Thursday, May 16, 2024

Can You Use A Credit Card To Pay Your Mortgage

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Risks Of Paying Your Mortgage With A Credit Card

How To Pay Your Mortgage With A Credit Card Part 1 (Velocity Banking)

While landing big bonus points from a big credit card purchase may sound enticing, trying to pay your mortgage with a credit card is often more trouble than it’s worth and could create more problems than it solves. Here are some of the risks and drawbacks to consider:

  • It’s not free: Both third-party processors and money orders have fees, though third-party processors cost a bit more. You’ll also need to be sure to pay your credit card in full each month to avoid late fees and interest charges.
  • It’s inconvenient: Each method introduces additional steps to paying your mortgage. Third-party processors require paying through their sites, but you should also check your mortgage payment site to make sure that the payment goes through on time. The gift card method involves buying gift cards and money orders, and possibly mailing in your payment each month.
  • It can lead to debt:Whenever you use a credit card, you’re increasing your risk of carrying debt. If you’re not diligent about making payments in full every month, your debt could snowball.

The Bottom Line: Think Long And Hard Before Using Plastic

Usually, mortgage companies dont let you make your payment with a credit card, because rolling existing mortgage debt into a high-interest credit card may introduce financial liability for both the lender and the borrower. If you want to get around this, you can use a third-party service, but they charge fees meaning youll need to determine if the benefits outweigh the costs.

Good credit habits are key to bettering your financial situation. Heres some more info on establishing good credit.

What Are The Downsides Of Using A Credit Card To Pay Your Mortgage

The cost of the convenience fee is the most immediate downside of using a credit card to pay your mortgage. Another issue, often overlooked, is that paying your mortgage with a credit card can dramatically increase your credit utilization and hurt your credit score.

Most important, credit cards usually have higher interest rates than mortgages. If you charge your mortgage to your credit card, then carry a credit card balance from month to month, you’ll effectively make your mortgage payments much more expensive than they need to be.

Read Also: What Experian Credit Score Do I Need For A Mortgage

Can I Pay My Mortgage Online

It’s common these days for mortgage servicers to accept online payments directly through their websites. Check your mortgage statement for the company’s official website. Then, register for an online account and connect your checking account. Make sure to enroll several days before your payment is due since it may take that long for your accounts to link up. Once the sign-up process is complete, you’ll be able to schedule your payment.

Alternatively, your checking account may offer an online bill-pay service that you can use to pay your mortgage. Make sure to find out how far in advance you need to schedule your payment for your loan servicer to receive it on time.

Dovenmuehle Mortgage Make Payment

Can You Use Your Credit Card To Pay Mortgage : Can Credit Card ...

At Dovenmuehle Mortgage, we make the payment process easy and convenient for our customers. Whether youre making a one-time payment or setting up recurring payments, we have a variety of options to choose from. Our online payment portal is available 24/7, and we also offer a convenient automatic payment option. We make it easy to stay on top of your mortgage payments, so you can focus on whats important owning your home.

Dovenmuehle Mortgage, an American mortgage subservicing company, serves loans on behalf of banks, mortgage banking entities, credit unions, and housing finance agencies. The Lake Zurich, Illinois-based company, founded in 1844, is a financial institution holding company with a diverse portfolio of 250 financial institutions and thousands of mortgage loans. The law allows for a $9.50 fee to be charged when you use the automated system or contact a customer service representative. When it comes to avoiding a late Dovenmuehle mortgage payment at all costs, you must remember that mistakes do occur. If you dont keep up with your payments on time, your credit score could suffer. When your mortgage is late, you may have it on your credit report for up to seven years. Here are three proven ways to remove late payments from your credit reports.

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Ways To Pay Your Rent Or Mortgage With A Credit Card

Update: Some offers mentioned below are no longer available. View the current offers here.

Your rent or mortgage is likely one of your biggest recurring expenses. And as of now, there is only one publicly available no-fee option to pay it with a credit card.

Due to bank interchange fees, accepting most credit cards without a surcharge would mean most landlords and banks would lose 2%-3% of the mortgage payment or rent due each month.

One option that has emerged is Bilt Rewards, a new credit card and loyalty program that allows renters to pay rent with no fees at any apartment or rental unit and offers Mastercard World Elite benefits without an annual fee.

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However, beyond this one card, there are several other ways to pay your rent or mortgage with a credit card and earn big points and miles. We’ll go over the different methods and determine when it makes sense to do so.

Alternatives To Paying Your Mortgage With A Credit Card

Finding good alternate options depends on the reasons youre looking into paying with a credit card.

If youve been struggling to cover your mortgage payments on time, charging them on your credit card may only be a Band-Aid solution. Instead, contact your mortgage lender and try to find a better way to address the issue. For example, if your lender may be able to offer you a repayment plan or forbearance.

