credit cards

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American Express cards are the Mercedes of credit cards. They’re not cheap, nor are they easy to get – but boy are they nice…right?

Amex’s stand out as having some of the best perks and rewards in the industry, but they are offset by high annual fees, high credit requirements, and a slightly lower merchant acceptance rate.

That’s quite a list of drawbacks – especially the annual fee – but is it all worth it for the high rewards? Will the perks and points cover the cost of one of these cards, and then some? Or are you better off sticking with a Toyota than a Mercedes?

What’s Ahead:

What makes Amex cards stand out?

Generally speaking, Amex cards stand out from other credit cards in four ways. And like The Rock’s character in Fast Five, I like my dessert first – so let’s start with the good stuff.

Amex cards have industry-leading rewards

In a word, Amex rewards slap.

Not only will you earn crazy cash back with an Amex, but also some impressive sign-up bonuses, too.

Here are just a few examples:

The Blue Cash Preferred® Card

  • 20% back on Amazon.com purchases within the first six months of card ownership.
  • $200 cash back after spending $3,000 in purchases within six months.
  • 6% cash back at supermarkets and streaming services.
  • 3% cash back on transit purchases.

American Express® Gold Card

  • 75,000 Membership Rewards® Points for spending $4,000 within first six months of card ownership.
  • 4x points at restaurants worldwide and U.S.-based supermarkets.
  • $120 Uber Cash.

The Platinum Card®

  • 125,000 Membership Rewards® Points after spending $6,000 within first six months.
  • 10x points on purchases at “Shop Small” (i.e. small businesses on this map) and restaurants worldwide.
  • 5x points on flights.
  • 5x points on prepaid hotels.
  • $200 Hotel Credit.
  • $200 Airline Fee Credit.
  • $200 Uber Cash.
  • $240 Digital Entertainment Credit.
  • $100 Global Entry or $85 TSA PreCheck®.
  • And more.

Even The Platinum Card®‘s eye-watering $695 annual fee starts to make sense when you consider it comes with $1,400 in credits for Uber, Netflix, and more.

Now that we’ve eaten dessert, it’s time for the cabbage, so to speak. What’s the bad news?

They have higher credit requirements

I’ll just come out and say it – you’ll need a 700+ credit score to have a good shot at getting approved for an Amex. That’s because Amex wants to attract “Lannister types” – those who spend big but always pay their debts.

Most Amex cards charge an annual fee

Amex currently offers 17 rewards cards, and 11 of them have an annual fee attached.

For reference, the six “freebies” are:

  • The Blue Cash Everyday® Card.
  • The Cash Magnet® Card.
  • The Hilton Honors Card.
  • Blue from American Express®.
  • The Delta SkyMiles® Blue American Express Card.
  • The Amex EveryDay® Credit Card.

These cards are OK. They compete with other no-fee cards on rewards, but lose ground on perks, merchant acceptance, and required credit.

Amex’s no-fee cards, then, are like a salad in a steakhouse; they’re perfectly fine, but they’re not why we’re here.

Instead, we’re here for the prime chops. Amex’s paid cards are highly compelling, but they’re definitely not cheap, with annual fees ranging from $95 to $695.

Regardless of how tasty the steak is, the eye-popping bill is an undeniable drawback.

The acceptance rate is better, but still lacking

Nothing deflates an Amex holder’s day faster than the following phrase:

“Sorry – Visa and Mastercard only.”

Poof. All those potential reward points, gone.

Historically, merchants have refused Amex’s because of high merchant fees. In 2017, Visa and Mastercard charged an average of 2.12% compared to Amex’s 2.36%.

0.24% may not seem like much, but when you’re operating on razor-thin margins, it adds up. That’s why, until very recently, only 3.7 million out of 10.6 million U.S. merchants accepted Amex.

Since then the acceptance rate among U.S. merchants has gotten much better – from 35% to 99% in just a few years. However, Amex still struggles internationally. According to a 2020 Nilson report, while Visa and Mastercard are now accepted by over 70 million merchants globally, only 44.2 million of them accept Amex.

It’s ironic, then, that Amex cards offer the industry’s best travel rewards – but there’s a 37% chance you can’t use them when you land.

Are Amex rewards worth the annual fee?

It depends!

If there’s an Amex that clearly fits your existing spending habits and lifestyle, you’ll almost certainly end up using it enough to clear the annual fee and earn serious rewards.

