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Buy now, fly later

More companies are offering frequent-flier miles with loans and real estate-related services. But don't forget the bottom line: Would better terms and airfare be cheaper?

June 08, 2003|Michelle Hofmann | Special to The Times

Shopping for a mortgage? The Mortgage Bankers Assn. of America predicts that homeowners will finance or refinance $3 trillion in mortgages this year. After finding the best deal and signing the paperwork, however, some will have another decision to make: window seat or aisle?

Increasing numbers of lenders and realty networks are joining with airlines to offer frequent-flier mile rewards to consumers who take advantage of financing options and real estate services.

"While credit cards have been part of airline rewards programs for some time, mortgage [dividends] are relatively new," said Robert Kallio, vice president for Nationwide Advantage Mortgage Co., which partnered with America West Airlines in February. The pairing allows the airlines' FlightFund members to earn 1,000 miles per $10,000 borrowed and an additional 3,000-mile bonus for financing a new home purchase through Dec. 31.

Delta Air Lines joined forces with Awards for Mortgage and Real Estate in May to give its SkyMiles members the chance to accumulate mileage rewards for using the relocation service network's affiliates to buy, sell, finance or refinance a home or purchase moving van services. Awards for Mortgage and Real Estate gives SkyMiles members 1,300 miles on each $10,000 financed or refinanced, 3,000 on each $10,000 in a home's sale or purchase price, 1,000 on each $1,000 paid in van line moving services and 5,000 bonus miles for combining services.

Mike Franco was one of the first in line to take advantage of the program. The Laguna Niguel resident used Chase Home Finance, the mortgage division of JP Morgan Chase & Co., to refinance his home and purchase an investment property.

Franco liked the 4.7% refinancing rate on a three-year adjustable loan and the network's affiliation with such national lenders as Chase and Washington Mutual Home Loans, but he said the miles drove the deals, which closed in May and earned him 250,000 miles.

"It's an awesome program," said Franco, who plans to use his miles to fly his wife and three children to Hawaii in November.

Though a major player, the Delta program, which has included mortgage partners since 1998, is not the only game in town.

American Airlines' AAdvantage program, for example, gives mortgage hunters 1,000 miles for every $10,000 borrowed through Countrywide Home Loans. On a $500,000 mortgage, AAdvantage members receive 50,000 miles -- enough for two round-trip domestic tickets or one round-trip flight to Europe. Since April 2002, about 7,500 AAdvantage members have earned more than 133 million miles through the airline's mortgage and real estate partnerships.

Online lender E-Loan, partnered with Delta and United Airlines, awards 1,250 miles for every $10,000 financed on a mortgage or home equity loan, and 3,500 miles for any auto loan.

Chris and Amanda Coye have used E-Loan to refinance a home loan, finance a car and secure two mortgages and two home equity loans since 1999. Their loyalty has earned the couple more than 132,000 air miles.

While the idea of strolling along the Champs-Elysees has obvious appeal, the Coyes said the decision to use E-Loan was based on rates and terms.

"Certain companies advertised better rates, but when we talked with them, they were for smaller loans or more points," said Chris Coye, a director of software development at Walt Disney Co. "E-Loan listed a rate and the points, and that is what we got. No haggling. The miles were just a freebie."

One of their latest E-Loan transactions, a $431,000 mortgage on a five-bedroom contemporary-style residence in Stevenson Ranch in December, secured the couple a 4.6% interest rate on a five-year adjustable-rate mortgage and 53,900 air miles. A home-equity loan on the same house in January earned them an additional 6,250 miles. They plan to use the miles to visit family in Rehoboth Beach, Del.

Scott Foust's annual vacation budget got a 73,000-mile boost from LendingTree Inc., an online lending exchange partnered with Continental, Delta, United, US Airways and Northwest. Foust, a Colorado-based management consultant, found himself in need of a Los Angeles real estate agent in December to oversee the sale of his late aunt's Hollywood condominium.

Having used LendingTree to finance a second home and refinance his primary residence in Denver, he turned to them for an out-of-area agent referral. Consumers who use a LendingTree affiliated agent to buy or sell a home earn 3,000 miles for every $10,000 in the sale price.

The Hollywood condo sold in March for $245,000, and Foust, who worked with a local agent, plans to use his bonus miles for a family vacation to Mexico.

"Once the transaction was done, I wondered whether it would turn into a hassle to try and force LendingTree to cough up my miles," he said. "But when I signed up, I gave them my United Mileage Plus number, and at the beginning of April, bada bing, bada boom, I got nearly 75,000 miles."

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