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Special to The Times

Shopping for a mortgage? The Mortgage Bankers Assn. of America predicts that homeowners will finance or refinance $3 trillion in mortgages this year. After finding the best deal and signing the paperwork, however, some will have another decision to make: window seat or aisle?

Increasing numbers of lenders and realty networks are joining with airlines to offer frequent-flier mile rewards to consumers who take advantage of financing options and real estate services.

“While credit cards have been part of airline rewards programs for some time, mortgage [dividends] are relatively new,” said Robert Kallio, vice president for Nationwide Advantage Mortgage Co., which partnered with America West Airlines in February. The pairing allows the airlines’ FlightFund members to earn 1,000 miles per $10,000 borrowed and an additional 3,000-mile bonus for financing a new home purchase through Dec. 31.

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Delta Air Lines joined forces with Awards for Mortgage and Real Estate in May to give its SkyMiles members the chance to accumulate mileage rewards for using the relocation service network’s affiliates to buy, sell, finance or refinance a home or purchase moving van services. Awards for Mortgage and Real Estate gives SkyMiles members 1,300 miles on each $10,000 financed or refinanced, 3,000 on each $10,000 in a home’s sale or purchase price, 1,000 on each $1,000 paid in van line moving services and 5,000 bonus miles for combining services.

Mike Franco was one of the first in line to take advantage of the program. The Laguna Niguel resident used Chase Home Finance, the mortgage division of JP Morgan Chase & Co., to refinance his home and purchase an investment property.

Franco liked the 4.7% refinancing rate on a three-year adjustable loan and the network’s affiliation with such national lenders as Chase and Washington Mutual Home Loans, but he said the miles drove the deals, which closed in May and earned him 250,000 miles.

“It’s an awesome program,” said Franco, who plans to use his miles to fly his wife and three children to Hawaii in November.

Though a major player, the Delta program, which has included mortgage partners since 1998, is not the only game in town.

American Airlines’ AAdvantage program, for example, gives mortgage hunters 1,000 miles for every $10,000 borrowed through Countrywide Home Loans. On a $500,000 mortgage, AAdvantage members receive 50,000 miles -- enough for two round-trip domestic tickets or one round-trip flight to Europe. Since April 2002, about 7,500 AAdvantage members have earned more than 133 million miles through the airline’s mortgage and real estate partnerships.

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Online lender E-Loan, partnered with Delta and United Airlines, awards 1,250 miles for every $10,000 financed on a mortgage or home equity loan, and 3,500 miles for any auto loan.

Chris and Amanda Coye have used E-Loan to refinance a home loan, finance a car and secure two mortgages and two home equity loans since 1999. Their loyalty has earned the couple more than 132,000 air miles.

While the idea of strolling along the Champs-Elysees has obvious appeal, the Coyes said the decision to use E-Loan was based on rates and terms.

“Certain companies advertised better rates, but when we talked with them, they were for smaller loans or more points,” said Chris Coye, a director of software development at Walt Disney Co. “E-Loan listed a rate and the points, and that is what we got. No haggling. The miles were just a freebie.”

One of their latest E-Loan transactions, a $431,000 mortgage on a five-bedroom contemporary-style residence in Stevenson Ranch in December, secured the couple a 4.6% interest rate on a five-year adjustable-rate mortgage and 53,900 air miles. A home-equity loan on the same house in January earned them an additional 6,250 miles. They plan to use the miles to visit family in Rehoboth Beach, Del.

Scott Foust’s annual vacation budget got a 73,000-mile boost from LendingTree Inc., an online lending exchange partnered with Continental, Delta, United, US Airways and Northwest. Foust, a Colorado-based management consultant, found himself in need of a Los Angeles real estate agent in December to oversee the sale of his late aunt’s Hollywood condominium.

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Having used LendingTree to finance a second home and refinance his primary residence in Denver, he turned to them for an out-of-area agent referral. Consumers who use a LendingTree affiliated agent to buy or sell a home earn 3,000 miles for every $10,000 in the sale price.

The Hollywood condo sold in March for $245,000, and Foust, who worked with a local agent, plans to use his bonus miles for a family vacation to Mexico.

“Once the transaction was done, I wondered whether it would turn into a hassle to try and force LendingTree to cough up my miles,” he said. “But when I signed up, I gave them my United Mileage Plus number, and at the beginning of April, bada bing, bada boom, I got nearly 75,000 miles.”

