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The country’s largest mortgage lender has launched a credit card, known as the “Rocket Visa Signature Card”.
This allows cardholders to earn 5% back for the down payment on the home or 2% for their principal balance on the Rocket Mortgage.
There is a $95 annual fee, which is waived for existing Rocket Mortgage Servicing customers (if they have your mortgage).
To celebrate the launch, the card offers a $200 statement credit to those who spend $3,000 in the first 90 days from approval.
Is this something worth looking at, or are consumers better off with general purpose cards instead?
Rocket Visa Signature Card offers rewards that can be used towards down payment
The new Rocket Visa Signature Card is a credit card designed with the potential home buyer or existing home owner in mind.
Every dollar spent using the Metallic Card earns 5 Rocket Rewards points, and there’s no limit to how many points you can earn.
These points can only be redeemed for cash back towards closing costs, down payment, mortgage principal, or statement credits.
If you use Rocket Mortgage for your home loan needs, the 25,000 Rocket Rewards is worth $250, which is the full 5% cash back value.
So for every $5,000 spent using the card, you’ll get $250 off your Rocket mortgage closing costs.
If you’ve spent $50,000 in a year, we’re talking about $2,500 that can be applied toward a down payment on a home. Or just toward closing costs.
tip: The card also offers so-called Porch Piracy Protection, which provides up to $10,000 for an eligible stolen item.
Existing Rocket Mortgage customers can apply rewards to principal balances
The other key redemption option allows existing Rocket Mortgage Servicing customers to apply Rocket Rewards to the principal balance of their loan.
While the card still earns 5 Rocket Rewards points per dollar spent, this redemption option is only worth 2% cash back value.
For example, someone who spends $5,000 still earns 25,000 Rocket Rewards points.
But those 25,000 points are only worth $100 for the Rocket Mortgage principal balance reduction.
And while that $100 will reduce the amount of interest paid on the mortgage, it will not reduce subsequent mortgage payment amounts.
Still, it can add up to those savings each month you hold the loan after Rocket Rewards points are applied to the loan balance.
In addition to these two redemption options, cardholders can redeem for statement credits for as low as 1.25% cash back value.
So that same $5,000 spend is worth 25,000 points, but only a $62.50 statement credit.
I think it’s still better than the 1% cash back some credit cards offer.
At the moment, the card appears to be limited to those who have a Rocket Mortgage. But it is expected to open to everyone after the beta launch.
In addition, the points cannot be redeemed toward refinancing transactions (yet they say), or non-retail loans, such as those through the company’s wholesale division that works with mortgage brokers.
Additionally, points cannot be used in conjunction with the Charles Schwab Partner Loan. This may change in the future as the program evolves.
You may be able to use any credit card to pay off your mortgage (or save up for a down payment).
Now you must be thinking is this a good deal? While the 5% cash back value is a very solid rate for closing costs and down payment, other options offer only 2% and 1.25% back.
There are many other credit cards out there that offer 2% to 5% cash back either annually or through rotating categories. And some cards offer large upfront bonuses as well.
Additionally, some of these options allow cashback in the ratio of 1:1. And there’s no limit to how you use that cash back, you could theoretically use the proceeds toward a new mortgage.
or to pay off the mortgage early through additional principal contributions to an existing mortgage.
It will also give you the freedom to do with the money as you please, as opposed to being stuck with a mortgage company.
That’s like rubbing. Unless you plan to use Rocket solely for your mortgage, you won’t be able to take advantage of the generous 5% cash back value.
For the record, up to $8,000 in card point value can be redeemed towards a down payment and/or closing costs on a new Rocket Mortgage transaction. They will appear as credits on your closing statement.
And these points can be added up to an additional $2,000 in Rocket Rewards engagement points, which will apply as a lender credit.
There does not seem to be any limit on the cash back that can be applied to the mortgage principal.
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