than earning miles.
see: http://www.costco.com/Service/MemberService.aspx