LendingTree has awarded more than 115 million air miles to customers since its inception in January 2000. The company’s nationwide realty service incorporates more than 6,500 affiliated agents from Coldwell Banker, Century 21, Realty Executives, Re/Max, Prudential, ERA and GMAC Real Estate. In addition to real estate services, clients earn 1,250 miles for every $10,000 borrowed on a mortgage, home equity or auto loan.

Real estate agents associated with LendingTree’s mileage incentive report that client response has been overwhelmingly positive. “The public seems to really like these programs, but it is tough on agents who can pay a significant fee for the client referral,” said Nancy Kohutek, vice president of business development and relocation for Coldwell Banker Associates Realty, which serves San Diego and Riverside counties and has 50 LendingTree-certified agents.

For LendingTree referrals, agents pay a 35% fee off the top of their commission. By comparison, agents affiliated with Awards for Mortgage and Real Estate pay about 28% to cover the cost of air miles and transaction services.

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But lenders and realty agents are not the only ones enticing consumers with air miles. Mileage-earning credit cards offer holders a mile for every $1 or $2 spent. Tim Winship, Los Feliz-based publisher of Frequentflier.com (www.frequentflier.com), a Web site for mileage enthusiasts, said annual fees range from $25 to $125 and most issuers cap annual mileage rewards.

Alaska Airlines Visa Check Card, for example, has a cap of 100,000 miles per year. While rules and restrictions on debit card cash transactions vary, Winship said some frequent fliers increase their mileage by using debit cards to purchase postal money orders to pay mortgages and other bills.

For consumers, the mortgage-for-mileage process is fairly straightforward. Companies buy air miles for 1 to 2 cents per mile from various airlines and give the mileage rewards to clients as an incentive to use their services. However, the travel bonus is not automatic or retroactive. To receive credit, customers sign up for the various mileage programs by phone and mail, online or at the airport and provide their frequent-flier membership information before completing the realty transaction. Miles take about six to eight weeks to post once the deal closes.

Consumers should still get multiple quotes and be aware of any hidden costs.

“Borrowers in general need to look out for offers that promise low fees but have a higher interest rate, since the lender is simply increasing the rate to offset the no-fee offer,” Kallio said. “Many lenders charge 1%. On a $200,000 loan that’s $2,000. It would be a better deal for a consumer to find a lender that has low fees and take the difference and simply buy an airline ticket.”

While the possibility of an air mile windfall has some homeowners shopping for luggage, Winship said stricter award ticket requirements, fewer flights and seats and more fees for frequent-flier services mean loyalty rewards are not always a win-win for consumers.

And does an airline bankruptcy affect the ability to redeem miles? Christine Pierce, Delta’s director of partnership marketing, said historically frequent fliers have not lost miles when an airline files bankruptcy or is acquired.

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“Since frequent-flier programs are such valuable customer databases, the purchasing airline has always honored the miles,” she said. Miles or no miles, experts stress that consumers should find a mortgage product that is going to save them money.

“Obviously, the mortgage transaction has to make sense,” Kallio said. “But if you can refinance your home in as little as 10 minutes and send yourself on a vacation as well, it’s a pretty good all-around deal.”

Michelle Hofmann can be reached at michelle hofmann@earthlink.net.

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(BEGIN TEXT OF INFOBOX)

Programs to finance and fly

Mortgage dividend incentive programs:

Awards for Mortgage and Real Estate: (877) 554-2200, www.awardsformortgageandrealestate.com. Partner: Delta, (800) 988-5687, www.delta.com/skymiles.

Countrywide Home Loans: (800) 556-9568, www.countrywide.com. Partner: American, (800) 421-0600, www.aa.com.

E-Loan: (888) 533-5333, www.eloan.com. Partners: Delta; United, (800) 421-4655.

GMAC Real Estate: (800) 766-4622, www.gmac-real-estate.com. Partner: Delta.

LendingTree: (800) 555-8733, www.lendingtree.com. Partners: Continental, (800) 621-7467, https://continental.lendingtree.com/continental/; Delta, www.delta.lendingtree.com; United, https://united.lendingtree.com/united/; US Airways, (800) 872-4738, https://usairways.lendingtree.com/usairways/; and Northwest, (800) 225-2525, www.lendingtree.com/nwa.

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Nationwide Advantage Mortgage Co.: (888) 244-8494, www.nationwideadvantage mortgage.com. Partner: America West, (800) 247-5691, www.flightfundmortgage.com.

-- Michelle Hofmann

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