Savings Account & MMA Rates
CD (Certificate of Deposit) RatesJP Morgan Chase is pushing a new gimmick to sell mortgages.
Take out a new loan — purchase or refinance — and get back 1% of each year’s total mortgage payments.
But how much will you have to pay for a Chase loan?
When we used the “custom quote” feature on the bank’s Web site, we could find some fairly competitive rates on 30-year, fixed-rate loans.
Unfortunately, every quote also came with points — that’s prepaid interest due at closing, with one point equaling 1% of the loan amount.
Let’s look at one quote we were given for a $200,000 loan — 5.125% with 1.5 points.
The monthly payment would be $1,090, the annual payment would total $13,080, and the 1% cash back would be $130.80.
At that rate it would take just over 23 years to recoup the $3,000 in points the bank charged at closing. And almost no one keeps a mortgage 23 years.
The average loan is paid off in seven years, when the borrower either refinances or sells. In that case, homeowners would only recapture $917, or less than a third, of what they paid in points.
Bottom line: If you can find a lender offering the same rate without points, that’s a better deal than a “cash back” mortgage from Chase with points.
A lender offering a lower rate without points is an ever better way to go.
We had no problem finding lenders who did both in the databases at Bankrate.com and Interest.com.
One final concern.
To qualify for a “cash back” mortgage, you also have to have (or open) a Chase checking account.
That means you’ll be subjected to Chase’s high-pressure marketing campaign to sign up for over-draft protection and all of the fees that come with it.
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