Here’s a quick summary of who is (and isn’t) a fit for an Amex card:

Amex cards are a good fit for:

  • Big spenders.
  • Delta Frequent Fliers.
  • Hilton Honors or Marriott Rewards members.

Amex cards are not a good fit for:

  • Frugal spenders.
  • Credit-builders.
  • Balance transfers.

Which Amex is right for you?

As hinted above, the key to picking the right Amex, and rewards card in general, is to find the card that fits your existing lifestyle and spending habits. 

I emphasize existing because you don’t want to make the same mistake I did – I got a card in my early 20s that fit my aspirational lifestyle – not the one I was already leading. This led to me losing $75 on the card in Year One, and worse, overspending in Year Two to justify having it.

Don’t be like me!

Don’t get a rewards card that encourages unplanned or out-of-budget spending – instead, get a rewards card that gives you 3x, 6x, even 10x points back on stuff you’re already spending money on.

The rewards card should fit the lifestyle, not the other way around.

Examine your existing budget and spending habits

As you probably surmised from my mini-lecture above, the first step in determining if an Amex is right for you is to get a clearer picture of your existing spending habits.

If you use a budgeting tool, take a look at your spending summary for the past few months. If you prefer to budget more manually, pull up your current credit card statement as a substitute.

Now, what common credit card rewards categories are you spending the most in?

  • Flights?
  • Hotels?
  • Groceries?
  • Amazon purchases?

Making a list of your top three spending categories will help you choose the right Amex card in the next step.

Find the right Amex for you

Next, take a look at Amex’s current stable of rewards cards and spend a good 15 seconds studying each one’s sign-up bonus and rewards.

The travel rewards cards will be the easiest to filter out

Do you fly Delta once a month? The Delta SkyMiles® Gold American Express Card might be a fit. Do you fly Delta every week? You’ll almost certainly get value out of the Delta SkyMiles® Platinum American Express Card.

The same applies to the Hilton and Marriott cards. If you already frequent those hotel chains, the points and perks will justify the annual fee almost immediately.

If the travel cards aren’t a fit, that leaves the more general rewards cards

Do you spend a lot on groceries and streaming services? The Blue Cash Preferred® Card might be a fit.

Do you take Ubers frequently and could you benefit from 0% APR for 12 months? Maybe the American Express® Gold Card may be your literal golden ticket.

…or you might prefer The Platinum Card®

Finally, you might be considering the “S-Class” of the Amex lineup – The Platinum Card®. Despite having the highest fee of any Amex card, The Platinum Card® may actually be the best value – if you’re already spending big money on flights, hotels, Uber, SiriusXM®, etc.

If you’re not sure if you’ll be able to justify this or any other Amex’s high annual fee, let’s move onto Step 3 and do some math.

Calculate what you’ll need to spend to cover the annual fee

Let’s say you’re considering the Blue Cash Preferred® Card, but you’re not sure if you’ll spend enough to justify the $95 annual fee.

Thanks to sign-up bonuses, you’ll have no trouble justifying your fee in Year One. It’s Year Two you have to think about.

So, to determine how much you’ll need to spend to cover the fee in Year Two, use this simple equation:

Annual fee / percentage cash back rewards

For example, the Blue Cash Preferred® Card has a $95 annual fee and 6% cash back on supermarkets and streaming – among others, but for simplicity’s sake, we’ll focus on the biggest rewards categories:

$95 / 0.06 = $1,650

You’ll have to spend $1,650 within the 6% cash back categories to cover your annual fee.

Mind you, this is just a break-even point – you’ll have to spend another $1,650, or $3,300 total, to catch up to what you would have earned with a no-fee, 3% cash back card. So if you spend less than $3,300 annually in these categories, a no-fee card is probably a safer bet.

Summary

Amex cards are the Mercedes of credit cards – expensive, but feature-rich. They’re not for everyone – many won’t use them enough to justify the high annual fees. But those whose lifestyle and spending habits already justify the addition of an Amex are in for a treat.

Read more:

Source: moneyunder30.com

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Note: We’re not encouraging people to go out and sign up for credit cards, especially if you have debt or plan to carry a balance on a card. (The interest you pay will wipe out any rewards benefits.) But if you can control your spending and pay your bill on time and in full every month, Holly’s money hack may work for you. Also keep in mind that your credit score takes a hit each time you open a card, and whatever balance you have on your credit card as of the statement closing date will be reported to the credit bureaus. If you pay the balance in full before the statement closing date, your balance will be reported as $0.

