How Can Homebuyers Prepare
At this point, if the Bank of Canada raises interest rates, youll just have to prepare yourself for a bigger mortgage payment. Im sure thats not what you want to hear. But unless you have a mortgage pre-approval, you might have no choice but to accept the higher rate.
Speaking of mortgage pre-approvals, you could try to lock in historically low interest rates by getting pre-approved through a lender. While youre not guaranteed a mortgage with an approval, you are guaranteed the interest rate, at least for a time, usually anywhere from two to four months.
But youll have to act fast. How long it takes to get pre-approved depends on the lender, but if youre serious about buying a home this year, youll want to submit your application as soon as you can.
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Should You Use Your Credit Card To Pay Your Mortgage
While you may have good intentions to pay back the credit card debt as soon as you get paid again, mortgage payments are often larger than the usual amounts you may put on a credit card which can then cause issues if large amounts of interest are added on top.
This is because not only do you have the current months mortgage payment to worry about, you now have this extra payment on your credit card to clear on top.
This can make it tempting to not pay back the full amount on the credit card, which can lead to interest being added and the monthly repayments going up even more. Its a vicious circle and one that can feel difficult to get out of.
You may believe that moving the payment to a 0% interest credit card is better than having a mark on their credit report. However, if you cannot clear the credit card debt before the interest-free period rolls over, this is when trouble can arise.
Instead you should take a closer look at the reasons why you are unable to make your mortgage repayments and tackle this, rather than simply moving the debt. Ask yourself:
These could allow you to reduce your payments to a manageable amount, while still paying all of the lenders you owe.
What If The Bank Of Canada Doesnt Raise Interest Rates
Oh, it will. Its not a matter of if its a matter of when.
If it doesnt raise the overnight rate on January 26, Id say theyll most certainly do it between March and April. In October Bank of Canada governor Tiff Macklem said they would raise the rate in the middle of 2022. But, given the urgency of inflation, April is the latest.
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What Are The Risks To Making Mortgage Payments By Credit Card
While there can be benefits to making payments with the credit card, if you dont ask the mortgage lender, the card issuer and the processor or third-party payment processor the right questions, there are some real issues that could come up in addition to putting yourself in the hole.
- Possibility of rejected payments: As mentioned above, a lot of puzzle pieces have to fit to even make payments with a credit card. If the payment isnt accepted, you could end up unintentionally late and get hit with another fee. You need to discuss with the lender what your options might be. If you end up working with a third party, you should make sure its one that accepts your card.
- Fees may be cost-prohibitive: This just comes down to math. It doesnt make sense to pay 2.5% in fees if youre only getting 1.5% back in rewards .
- Look out for cash advances: Depending on their policies, the credit card issuer or third-party payment processor can choose to initiate the transaction as a cash advance to just cut the check to your mortgage servicer. If they do this, cash advances come with the highest rates of interest.
Be Patient: Payments May Take A While To Arrive
When you have to wait for money to change hands more than once, say goodbye to day-before deposits or last-minute payments
If you select a recipient in our system, they will be funded by ACH/EFT in 2-3 business days. If your recipient is manually added, they will be funded by check in 5-7 business days. Plastiq
With some services, the payment can be processed and delivered in just a few days. In other cases, youre looking at a week or more before your payment reaches its final destination. So, if your rent or mortgage is due on the first of the month, youd better start the ball rolling ASAP to avoid late fees.
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When Does It Make Sense To Charge Your Mortgage To A Credit Card
If the timing is such that you can’t mail in your monthly payment then it can be worth the cost of a convenience fee to avoid making a late payment, as late payments will show up on your credit report and have a significantly negative effect on your credit score. Another scenario where it can make sense is if the value of any credit card rewards in the form of cash back, points or airline miles is greater than the cost of the transaction convenience fee.
Should You Pay Your Mortgage With A Credit Card
If you can navigate the waters to make it possible, paying your mortgage with a credit card is an option, assuming the rewards outweigh the fee. As long as it won’t hurt your credit and your budget, its worth considering.
