Buyers get to travel for free

Frequent-flier miles offered as realty bonuses

Europe, anyone?

But the trip can mean a higher mortgage cost

July 28, 2002|By Liz Steinberg | Liz Steinberg,SUN STAFF

Buy a house, and get a trip to Europe for two - free -with frequent-flier miles.

You don't even have to purchase the house on your credit card to do so.

Companies including LendingTree, an online lending and realtor exchange, and E-Loan Inc., an online lending company, are offering frequent-flier miles as bonus prizes for a cornucopia of real estate services: mortgages, home equity loans, real estate agent time.

Go through LendingTree and get 1,250 miles for every $10,000 you borrow on your mortgage or home equity loan, 3,000 miles for every $10,000 you borrow through an affiliated real estate agent or 3,000 miles for every $10,000 of your home's purchase or sales price when you go through an affiliated real estate agent. Selling a $200,000 home, for instance, will earn you 60,000 miles, approximately one round-trip ticket to Europe.

LendingTree offers miles through four partnered airlines: US Airways, Delta, Continental Airlines and Northwest Airlines.

So far, LendingTree has awarded customers 31.5 million frequent flier miles since it began the incentive program in March 2001.

E-Loan, which is partnered with Delta and United Airlines, offers customers 1,250 miles per $10,000 financed for a mortgage or home equity loan, and 3,500 per auto loan.

The incentive program speaks for itself, spokesmen say.

"It enables [the consumer] to receive significant value from going through LendingTree," said Bob Harris, senior vice president of marketing for the Charlotte, N.C.-based company. "What we believe is competitive rates plus this additional value ... is compelling to the consumer."

"If you're going to purchase a huge item like a house and someone's going to give you frequent flier miles, [it's something] you're not normally getting," said Beverly Mosso, Coldwell Banker Residential Brokerage's manager for the Lending-Tree program. After potential customers living in the Baltimore region apply for LendingTree services online, Mosso sets them up with Coldwell Banker agents.

"You're going to get a lot of miles" by going through LendingTree, Mosso said. "You're not normally getting anything."

Customers who opt for frequent flier miles receive the same rates as all other customers, said Tiffany Kelley, E-Loan's marketing director.

"There's not going to be a fee; there's not going to be a differential in rate," she said.

The program's expenses are factored into the marketing budget: "This is just a different form of advertising," Kelley said.

However, industry experts say, in the end, rates matter more than bonus miles.

"Is it worth getting frequent flier miles to pay a higher mortgage rate? I don't think so," said Cindy Ariosa, Baltimore regional manager for Long & Foster Real Estate Inc.

A fraction of a percent difference in mortgage rates can result in tens of thousands of dollars saved or spent over a 30-year period. For instance, a mortgage rate one-tenth of a percentage point higher than this week's average 30-year fixed rate will cost you an extra $2,500 on a $100,000 loan over 30 years. (As a point of comparison, round-trip plane tickets between London and Baltimore start at $750 now.)

"You really have to look at all the other parts of the deal," such as the interest rate and any other fees, said Marlys Harris, finance editor for Consumer Reports magazine. "Otherwise, it's just kind of a frill. It's like getting a blender or a toaster years ago."

Harris said she recommends that consumers looking for financial services get quotes from multiple sources such as LendingTree, E-Loan and their competitors as well as local banks, and choose a service offering the lowest possible rate.

"They're not going to give you something for nothing," Harris cautioned. However, if they come with the lowest rate, "then take the air miles," she said.

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