Almost two years ago, we began our journey out of debt. Like the average American family, we had car loans, student loans, and consumer debt. At one point, we were making minimum payments on several credit cards and a loan I took out to buy a Kirby vacuum. I’m serious.

However, getting pregnant with our second child made us realize that we needed to get our finances together quickly. Once we committed to new financial goals, we cut out nearly everything from our life that was “enjoyable.” We said goodbye to cable TV and dinners at restaurants. We quit shopping for fun and only went to the store to get groceries and absolute necessities. Our new budget was cut down to the bare bones…so much so that I hesitated to buy almost anything.

As the months flew by, we began making huge strides against the debt that we had burdened ourselves with. Once we became debt-free, we realized that we had become addicted to our new, frugal lifestyle. Having no consumer debt had freed up a lot of cash to save and invest, and we quickly got serious about building wealth. However, having a strict budget made it difficult to do anything spontaneous like see a movie or have a date night. I began to look for a way to supplement our income with some “fun money” without ruining our short- and long-term goals. It was around that time that I got my first credit card sign-up bonus offer in the mail.

Enter credit card rewards

I couldn’t believe my eyes when I read a direct mailer from a major issuer promoting their new credit card. “Spend $500 in 3 months and earn a $100 statement credit.” Could it really be that easy? Why would they give away $100 in free money? As I read through the disclosures carefully, I determined that there was no “catch.” Truthfully, the issuer was offering a $100 bonus just to get new customers to try their card. As long as I paid off the card in full and accrued no interest, this $100 would truly be free money. Since our grocery spending approaches $500 on a normal month, I knew that we could reach the spending requirement easily and I decided to give it a try. Within the first month, we put our regularly planned spending on the card. The bonus points, equal to a $100 statement credit, were quickly credited to my account. I was hooked.

Soon after that, my husband applied for the same card and earned the $100 bonus just for doing our regular shopping. We then moved on to new cards in order to earn a new sign-up bonus. Another card from that issuer, which had better perks, required that we spend $3,000 in three months in order to earn a $400 statement credit. Since we had some upcoming expenses that could be put on credit, we each signed up. We put two family vacations and our regular monthly spending for groceries and gas on each card and easily earned $800 in statement credits. Since we were going to spend the money anyway, these bonuses were truly “free.” We used the $1,000 that we had earned up to this point on some fun activities with our children. I was also able to surprise my husband with last-minute tickets to see his favorite musical, “Les Miserables,” and a new grill for Father’s Day.

Is this wrong?

Obviously there are some people who would say that we are gaming the system. Their argument may be that the credit card bonuses are meant to secure long-term customers, not to provide some extra cash to take my family to Applebee’s. Some may feel that we are just using the banks for our own gain.

I don’t see it that way at all. Actually, to a certain extent, some of their strategies have worked. For instance, I plan on keeping the perkier card because it has no foreign transaction fees. I have also found that this particular card comes with great customer service. Calling the 1-800 number on the card quickly connects me with a real, live person at any hour of the day or night. I would have never tried the card if not for the sign-up bonus. So, in that respect, I feel that the issuer did earn a long-term customer.

I also definitely do not feel bad that I never pay interest. For every person like me who pays their balance in full every month, there are far too many people making the minimum payment. Additionally, banks earn money from retailers just because they choose to take credit cards as payment. Simply put, when I spend $100 at the grocery store, they have to pay the credit card company a certain percentage of my order.

Moving forward

In the past two months, we have moved our spending from those cards to another issuer’s premium card. Their new offer of “Spend $2,000 in 3 months and earn $250 in gift cards” was just too good to pass up…especially with Christmas just around the corner. Since we will put our gas, groceries, and our entire Christmas shopping budget on the card, we will easily reach the spending requirement and, thus, reap the rewards.

Chasing reward deals certainly isn’t for everyone. However, it has definitely made a difference in our bottom line. It has provided us with some extra money that doesn’t have to be accounted for. I can spend our rewards on gifts or something fun and not feel like I have sacrificed what is important to us. And now that we are completely out of consumer debt, I am actually finding that using credit cards helps us stay on budget. Both of the issuers have websites that make it quick and easy to track what I have spent and where.

