Rocket Visa Signature Card: Rewards Can Be Used Toward Down Payment on a Home or an Existing Mortgage Balance

The nation’s largest mortgage lender has launched a credit card, known as the “Rocket Visa Signature Card.”

It allows cardholders to earn 5% back toward a down payment on a home, or 2% toward their principal balance at Rocket Mortgage.

There is a $95 annual fee, which is waived for existing Rocket Mortgage servicing clients (if they hold your mortgage).

To celebrate the launch, the card offers a $200 statement credit to those who spend $3,000 in the first 90 days from approval.

Is this something worth looking at, or are consumers better off with a general purpose card instead?

Rocket Visa Signature Card Earns Rewards That Can Be Used for a Down Payment

The new Rocket Visa Signature Card is a credit card that has the prospective home buyer or existing homeowner in mind.

Each dollar spent using the metallic card earns 5 Rocket Rewards points, and there is no limit on how many points you can earn.

These points can be redeemed for closing costs, down payment, mortgage principal, or simply cash back via a statement credit.

If you use Rocket Mortgage for your home loan needs, 25,000 Rocket Rewards are worth $250, which is the full 5% cash back value.

So for every $5,000 spent using the card, you’d get $250 off your Rocket Mortgage closing costs.

If you spent $50,000 in a year, we’re talking $2,500 that could be applied toward a down payment on a home. Or simply toward closing costs.

Tip: The card also offers so-called Porch Piracy Protection, which provides up to $10,000 for an eligible stolen item.

Existing Rocket Mortgage Customers Can Apply Rewards to Principal Balance

The other main redemption option allows existing Rocket Mortgage servicing customers to apply Rocket Rewards toward their loan’s principal balance.

While the card still earns 5 Rocket Rewards per dollar spent, this redemption option is only worth 2% cash back value.

For example, someone who spends $5,000 still earns 25,000 Rocket Rewards points.

But those 25,000 points are only worth $100 toward a Rocket Mortgage principal balance reduction.

And while that $100 would reduce the amount of interest paid on the mortgage, it wouldn’t reduce subsequent mortgage payment amounts.

Still, it could compound those savings each month you hold the loan after applying the Rocket Rewards points to the loan balance.

Aside from these two redemption options, cardholders can redeem for a statement credit, at an even lesser 1.25% cash back value.

So the same $5,000 spend equates to 25,000 points, but only a $62.50 statement credit.

I suppose that’s still better than the 1% cash back some credit cards offer.

At the moment, the card appears to be limited to those with a Rocket Mortgage. But is expected to open to everyone post-beta launch.

Also, points cannot be redeemed toward a refinance transaction (yet they say), or toward a non-retail loan, such as via the company’s wholesale division that works with mortgage brokers.

Additionally, points can’t be used in conjunction with a Charles Schwab Partner loan. This may change in the future as the program evolves.

You Might Be Able to Use Any Credit Card to Pay Down Your Mortgage (Or to Save for a Down Payment)

Now you might be wondering if this is a good deal? While the 5% cash back value for closing costs and down payment is a pretty solid rate, the other redemption options only offer 2% and 1.25% back.

There are many other credit cards out there that come with 2% to 5% cash back, either annually or via rotating categories. And some cards offer big upfront bonuses too.

Additionally, some of these options allow for cash back at a 1:1 ratio. And with no limit to how you use that cash back, you could theoretically use the proceeds toward a new mortgage.

Or for an existing mortgage to pay off the mortgage early via extra principal contributions.

This would also provide the freedom to do as you wish with the money, as opposed to being stuck with one mortgage company.

That’s kind of the rub. Unless you absolutely plan to use Rocket for your mortgage, you might not be able to take advantage of the generous 5% cash back value.

And if you’re planning this in advance, does that mean you won’t shop around for your mortgage?

For the record, up to $8,000 in card points value can be redeemed toward down payment and/or closing costs on a new Rocket Mortgage transaction. They will show up as a credit on your closing statement.

And these points can be combined with up to an additional $2,000 in Rocket Rewards engagement points, which would apply as a lender credit.

There doesn’t seem to be a limit for cash back applied to mortgage principal.