The wildly popular 100,000-point credit card sign-up bonus that Chase offered in 2016 and later scaled back by half is back, but with a catch — a big one. To get this massive windfall of points, you have to finance a home mortgage through Chase Mortgage.
EDITOR’S NOTE: The mortgage offer described in this article is expired and is no longer available
What is usually the biggest purchase of a lifetime is now worth at least $1,000 in Chase Ultimate Rewards® (UR) points. Points can be redeemed for cash back at a value of one cent each; customers who hold the Chase Sapphire Reserve® card get 50% more value when they redeem their points for travel through Chase Ultimate Rewards®; some credit card points experts value UR points at more than two cents each. Points can be redeemed toward travel, cash, gift cards and more, redemption values vary based on how you redeem your points.
The offer is for new mortgages and existing customers only
The bonus is offered only to certain existing Chase credit card customers. You must have the Chase Sapphire® Card, Chase Sapphire Reserve® or Chase Sapphire Preferred® Card prior to 05/07/2017 to be eligible for this offer.
The offer only applies to new residential first mortgage purchase loans, not to refinances or home equity lines of credit, submitted directly to Chase. Applications must be submitted between May 8, 2017 and August 6, 2017. The Chase mortgage loan will have to be funded and closed in order to be eligible to receive the 100,000 Ultimate Rewards points. After Chase determines the eligibility criteria are met the Ultimate Rewards® points will be posted to the primary cardholder’s account within 10 weeks of your closing. Other conditions apply.
Chase is making this offer as a way to attract Millennial’s, who it says make up half of Chase Sapphire customers and are likely to buy their first home soon. More Millennials are buying homes through Chase, the company says, with customers under the age of 35 making up 36 percent of its mortgage origination in 2016, up from 20 percent in 2015.
Offer is driven by demographics and credit card popularity
The “tremendous enthusiasm” around the new Sapphire Reserve card in 2016 and the ongoing popularity of the Sapphire Preferred card helped Chase decide to make this offer, the company said.
The Chase Sapphire Reserve® card had a very generous initial bonus offer, which is expired and is no longer available, prompting an estimated 900,000 people to sign up for it in three months. More than 10.4 million people opened Chase credit card accounts in 2016.
The Chase Sapphire Reserve® card has an annual fee of $450, and offers Cardmembers many benefits beyond its current bonus offer for eligible new Cardmembers.
Do the math before you sign up
Chasing such a huge credit card bonus offer by signing up for a mortgage isn’t such a great deal if the interest rate on the home loan is higher than what consumers can find elsewhere. Other factors that can affect the price of a mortgage include the amount of the down payment, length of mortgage, type of loan, a borrower’s debt-to-income ratio, if points are paid, if an escrow account is used, and credit score.
Shopping around for any type of loan or credit is smart, but it’s particularly important for a mortgage because it’s such a big loan and it’s one you’ll likely be tied to for 15 to 30 years. The cost of interest over the life of the loan can be generally in the tens or hundreds of thousands of dollars.
The value of the rewards points can disappear quickly if the interest rate on a home loan is even half a point higher than it would be elsewhere. Here’s an example:
The median home price in March was $236,400, according to the National Association of Realtors. Financing that entire amount with a 30-year fixed-rate loan, the most common type of home loan, at 4 percent interest requires a monthly payment of $1,129 (not including taxes, property insurance, homeowners association fees if required or private mortgage insurance if required). The total cost of the mortgage over 30 years is $406,300. That’s about $170,000 in interest charges.
Increase the interest rate to 4.5 percent and the monthly payment goes up by $69 to $1,198. The total cost of the mortgage is now $24,909 higher.
Even at a two cent value, the rewards points would be eaten up by the $69 monthly increase in mortgage payments in about 30 months. After that, you’re paying more for the mortgage than the rewards points were worth.
Bottom line: make sure that Chase offers the best rate that you can get.
Mortgages and your credit score
Negotiating the best home price is an important part of buying a home, but so is shopping for a mortgage.
When you apply for new credit, your score is likely to drop by a few points. But the credit scoring agencies allow a window of time for you to shop around for the best rate on a mortgage (the same is true for auto loans and student loans). Depending on the scoring model used, that window of time is between 14 and 45 days. Here’s how it works.
Mortgage lenders are classified as such by the credit scoring agencies. The first mortgage application does not affect your score at all for 30 days. Once it’s that old, all inquiries made by mortgage lenders within the rate shopping time frame are counted as a single inquiry where your score is concerned. You can apply with a hundred mortgage lenders and only one inquiry will affect your score.
There is no way for you to know what scoring model will be used when a lender pulls your score, so to be safe, shop within a two week time frame.
A FICO® credit score of 740 or higher may usually qualify for the lowest interest rates, whether on a mortgage, new credit card or some other type of loan or credit. With a credit score lower than that, lenders may charge you higher rates because they view you as more of a risk to miss payments. Although be sure to keep in mind that lenders, credit card issuers, and other financial institutions use a variety of different types of credit scores and other criteria to make credit and lending decisions.
In a Credit Sesame survey of people who don’t own a home, 20 percent said a low credit score was why they aren’t homeowners.
If you don’t know where you stand, sign up for a free Credit Sesame account today to check your score. You’ll also get access to a free credit report card where you’ll see what factors affect your credit and how you can improve them.
You can also get a free credit report once every twelve months from each of the major credit reporting agencies (Equifax, Experian and TransUnion) by visiting AnnualCreditReport.com. If you plan to apply for a mortgage, this is a good time to request your free copies to check them for errors. Make sure everything in your credit history is as it should be before a lender sees it.
Also check your member dashboard for competing mortgage offers for which you might qualify. Within a few minutes you can see how quickly a small increase in the home loan’s interest rate can erase a few thousand dollars in credit card rewards points. The short-term gain may not be worth it without the right loan terms.
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