Is this strategy right for you?

Before entertaining any credit card sign-up bonuses, I would ask myself a few questions. Are you in debt? If you are in credit card debt, then it is a bad idea to pursue credit card rewards. In fact, you might consider cutting up your cards or putting them somewhere not easily accessible. Work on getting out of debt and staying out of debt instead.

Do you have trouble tracking your spending? If so, then pursuing rewards offers may not be for you. While I tend to use one card at a time, some people try to juggle multiple offers at once and end up getting confused. If you are worried about losing track of your spending, then please skip using credit cards altogether.

Are you worried about your credit score? Remember that applying for new credit too frequently can reduce your score and make it harder for you to get the best rate for a loan. Please take into consideration how applying for credit will affect your credit score and do what is in your best interest.

Do you try to earn credit card rewards? If so, what is your favorite credit card rewards program?

Source: getrichslowly.org

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Our rating

Southwest Rapid Rewards Priority Credit Card

  • Sign-Up Bonus: Earn 50,000 Rapid Rewards points after spending $1,000 on purchases in the first three months from account opening
  • 3x Points: Southwest purchases
  • 2x Points: Rapid Rewards® hotel and car rental partners
  • 2x points: Local transit and commuting, including rideshare
  • 2x Points: Internet, cable and phone services, and select streaming
  • Redeem For:  Flights on Southwest Airlines
  • Intro APR: None
  • Annual Fee: $149
  • Credit Needed: Good or better

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Southwest Airlines is the nation’s largest domestic carrier, but it offers a remarkably simple frequent flier program called Rapid Rewards. You simply redeem your points for about 1.4 cents each toward any unsold seat. 

The Southwest Rapid Rewards Priority card offers the most perks of any of their credit cards, but that comes at a cost. 

What Is the Southwest Rapid Rewards Priority Credit Card?

The Southwest Rapid Rewards Priority Credit Card is a premium travel rewards credit card offered by Chase. With its $149 annual fee, it’s the most expensive of the three Rapid Rewards consumer credit cards offered. 

As a new applicant, you can earn 60,000 Rapid Rewards points and a 30% off promo code after using your card to spend $3,000 within three months of account opening. You can use this code for a round-trip ticket with multiple passengers, and it’s valid with both cash and points bookings.

You also earn 2x points on Southwest airlines purchases and from purchases from Rapid Rewards® hotel and car rental partners. The 2x points offer is also valid for local transit and commuting purchases, including rideshare providers such as Uber and Lyft. You also earn 2x points on your internet, cable, and phone bills as well as for select streaming services.

You should expect plenty of valuable benefits from a premium travel rewards card, and this card largely delivers. For example, you receive a $75 credit toward Southwest purchases each year as well as a credit toward four upgraded boardings annually. These upgraded boardings currently sell for $30 to $80 each, depending on the flight. 

This card can also help you earn elite status in the Rapid Rewards program.  You earn 1,500 tier qualifying points (TQPs) toward A-List status for every $10,000 you spend, and there’s no limit on the number of TQPs you can earn.

Other perks include 25% back on in-flight purchases as well as cardholder benefits like lost and delayed baggage insurance, extended warranty coverage and a purchase protection policy. 

There’s a $149 annual fee for this card, but thankfully there’s no foreign transaction fee imposed on purchases processed outside the United States. You also get a 7,500-point bonus on your account anniversary instead of flowers, which is worth about $105. 

What Sets the Southwest Rapid Rewards Priority Credit Card Apart?

Nearly every airline offers several credit cards, but the Southwest Rapid Rewards Priority Credit Card is different for a few reasons. Mostly, it provides you with enough perks to help you justify its considerable annual fee. These perks include:

  • Big sign-up bonus. Earn 60,000 bonus points and a 30% off promo code after spending just $3,000 within three months. The promo code itself is a unique offer and can be very valuable.
  • Lots of bonus categories. Earn 3x points on Southwest ticket purchases plus 2x from transit, commuting, and rideshare purchases and 2x from internet, cable, and phone services and select streaming purchases. You also earn 2x when you book reservations with Southwest’s hotel and rental car partners.
  • Credit toward Southwest tickets. You get $75 back from your Southwest purchases each year. You also get a 7,500-point bonus on your account anniversary, which is worth about $105. For many travelers, these two features can justify this card’s annual fee. 
  • Earn credit toward A-List status.  This card lets you earn 1,500 tier qualifying points (TQPs) toward A-List status for every $10,000 you spend, and there is no limit on the number of TQPs you can earn. A-List status offers you perks such as a better boarding position and free same-day confirmed flight changes. 
  • Four upgraded boardings per year when available. This gives you a boarding position of A1-15, which normally costs $30 to $80 per flight. 