Tip: If you have good credit, it may be a good idea to look into refinancing your home to lower your mortgage rate and, consequently, your payments.

Alternatively, you might consider loan modification through government programs, such as the Home Affordable Modification Program . Such programs are designed to assist people with serious debt problems, so there might be certain qualification requirements to keep in mind.

If, on the other hand, youre looking to earn rewards, there are plenty of other expenses you can put on your card. For instance, if youve been saving for a large purchase, put in on your credit card and pay it off right away. You can also check if you can prepay your utilities with your rewards card, as well as charge your bills on it. Finally, if youre paying tuition, some schools accept credit card payments without fees see if yours does, too.

See related: Best credit cards for paying monthly bills

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Taking A Hit On Your Credit

Paying your mortgage with your credit card will also increase your credit utilization ratio, which isnt good for your credit score. It means youre using a greater percentage of your available credit. Amounts owed is a major component of your , accounting for 30% of your score.

Your credit score may decline if you increase your credit utilization because the more credit you use, the more it looks like youre at risk of overextending yourself.

$1,000

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Can You Pay Your Mortgage With A Credit Card What Cash

Can I pay my mortgage with a credit card?

Tempted to make your mortgage payments with a credit card, because it sounds like a way to send your rewards points through the roof?

Or maybe you feel the need to put a payment or two on your credit card because your household budget is feeling the squeeze of inflation. You wouldnt be alone.

The end of mortgage forbearance from the CARES Act in June 2021 made it hard for some people still financially affected by the pandemic to make their payments. According to a May release from the Federal Reserve Bank of New York, about 24,000 individuals had a new foreclosure notation added to their credit reports during the first quarter of 2022, compared to only 9,000 individuals in the fourth quarter of 2021.

The more you look into the idea, the quicker youll see that making a mortgage payment with your credit card rarely makes financial sense.

Is making a payment on your credit card worth the risk of possibly carrying that amount on your credit card balance?

In the end, its a game of numbers. You’ll have to decide if the points youre chasing outweigh the potential costs. That’s if your mortgage lender is even willing to go along.

Here are six reasons why paying your mortgage with a credit card is probably a nonstarter.

Read Also: What Bureau Do Mortgage Lenders Use

Which Credit Card Is Best To Pay Your Mortgage

There’s a card that can make it worth your while during a promo or when you have fee-free dollars: The Blue Business® Plus Credit Card from American Express, since it earns 2x Membership Rewards points on the first $50,000 you spend each calendar year . If you were to use this option to pay a $2,000 mortgage through Plastiq during a 2% promo, youâd be charged a $40 fee and earn 4,080 points.

These points are worth $81.60 based on TPGâs valuations, which peg Membership Rewards points at 2 cents apiece â and you could get even more value from them if you transfer them to certain loyalty program partners. If you arenât on the Plastiq email list, I suggest you register.

Another great option is the Citi® Double Cash Card, which offers up to 2% cash back . You can now transfer your rewards to Citi ThankYou points, which are worth 1.8 cents each, according to TPG’s latest valuations. Therefore, you could realize 3.6 cents in value per dollar charged, which is nominally more than the cost of the fees.

Related: These are the best credit cards for everyday spending

Can You Pay Off A Loan With A Credit Card

Paying off a loan with a credit card will depend on the lender and the type of loan. If your lender allows it and you are given enough of a credit limit, you may be able to pay a portion of your entire balance of your home, car or student loans with a credit card.

Federal student loan issuers, however, are restricted by the Department of Treasury from accepting credit card payments.

Its also possible that certain loan providers have their own policies regarding loan payment using a credit card. You can always contact your lender to learn about your options.

Its more common to see credit cards paid off by debt consolidation loans, but there can be cases where it might make sense to consider using credit cards with low or zero percent promotional periods to pay off a loan.

Its something to consider if you have a high interest rate on your loan, and your budget can handle the size of the monthly payments you need to make to wipe out the debt before the low or zero percent interest rate period expires.

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Can I Pay My Mortgage With A Capital One Credit Card

First, you need to check if your mortgage provider accepts credit card payments. In the unlikely event that it does, you might be able to use your Capital One credit card to make your payment. If your Capital One credit card is linked to Mastercard, you may use it to pay your mortgage through Plastiq. Alternatively, you may purchase a prepaid card or a money order and use the same to pay your mortgage.

Is Combining Credit Card Debt With A Mortgage An Option

FREE 9+ Sample Credit Card Payment Calculator Templates in Excel

Some lenders may allow you to remortgage your property for the mortgage balance remaining plus some extra so you can pay off your credit card debts, via a debt consolidation mortgage. This basically means that your debts will be consolidated into one big debt your mortgage. For debt consolidation, its best to speak to a mortgage broker like John Charcol who can walk you through how it works.

