Why Jews are the chosen people?

Are the Jewish people the chosen and if so why?...My uneducated Grandmother always said the the Jewish people were the chosen because they were the only people who kept God's laws at that time..such as, feast of the tabernacle, fest of unlevened bread..etc..I am confused. If not born Jewish, are the rest Gentiles? And if the Jewish are the chosen people why are they blinded to the first coming of Christ?