Key Features of the Southwest Rapid Rewards Priority Credit Card

The Southwest Rapid Rewards Priority Credit Card is not a very complicated credit card, but it does offer a lot of features that are worth knowing about before you apply. 

Sign-Up Bonus

Earn 60,000 bonus points and a promo code for 30% off after spending just $3,000 within three months. The 30% off code has the potential to offer tremendous savings to large families who use it to book a round-trip ticket.

Earning Rewards

Earn 3x points on Southwest ticket purchases plus 2x from transit, commuting, and rideshare purchases and 2x from internet, cable and phone services, and select streaming purchases. You also earn 2x when you book reservations with Southwest’s hotel and rental car partners. You earn one point per dollar spent on all other purchases. 

Redeeming Rewards

Rapid Rewards points are worth about 1.4 cents each toward airfare in any of their four fare classes. There are no restrictions on the number of seats available for redeeming rewards — you can use your points for any unsold seat. 

Important Fees

This card has an $149 annual fee. No doubt, this will turn off a lot of potential applicants. However, it’s important to consider it in the context of the sign-up bonus as well as the $75 annual travel credit, 7,500-point anniversary bonus, and the four upgraded boardings each year. Fortunately, there’s no foreign transaction fee.

Credit Required

This card requires good or better credit to qualify. If your FICO score is much below 700, then you’ll likely have trouble being approved. 

Advantages

This card has several key advantages that help justify its pricey annual fee. 

  • Lots of benefits. This card offers numerous benefits, such as travel fee credits, upgraded boardings, in-flight purchase discounts and an anniversary bonus. You also get several purchase protection and travel insurance policies.
  • Bonus points. With all the 3x and 2x bonus categories, this card makes it easy to earn a free trip. 
  • Big sign-up bonus. You can earn a bonus worth hundreds of dollars, and the minimum spending required is lower than many competing cards. The 30% off code can also be extremely valuable.
  • Easy rewards program. Other airline credit cards offer miles that can be difficult and confusing to redeem for the most value. But the Southwest Rapid Rewards program still keeps it simple. 

Disadvantages

Before applying for this card, you have to consider some of its drawbacks and missing perks. 

  • Expensive annual fee. There’s no way around the fact that you must pay $149 a year to use this card, so you have to use the rewards and benefits of this card to justify it. 
  • No promotional financing offer. If you’re looking for a credit card with a 0% APR introductory financing offer, this isn’t it. 
  • Forget first-class. You can’t redeem your Rapid Rewards points for a first-class seat because there are only economy seats on Southwest. 
  • No overseas awards. Like first-class, Southwest fliers will find Europe, Asia, and much of the world out of their reach. However, Southwest does fly to Hawaii, Mexico, the Caribbean and even Central America.

How the Southwest Rapid Rewards Priority Credit Card Stacks Up

One of Southwest’s closest competitors is JetBlue, and it offers the JetBlue Plus card from Barclays. The JetBlue card has a slightly better sign-up bonus and substantially more points for airline ticket purchases. However, JetBlue points are worth about 1.2 cents each, which is significantly less than Southwest points. 

Southwest Rapid Rewards Priority Credit Card JetBlue Plus Card From Barclays
Annual Fee $149 $99
Sign-Up Bonus Yes Yes
Rewards Rate Up to 3x Up to 6x
0% Intro APR None None
Foreign Transaction Fee None None
Credit Needed Good or better Good or better

Final Word

Fans of Southwest Airlines know that it’s a different type of carrier than the likes of American, Delta and United. 

Instead of business-class tickets to Europe, Southwest fliers prize little perks like an upgraded boarding position and easy-to-use rewards. That’s where the Southwest Rapid Rewards Priority Card delivers. 

But for those who aren’t fully onboard with the way Southwest works, the $149 annual fee can be hard to swallow. It’s also not a card for those whose home airport doesn’t offer much Southwest service. And for these more casual Southwest customers, it can be worth considering the Rapid Rewards Plus and Premier cards. 