Bear in mind that while consolidating debt can allow you to pay off credit cards sooner, the debt itself simply becomes part of your mortgage and is secured against your property, which means you may pay more interest overall as you pay back your mortgage over time.

Also Check: How To Make Bi Monthly Mortgage Payments

Are There Any Hacks To Paying Off My Mortgage Without Excessive Credit Card Debt

If you find yourself in a situation where youre unable to make mortgage repayments as per the schedule, consider discussing this with the lender.

You may be able to pause or defer home loan repayments temporarily. This could potentially cost you more money over the longer term, as your interest charges are likely to be capitalised into your loan balance. Still, this may work out cheaper than the interest you might incur if you could pay using your credit card.

Alternatively, check if you can refinance your mortgage at a more affordable interest rate. Compare home loans from other lenders and check the eligibility criteria to see if you may qualify.

You might need to review your household finances. Using your credit card to manage your household expenses could leave you with more of your income available to make mortgage repayments. Some borrowers deposit their income directly into their mortgage offset account to help minimise their interest charges, and manage their other household expenses with their credit card. Of course, youd also need to repay the credit card debt in full or risk having to pay interest.

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This article was reviewed by Personal Finance EditorGeorgia Brown before it was published as part of RateCity’s Fact Check process.

Personal Finance Editor

Youre At Risk Of Foreclosure

Some people looking to avoid foreclosure of their homes may try to make the payment with a credit card. However, the interest rate on credit cards tend to be much higher than the interest rate on your mortgage, so it can be very difficult to find sufficient funds to pay off the resulting . Youd be trading one bad situation for another.

If youre at risk of foreclosure, the best thing to do is contact your mortgage servicer. They can run through possible options to help you. Rocket Mortgage clients can get started online by filling out our Application for Success.

Also Check: Can I Rent An Apartment If I Have A Mortgage

There Are Only A Few Situations Where It Makes Sense

InvestopediaForbes AdvisorThe Motley Fool, CredibleInsider

Do you want to pay your mortgage with a credit card? It might be possible, but it will probably cost you. How do you do it? Whats the cost? And when is it worthwhile? This article will answer all of your questions about charging your monthly mortgage payment.

Paying Off Our Mortgage Earlywhat Did We Get

PAYING MORTGAGE OR RENT WITH CREDIT CARD USING PLASTIQ

Paying a mortgage with a credit card isnt for everyone. In fact, many experts discourage it. Luckily for us, everything worked out. Making the final payment toward our mortgage was a euphoric feeling. We suddenly went from owing money on our home to owning it outright.

Were still required to pay property taxes and homeowners insurance, but its a nice feeling to no longer have mortgage payments to cover. We also earned an effective 3.75 percent on the money we prepaid since we saved that much in interest.

Along the way, we also earned 200,000 Barclays miles for paying off $100,000 in loan payments .

How did we spend our rewards? We paid for the bulk of an Adriatic cruise by cashing in 200,000 Barclays miles for $2,000 in travel credit. Our cruise departed out of Venice, Italy, with stops in Southern Italy, Greece and Croatia.

But the most important benefit we gained has nothing to do with money or rewards. The freedom we earned by paying off all our debt is a gift that we know will pay off the rest of our lives. No matter what happens, we have a home thats fully paid for one we cant lose due to market downturns or lean financial times.

Read Also: How Do I Know If I Have Mortgage Insurance

What Could Work For You

It’s possible but unlikely that landlords will accept credit cards without tacking on a fee. If you can find one that does, that’ll make it easier to load up on rewards.

If you’re like most renters or homeowners and would have to pay some kind of fee to pay with plastic, the trick is to find a way around it, like the Johnsons did, or to offset it with credit card rewards. But finding a credit card that offers rewards that exceed the cost of fees is rare, too.

“Like Holly and her husband, our customers are savvy spenders who use their cards to their advantage whether to better manage cash flow or maximize rewards,” Eliot Buchanan, founder and CEO of Plastiq, tells CNBC Make It. “We encourage our customers to use Plastiq in ways that drive value for them, and we love hearing stories about the creative uses that cardholders find for our service.”

Credit card blogger Keith Rosso bought a $60,000 Tesla with a credit card last year using the Chase Ink Business Preferred. That earned him 3 points per dollar on the purchase, which outweighed Plastiq’s 2.5 percent fee. Depending on how he redeemed those rewards, he estimated that they could be worth as much as $5,000.

The Ink Business Preferred no longer rewards Plastiq purchases with 3 points per dollar, a representative from Chase tells CNBC Make It, so this particular strategy may no longer be a profitable option.

Barclays did not respond to CNBC’s request for comment.

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