Reasons To Pay Your Mortgage With A Credit Card
There are a few scenarios where paying a mortgage with a credit card could be a good idea:
- Reaching a welcome bonus faster. Some credit cards offer large welcome bonuses that require spending at least a few thousand dollars in a specified time period. New cardholders can reach that minimum quicker when they make large purchases, like mortgage payments. If the welcome bonus outweighs any small fees associated with paying a mortgage using a credit card and the cardholder can pay off a balance before accruing any interest, it might be worth it.
- Receiving rewards that are greater than the purchase fee. Credit cards that offer cash back rewards or points per dollar can sometimes still benefit the cardholder when paying for a mortgage with a credit card. Its only worth it if the fees associated with making the transaction are less than the rewards. For example, if a third-party service charges a 2.5% fee for making a mortgage payment with a credit card, and the card has a 3% cash back reward, that 0.5% reward difference may be enough to outweigh the initial cost.
Paying Your Mortgage With Paypal
PayPal is an online payment platform that allows you to send and request money online with ease. You create a free account linked to either your credit card, debit card, or bank account to use PayPal. You can directly make mortgage payments with PayPal if your lender accepts them.
If they do not accept PayPal, you can use it to get a cash advance on your credit card. You can then use this to pay for your mortgage. To do this, you can transfer money to another user and have them move the money to their bank account and make the payment for you. They could also transfer the money to your bank, and you can make the payment yourself.
Since you are drawing money from your credit card, the high interest that applies to credit card loans applies here. You should think about it very carefully before you do this, to ensure that the benefits outweigh the risk. Usually, lenders give a 15-day grace period to pay your mortgage, after which a heavy late fee is imposed.
If you need more time to make the payment but do not want to pay the late fee and damage your credit score, you can choose to pay this way. As long as you pay back with the acceptable limit, you avoid paying the heavy credit card interest. If you can’t pay back within that time frame, you could end up paying a lot more interest.
Final Tip: Consider Your Credit Utilization
Another factor to consider is the effect of credit-card mortgage payments on your . According to FICO, which generates the credit scores that most major lenders use, credit utilization accounts for 30% of your credit score. If you dont want the fact that you’re paying your mortgage via credit card to affect your credit utilization ratio, you will need to pay off your balance before your statement is even issuednot just before your statement due date.
That said, if you have a high credit line and you only use a minuscule percentage of itsay, less than 10%you dont need to worry about paying your balance before your statement comes out. Such a low credit utilization ratio shouldnt harm your score.
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Will Your Landlord Or Lender Accept A Creditcardpayment
Image source: Ivan Kruk/Shutterstock.com
Landlords typically request payment by cheque or money transfer from their tenants. Similarly, borrowers normally pay their mortgage by setting up automatic withdrawals from a chequing or savings account or by completing payments on their lenders website.
If you want to make your rental payments with a credit card, start by asking your landlord if its a payment method they can accept. Its unlikely that an independent landlord will accept direct credit card payments, and if your landlord is technophobic you might have your work cut out for you convincing them to try new digital solutions like PaySimply or Plastiq.
However, if youre renting from a rental management company, ask your property manager about acceptable payment methods. Large property management companies may have an online payment portal where you can use your credit card to pay your rent, and they might charge lower fees than third-party processors.
As for paying your mortgage with a credit card, its a similar scenario. Mortgage lenders are typically wary of accepting debt-for-debt payments, so its unlikely you can make mortgage payments with a credit card without using one of the aforementioned third-party services as the payment intermediary.
Tips For Paying Your Mortgage
- A financial advisor could help you put a financial plan in action for your home buying needs. SmartAssets free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAssets mortgage comparison tool to compare mortgage rates from top lenders and find the one that best suits your needs.
- The best way to ensure that you can pay your mortgage every month is to keep your mortgage payment small. You can do this by buying a smaller home, finding a lower rate, or making a larger down payment. SmartAssets free mortgage calculator will help you figure out what the payment may be in different scenarios.
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Pay Mortgage With A Credit Card: Rules Of The Game
Now that you know where you can pay your mortgage with a credit card, lets cover some things to watch out for.
As you probably know, the credit card company isnt giving you a signup bonus just to be nice. They want to make some money off of you. With the signup bonus, they are hoping to whet your appetite just enough so youll continue spending on the card.
