Air miles are a curious commodity. The people who have the most rarely take the time to figure out how to most efficiently use them, while others who guard them like gold would happily miss their mother’s birthday if they could fly someplace "for free."
Perhaps it’s been the rotten early spring weather, the need to travel at this graduation time of year, or the real estate industry pulling out all the stops to accentuate the positives of buying a home and getting a mortgage, but I have been hearing and reading more announcements intended to tweak my interest in air miles and getaways.
For example, there are many lenders including LendingTree, Washington Mutual, Wachovia and Chase who will give you 1,000-1,300 air miles for each $10,000 of your home purchase loan amount up to a maximum of 25,000 miles. Programs vary, depending upon the lender and air carrier. E-Loan will give 1,250 miles for every $10,000 borrowed on a home equity line of credit, refinance or purchase.
In a residential transaction, home buyers can receive 10,000 miles for each $100,000 of the home purchase sale price when using an approved participating real estate agent. Affinity companies, including Tacoma-based Miles4realestate.com, say the miles provide an innovative real estate marketing opportunity with absolutely no risk to the seller.
Commercial, office building and industrial real estate also qualifies for air miles, but the miles per dollar are lower because commercial deals are typically more expensive than residential transactions. Commercial real estate buyers can earn 2,000 miles for each $100,000 in purchase price when working through a participating agent.
Small-business owners — perhaps real estate brokers remodeling an office — can earn 1,300 miles for each $10,000 financed at closing on a business loan with Wachovia Small Business Capital.
If you are wondering how much it would cost to purchase those 25,000 miles directly from an airline, the cost would be approximately $725. Many airlines offer periodic specials, like Northwest’s 20 percent bonus on miles purchased before May 31.
Getting a round-trip coach ticket to your desired destination with the least number of miles can be a challenge, especially during popular times of the year. It takes a minimum of 25,000 Northwest Airlines miles to fly anywhere in the continental U.S. (often 50,000) and 35,000 minimum to Hawaii, Mexico and Central America (often 70,000).
The idea of linking air miles to homes and loans is not new. More than a dozen years ago, Great Western Bank (since acquired by Washington Mutual) had watched the huge success of free mileage linked with credit cards and began offering mortgage customers free air miles when they purchased or refinanced home loans. It was an attractive winter marketing wrinkle as customers dreamed of the sunshine in St. Somewhere.
Now, many major lenders and real estate companies have aligned with air carriers or affinity mile aggregators like EasyMiles and Miles4realestate.com to offer consumers a variety of options. For example, potential home buyers and sellers have nine different air travel options when they enter EasyMiles’ online site and send their business through an approved lender, mover or real estate company. Other home-related companies offering air miles are title insurance, home insurance and home warranty firms.
One of the prime movers behind the real estate and air-mile affinity program is Mike Taliaferro of Dallas-based EasyMiles, a former NFL quarterback for the New York Jets and New England Patriots who spent more than two decades in the lending industry. Part of his duties included the development and management of nationwide direct consumer marketing initiatives, including air miles for real estate sales and mortgages.
Remember that somebody has to pay for supposed freebies, however, so it’s always best to do comparison shopping. Sometimes you can negotiate out of the "free gift," which could prove more beneficial to you if you simply want to pay less money for a home or loan at closing.
Some lenders will tell you that the free air miles are indeed free and come with any program within their system. Others will say that there is no loan adjustment for declining the miles and that the expense of the air miles truly is contained in the bank’s national advertising budget. However, it never hurts to ask.
To get even more valuable advice from Tom, visit his Second Home Center.
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