But if you find yourself regularly boarding Southwest and are looking for the best card to maximize your rewards and benefits, then there’s no substitute for the Southwest Rapid Rewards Priority Credit Card. 

Disclaimer: The information related to the Chase Southwest Rapid Rewards Priority Card has been collected by Money Crashers and has not been reviewed or provided by the issuer of this card.

The Verdict

Our rating

Southwest Rapid Rewards Priority Credit Card

This is Southwest’s most feature-filled credit card for consumers. It includes lot’s of opportunities to earn bonus points, and it features strong benefits. If you’re a regular Southwest flier, you need to look into this card.

Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Jason has been writing about personal finance, travel, and other topics on blogs across the Internet. When he is not writing, he has a career in information technology and is also a commercially rated pilot. Jason lives in Colorado with his wife and young daughter where he enjoys parenting, cycling, and other extreme sports.

Source: moneycrashers.com

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Updated 11:18 a.m. ET June 5, 2023

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Editorial Note: Blueprint may earn a commission from affiliate partner links featured here on our site. This commission does not influence our editors’ opinions or evaluations. Please view our full advertiser disclosure policy.

Marje, Getty

Mortgage rates are trending about the same across the board. Here are today’s average mortgage rates: 

  • 30-year fixed: 7.17%
  • 15-year fixed: 6.33%
  • 30-year jumbo: 6.89%

Current mortgage rates for June 2, 2023

*Data accurate as of June 1, 2023, the latest data available.

30-year fixed mortgage rates

Today’s 30-year fixed mortgage rate is 7.17%, which is lower than last week’s 7.35%, according to data from Curinos. This is an increase from last month’s 5.95%. Last year around the same time, 30-year fixed rates were 4.85%, which makes today’s rate much higher than it was a year ago.

At the current 30-year fixed rate, you’ll pay about $677 each month for every $100,000 you borrow — down from about $688 last week.

15-year fixed mortgage rates

The mortgage rates for 15-year fixed loans dropped today to 6.33% from 6.48% last week. Today’s rate is up from last month’s 5.35% and up from a year ago when it was 4.11%.

At the current 15-year fixed rate, you’ll pay about $862 each month for every $100,000 you borrow, down from about $870 last week.

30-year jumbo mortgage rates

The mortgage rates for 30-year jumbo loans dropped today to 6.89% from 6.93% last week. This is up from last month’s 5.79% and up from 4.50% last year.

At the current 30-year jumbo rate, you’ll pay around $658 each month for every $100,000 you borrow, up from about $660 last week.

Methodology

To determine average mortgage rates, Curinos uses a standardized set of parameters. For conventional mortgages, the calculations are based on an owner-occupied, one-unit property with a loan amount of $350,000. For jumbo mortgages, the loan amount is $750,000. These calculations assume an 80% loan-to-value ratio, a credit score of 740 or higher and a 60-day lock period.

Frequently asked questions (FAQs)

Mortgage rates are determined by a variety of factors, including the overall economy, inflation and the actions of the Federal Reserve. Mortgage lenders then set their loan rates based on these economic elements.

The rate you’re offered on a mortgage will also depend not only on the lender but also on your credit score, income, debt-to-income (DTI) ratio and other parts of your financial profile.

If you opt for a rate lock, you can typically do so for 30 to 60 days, depending on the lender. In some cases, you might be able to lock in your rate for up to 120 days.

Keep in mind that while some lenders allow you to lock in a mortgage rate for free, you’ll likely have to pay a fee for a longer lock period. This fee generally ranges from 0.25% to 0.5% of your loan amount. You could also be charged a fee if you want to extend the lock period — usually 0.375% of the loan amount.