But if youre already using a large chunk of your credit limit, or if youre tight on money for bills this month, putting your mortgage on a credit card isnt the best idea. It could hurt your credit scores and end up further straining your budget over the long term if you dont pay your credit card bill off in full.
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Confirm Your Landlord/bank Accepts Credit Cards
Your landlord or bank is the first impediment to paying your rent or mortgage with your credit cards. Individual landlords are unlikely to accept credit card payments. Either they dont possess the ability to do so, or they cant stomach the credit card processing fees charged to merchants. Even larger rental organizations, such as apartment complexes, are often unlikely to want to lose as much as 3.5% of their rent to a credit card company just for the privilege of having the payment processed.
Finding a bank or mortgage lender that directly accepts credit card payments is also challenging. For example, mortgages from Chase cannot be paid directly by credit card the bank only allows payments from a Chase account, transfers from other banks, checks, or money orders.
Even if your bank or landlord does accept credit cards, some credit card issuers prohibit using their cards for mortgage payments.
Moreover, some entire credit card networks wont process mortgage payments through their networks. Visa and American Express both reportedly prohibit mortgage payments made by credit card from being processed on their networks, though debit and prepaid card payments are allowed.
All fees aside, banks and credit card companies are largely against processing mortgage payments via credit card because cardholders essentially pay a debt by creating more debt. Mortgage loans are a form of debt and so are credit cards. Paying off one using the other is just moving debt around.
Benefits Of Paying Mortgage With Credit Card
In addition to being easy to set up, paying your mortgage with a credit card helps you better manage your budget. For instance, if you get paid mid-month and your mortgage is due at the beginning of the month, paying with a credit card allows you to pay on time so that you avoid a late charge.
Most late charges range from 4-5 percent of the mortgage payment. This is substantially more than the fees charged when you pay mortgage with credit card.
Paying your mortgage with a credit card also allows you to earn reward points. This could mean that you earn cash back or rack up airline miles that allow you to go on a dream vacation.
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Ways To Pay Your Mortgage With A Credit Card
Although there are several ways to pay your rent with a credit card, unfortunately, most mortgage companies dont offer this option. Paying your mortgage with a credit card does take a little work, so youll have to get a bit creative.
Luckily, there are several third-party options available. Here are 2 ways that you can pay your mortgage with a credit card and start earning some massive points.
Oh, and one last time: Do this at your own risk!!!
Which Credit Card Is Best To Pay Your Mortgage
Theres 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, youd be charged a $40 fee and earn 4,080 points.
These points are worth $81.60 based on TPGs valuations, which peg Membership Rewards points at 2 cents apiece and you could get even more value from them if you transfer them to certain loyalty program partners. If you arent 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 1.7 cents each, according to TPGs latest valuations. Therefore, you could realize 3.4 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
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Monitor Your Credit Report And Score
It’s also a good idea to continually monitor your credit while you’re repaying your mortgage. If you have a good payment history and high credit score, you may be able to refinance your mortgage to lower your interest rate, decrease your monthly payment or get cash out. You can check your Experian credit report for free and monitoring.
Are There Benefits To Making Mortgage Payments By Credit Card
The question of whether mortgage payments can be made with a credit card is not an uncommon one for mortgage servicers get once people close on their loan. The reason for this is that in the right situation, making a payment with your credit card can have benefit for a consumer. Lets take some time to acknowledge the potential pros:
- Earn more credit card rewards: If you earn substantial through your card issuer, you may be able to earn more cash back or points that can be traded for things like gift cards, experiences or airline miles. However, youre going to want to do some math. It doesnt make sense if you have to use a third-party platform whose fee represents more of a percentage than youre getting back in rewards.
- Rewards sign-up bonus: Tied in with the above is that some credit card issuers will do sign-up bonuses where you get something special, like bonus airline miles, if you make $5,000 in transactions on your card within the first 60 90 days, for example. Using your card to make a mortgage payment could help you meet those goals because its likely to be the highest monthly bill you have. Again, if youre paying through a third party, its important to consider whether the combination of the rewards you learn with every purchase plus the enticement of the bonus outweigh the additional fee you would pay for making your mortgage payment with a credit card.
