The largest mortgage lender in the United States has introduced a new credit card called “Rocket Visa Signature Card.”Cardholders can earn 5% towards a downpayment on a house, or 2% off their principal balance with Rocket Mortgage.Existing Rocket Mortgage clients are exempt from the $95 annual charge (if they currently hold your mortgage).The card will offer a $200 statement credit for those who spend at least $3,000 within the first 90-days of approval.Does this card have any value, or would consumers be better off using a general-purpose card?
Rocket Visa Signature Card: Earn Rewards that Can Be Used as Down Payment
Rocket Visa Signature Card was designed with the homebuyer or homeowner in mind.You can earn 5 points for every dollar you spend using your metallic card. There is no maximum to the number of points that you can earn.You can redeem these points for mortgage principal or closing costs.If you choose Rocket mortgage to finance your home loan, 25,000 rocket rewards are worth $250. This is 5% of the cash back value.You can get $250 off the closing costs of your Rocket Mortgage for every $5,000 you spend with this card.You could use $2,500 if you spend $50,000 over a year to put down a deposit on a house. Or just towards closing costs.
Existing Rocket mortgage customers can apply rewards to principal balance
Rocket Mortgage customers can also redeem their Rocket Rewards by applying them to the principal balance of their loans.This redemption option only offers 2% of the value of your purchase.Spend $5,000 and earn 25,000 points.These 25,000 points will only reduce the principal balance of a Rocket Mortgage by $100.While the $100 payment would reduce the interest on the mortgage, the subsequent mortgage payments would not be reduced.Even if you apply the Rocket Rewards points each month to the loan balance, the savings could increase.Cardholders have two other redemption options. They can choose to redeem for a statement credits, which is worth 1.25% less.The same $5,000 in spending equates to 25000 points but only a statement credit of $62.50.It’s better than 1% cashback on some credit cards.The card is currently only available to Rocket Mortgage holders. After the beta launch, it is expected that everyone will be able to use the card.Points cannot be used to redeem for a refinance transaction (yet, they claim) or a non-retail credit, like a wholesale loan through the company’s division, which works with brokers.Points cannot be combined with a Charles Schwab Partner Loan. The program may evolve in the future, and this could change.
You might be able to use any credit card to pay down your mortgage (or to save for a down payment)
You might now be wondering if it is a good deal. The 5% cashback value for down payment and closing costs is an excellent rate. However, the other redemption options offer only 2% or 1.25%.
Many other credit cards offer 2% to 5% in cash back either annually or through rotating categories. Some cards also offer huge bonuses upfront.
Some of these options also allow cash back in a ratio of 1:1. You can use this cash in any way you want.
You can pay your mortgage off early by making extra principal payments.
You can also do whatever you want with your money instead of being tied to a single mortgage company.
It’s a bit of a problem. You might not be eligible for the generous 5% Cash Back unless you plan to use Rocket exclusively for your mortgage.
Does this mean that you won’t compare mortgage rates?
You can redeem up to $8,000 worth of card points towards a down payment or closing costs for a new Rocket Mortgage. Your closing statement will reflect the credit.
These points can also be combined with an additional $2,000 Rocket Reward engagement points that would apply as lender credits.
Cash back on mortgage principal does not seem to have a maximum.