There are several strategies that could help you qualify for the best mortgage rate, such as:

  • Checking your credit: When you apply for a mortgage, the lender will review your credit to determine your creditworthiness as well as your interest rate. In general, the higher your credit score, the lower your rate will be. So before you apply, it’s a good idea to check your credit to see where you stand. If you find any errors in your credit report, dispute them with the appropriate credit bureau to potentially boost your score.
  • Comparing lenders: Taking the time to shop around and compare your options from as many lenders as possible can help you find the best deal. In addition to rates, make sure to also consider each lender’s terms, fees and eligibility requirements.
  • Improving your credit score: If you have less-than-perfect credit and can wait to apply for a mortgage, it could be worth working to improve your credit beforehand to qualify for better rates in the future. Some possible ways to boost your credit include paying all of your bills on time and aiming to keep your credit utilization (the amount of credit you’ve used compared to your credit limits) on credit cards and lines of credit at 30% or less.
  • Reducing debt: Paying down debt could help lower your DTI ratio, which is how much you owe in monthly debt payments compared to your income. Having a lower DTI ratio can make you look like less of a risk in the eyes of a lender, which can result in a lower rate.
  • Choosing a shorter repayment term: Lenders typically offer lower rates to borrowers who opt for shorter terms. For example, you’ll likely get a lower rate on a 15-year mortgage compared to a 30-year loan.

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Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Jamie Young is lead editor of loans and mortgages at USA TODAY Blueprint who has been writing and editing for online media for 12 years. Previously, she worked for Forbes Advisor, Credible, LendingTree, Student Loan Hero, and GOBankingRates. Her work has also appeared on some of the best-known media outlets including Yahoo, Fox Business, Time, CBS News, AOL, MSN, and more. Jamie is passionate about finance, technology, and the Oxford comma. In her free time, she takes care of her two crazy cats and ever-growing collection of plants. You can follow her on Twitter @atjamie.

Megan Horner is editorial director at USA TODAY Blueprint. She has over 10 years of experience in online publishing, mostly focused on credit cards and banking. Previously, she was the head of publishing at Finder.com where she led the team to publish personal finance content on credit cards, banking, loans, mortgages and more. Prior to that, she was an editor at Credit Karma. Megan has been featured in CreditCards.com, American Banker, Lifehacker and news broadcasts across the country. She has a bachelor’s degree in English and editing.

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Source: usatoday.com

Apache is functioning normally

Everyone wants to be the next big thing in the mortgage industry, promising a digital experience or even a funded loan in days as opposed to weeks.

We’ve seen signs of this disruption for years now, and while it has improved the customer experience somewhat and shortened turn times, things aren’t much different.

You still have to fill out a loan application, often with the assistance of a human, submit financial documents, and wait for weeks (or over a month) to get your loan funded.

The difference now is you can do some of these tasks remotely, or better yet, authorize your financial accounts to be plugged into the application so you don’t need to track down documents yourself.

But there’s still the usual frustration and timelines that have long plagued the mortgage industry.

While most disruptors have focused on speed and convenience, an emerging company called “LoanSnap” is focused on originating “smart loans” as opposed to “dumb loans” that cost consumers billions annually.

What Is LoanSnap?

  • A direct mortgage lender and tech company based in Costa Mesa, CA
  • It was formed after acquiring Irvine, CA-based DLJ Financial
  • Currently licensed to do business in 19 states including AZ, CA, CO, FL, IL, and TN
  • Relies on artificial intelligence (AI) to offer a so-called smart home loan to consumers

LoanSnap was formed after acquiring DLJ Financial, a mortgage lender that had been based in Irvine, California for some 21 years.

The company’s current location is in nearby Costa Mesa, CA, with corporate headquarters in tech-rich San Francisco.

It makes sense that they have locations in both cities, as the Bay Area is where startups are born and Orange County has long been mortgage-central.

They offer a so-called “smart loan” that factors in all your monthly bills, such as credit cards and student loans, to ensure you get the best home loan.

In LoanSnap’s own words, it’s a mortgage that relies upon artificial intelligence (AI) “to analyze a consumer’s financial situation instantly and recommend the best options for their unique needs — all while addressing common financial issues like too much debt.”

Put another way, it goes beyond just the lowest mortgage rate or the fastest turn times and considers a customer’s entire financial situation.

After all, the borrower’s home and accompanying mortgage can often serve as their nest egg, dictating other investments and financial decisions.

It can also be leveraged to pay off other high-interest debt, which is where LoanSnap figures in.

At the start of the loan application on their website, they say, “Welcome! Let’s start by identifying where you’re losing money so we can help you own your financial future.”

What they mean by that is you’re probably paying more interest on your credit cards, student loans, and car loans than you are/would be with a low-rate mortgage.

After all, mortgage rates are close to 3%, while credit cards are often 20%+ and auto loans and student loans are maybe 5%+.