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An Example Of Paying Your Mortgage With A Credit Card
After reading a headline like How We Earned $2,000 in Credit Card Rewards Paying Off Our Mortgage, who wouldnt want to pay their mortgage with a credit card? Its a true story that personal finance blogger Holly Johnson pulled offand she used the rewards to help fund a Mediterranean cruise for her family of four.
However, she was only able to achieve it because her platform as a high-profile blogger allowed her to earn thousands of dollars in free Plastiq transactions by referring her readers to the service. Most of us cant do that.
Can I Pay My Wells Fargo Mortgage With A Credit Card
Although you can‘t pay your mortgage with a credit card, you can set up automatic mortgage payments so that your monthly payment can be withdrawn automatically from your checking account each month.
Furthermore, can you use a credit card to pay your mortgage?
For example, Visa allows mortgage lenders to accept Visa debit and prepaid card payments Mastercard allows the use of debit and . But some issuers don’t allow mortgage payments. Bank of America instance, cannot be used to pay a mortgage.
Additionally, how do I pay my Wells Fargo Mortgage? Payment Options
Then, can I pay my Wells Fargo Auto Loan with a credit card?
You can set up a Wells Fargo automatic online, or by phone. An automatic , or AutoPay, electronically debits your payment from a linked bank account. You can choose to pay the entire balance, the minimum amount due, or a customized amount.
Does Wells Fargo accept credit card payments?
Accept payments onsite, online, or on the goOffer your customers more ways to pay almost anywhere you do business. Whether you need to accept credit, debit, and mobile card payments at your location, online, or on the go, there’s an option for you.
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When It Make Sense To Pay Your Mortgage With A Credit Card
For the most part, it does make sense to pay your mortgage with a credit card when youre pursuing a credit card welcome bonus you couldnt earn otherwise. Imagine for a moment that you wanted to apply for a credit card which offers a welcome bonus of 60,000 points after you spend $4,000 in the first 3 months of opening the card. If you dont normally have enough expenses you can pay with plastic to reach the threshold, paying your mortgage with a credit card can leave you significantly aheadeven if you pay a small percentage in fees to do so.
It can also make sense to pay your mortgage with a credit card if youre earning a higher rate of rewards than the fees youre paying. For example, lets say paying your mortgage with a credit card results in 2.5% in fees, but you have a credit card that offers a flat 3% back. In that case, you could pay your mortgage with a credit card, pay your credit card bill in full each month to avoid interest and pocket the 0.5% in rewards.
With all this being said, it doesnt make sense to pay your mortgage with a credit card if you want to spread out your monthly payment or catch up on bills. Your mortgage likely comes with a low fixed interest rate, whereas the average credit card interest rate is currently over 16%. If you transfer secured debt at a low rate to an unsecured credit card that charges a ton of interest, you are setting yourself up for a financial disaster.
Obstacles To Paying A Mortgage With A Credit Card
It seems that the stars have to align so that you can make a mortgage payment with your credit card. Your card network, your card issuer and your mortgage lender all have to give the green light for a mortgage payment to go through successfully. Each party has its own rules.
For example, Visa allows mortgage lenders to accept Visa debit and prepaid card payments Mastercard allows the use of debit and credit cards for mortgage payments.
But some credit card issuers dont allow mortgage payments. Bank of America credit cards, for instance, cannot be used to pay a mortgage. Wells Fargo credit card holders may have more luck their cards can be used to pay a mortgage as long as the mortgage lender accepts them.
Check with all three parties card network, card issuer, mortgage lender to ensure your payment will process.
Of course, not all mortgage lenders do, but they might be more willing to accept your payment if its processed by a third-party payment service provider like Plastiq.
Its best to check with all three parties card network, card issuer, mortgage lender to ensure your payment will process. Otherwise, you run the risk of a late or declined mortgage payment.
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