They add that most folks “don’t realize they can move their credit cards or loans to their mortgage and save thousands in interest payments.”

So instead of pitching the lowest interest rates, they give you a full view of all your accounts to help their customers avoid losing money.

What Types of Mortgages Does LoanSnap Offer?

  • Home purchase loans, mortgage refinances, and HELOCs
  • The cash out refinance appears to be their chief offering
  • You can get a conventional loan, non-conforming loan, FHA loan, or a VA loan
  • Available on single-family homes and condos/townhomes

At the moment, they offer home purchase loans, mortgage refinances, and HELOCs.

That includes both rate and term refinances and cash out refinances, the latter of which is utilized to pay off other high-interest bills you may have.

The cash out refinance seems to be their weapon of choice to eliminate other debt, and explains the how and why of analyzing a consumer’s complete financial situation.

Once they know about your other debts, they can instantly recommend the best loan options that consider interest rates on all your outstanding debt, thereby saving you money.

In a sense, it’s marketing the cash out refinance as something unique to the company, while just about every mortgage lenders offers them.

Of course, things are a little less liquid in that department at the moment due to COVID-19, but that will likely change over time as the situation normalize.

It also means larger loan amounts for LoanSnap, which equates to more money for them.

In terms of loan type, they offer FHA loans, VA loans, and non-conforming loans. I assume they offer conforming loans backed by Fannie Mae and Freddie Mac as well.

They also offer second mortgages in the form of a home equity line of credit (HELOC), which can be used to pay off other bills like student loans, auto loans, and credit cards.

You can get a home loan on a single-family residence or a condo/townhouse. It’s unclear if they lend on second homes and investment properties.

In terms of where they’re available, they lend in 19 states with plans to expand to more soon.

At the moment, they’re licensed in Arizona, California, Colorado, Florida, Georgia, Illinois, Iowa, Kansas, Michigan, Nebraska, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington, and Wisconsin.

LoanSnap Mortgage Rates

While LoanSnap says it looks beyond mortgage rates to help its customers save money, essentially by saving them on other, higher-cost loans, it doesn’t reveal its rates.

Obviously it’d be nice to get an idea of where they stand pricing-wise, but there’s no daily rate section on their website as of now.

So if you want to pricing, you’ll need to either apply or give them a call. My recommendation is to get pricing first before spending time on an application.

Note that cash out refinance rates are often higher than purchase rates, so if you’re comparing rates among lenders, be sure it’s apples-to-apples.

Also take a look at their customer reviews to see what other customers thought about their interest rates and fees for more clues.

With regard to lender fees, they also leave us in the dark, so be sure to inquire about fees and rates when you call and speak with a loan officer.

LoanSnap Reviews

Despite being a relatively young company, they’ve already amassed a decent number of customer reviews.

On LendingTree, they’ve got a 4.6-star rating out of 5 from nearly 300 reviews, with a 92% recommended score.

At Trustpilot, they have a 3.8-star rating, which the site considers “great,” but not quite excellent.

Over at Google, it’s a similar 4.1-star rating, which is certainly good but not the highest customer satisfaction tier.

On Zillow, they have just a dozen or so reviews and a 4.27-star rating.

While they’ve been accredited with the Better Business Bureau since 2009, they aren’t currently rated.

LoanSnap Received an Investment from The Chainsmokers

  • Company has raised millions of dollars via several funding rounds
  • Latest investment comes from fund backed by pop group The Chainsmokers
  • Also supported by True Ventures, group behind Peloton and Fitbit
  • Expect them to become a household name in the mortgage world with that backing

In a bid to perhaps become the coolest mortgage lender out there, aside from maybe Rocket Mortgage, they announced a new investment round that included pop duo The Chainsmokers.

The popular group that makes electronic music is apparently also interested in making money, as evidenced by their early stage technology investment firm known as MANTIS.

In mid-May, LoanSnap raised an additional $10 million, co-led by True Ventures and MANTIS.

To show just how serious they are, True Ventures is the Silicon Valley-based venture capital firm behind Peloton, Blue Bottle coffee, and Fitbit.

Their backers also include Richard Branson and Joe Montana’s Liquid 2 Ventures, so it appears they came to play.

Expect to hear the name LoanSnap if and when searching for a mortgage in the near future.

(photo: Jason White)

Source: thetruthaboutmortgage.com