You need to understand that, while the credit card companies make money every time you swipe your card, the real money is made when you carry a balance. They want to suck you in and get you addicted to their drug, so they offer you this fancy free gift so youll take your first sniff.
Always remember, you want to use these rewards to create more freedom for yourself, not less. As such, your job is to avoid falling for their trap at all costs.
If you dont think you can handle it, DO NOT play the game.
To get the most out of your rewards points, you need to make sure to follow 2 simple rules:
How To Pay A Mortgage With A Credit Card
There are several ways to pay a mortgage with a credit card. In most cases, though, this doesnt include paying your mortgage with a credit card directly to your lender. Its important to be aware that all of the various avenues rack up fees that may add up to be higher than any late fee youre trying to avoid, or more expensive than just buying those airline miles or other credit card rewards outright, says Mayer Dallal, managing director of MBANC in Manhattan Beach, Calif.
These methods include using a third-party service to make the payment on your behalf, or choosing another workaround. The following methods outline how to pay your mortgage with a credit card.
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Can You Make Rent Or Mortgage Payments With A Credit Card In Canada
Your rent or mortgage payments are likely some of your largest monthly bills, so at some point youve probably contemplated shifting these major expenses onto your credit card, in the hope of either solving a temporary cash flow issue or earning back a heap of rewards each month.
Its indeed possible to pay rent or a mortgage with a credit card in Canada. That said, its an atypical payment method and youll likely need to jump through some hoops to pull it off. Are the potential payoffs worth the unavoidable headaches?
In This Article:
What To Consider Before You Pay Your Mortgage With A Credit Card
When youve found a way to charge your mortgage on a credit card, consider potential consequences before doing so.
Paying your mortgage with plastic can get extremely expensive, and it is not only because of the fees. Putting your mortgage on a credit card would mean youre converting low-interest secured debt into high-interest unsecured debt, which is rarely a good idea. are typically three to four times higher than mortgage rates.
The difference in rates may not matter if you pay off the balance right away. However, if you revolve the balance meaning you let it carry over to the next billing cycle youll be charged a steep interest rate on top of the mortgage interest youre already paying. Such debt can snowball fast, leaving you in a difficult financial situation.
Consider how this can affect your credit too. When you carry a high balance on your credit card, it increases your . Credit utilization is the second most important , responsible for 30% of your credit score. When the ratio exceeds 30%, your credit may take a hit.
Paying your mortgage with plastic may be a good short-term solution that can help you avoid a late payment if you need a little extra time to pay off the charge. However, it can quickly become problematic if you let credit card debt pile up.
Purchase A Gift Card To Buy A Money Order
Another workaround is to purchase a gift card with your credit card, and use that gift card to buy a money order. Only Visa or Mastercard gift cards that operate like debit cards can be used for this transaction type, however. After purchasing the gift card, youd need to set up a PIN to use the card as a debit card before going to a grocery store, bank or post office to purchase the money order.
Things you should know
Expect to pay fees to purchase both the gift card and money order. A typical fee for a Visa Vanilla gift card is $3.95 per card and $1 for a money order. Visa and Mastercard gift cards usually have a maximum of $500 per card, so you may have to purchase multiple cards to cover the cost of your mortgage payment.
How To Pay Your Mortgage With A Credit Card
A third-party payment service like Plastiq facilitates mortgage payments with a Discover or Mastercard credit card. Visa and American Express dont currently allow mortgage payments through this service.
You pay Plastiq a fee equaling 2.85% of your mortgage payment every time you use your credit card. Plastiq then delivers an electronic payment if the lender accepts it, or it cuts the mortgage lender a check, eliminating the need for all three parties the mortgage lender, the credit card issuer and the credit card payment network to approve the transaction.
You can pay manually this way or set up automatic payments. You also have the option of making a one-time payment.
Ideally, you then turn around and immediately pay back your credit card for the amount of the mortgage payment plus processing fee. If you made the transaction with an eligible rewards credit card, you’ll earn rewards as you would with any other purchase.
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Youll Avoid A Late Payment
Paying your mortgage payment late even once can cause your loan to go into default, which can lead to a foreclosure on your property. Using a credit card to make this payment on time can help you avoid defaulting but if you cant make your credit card payment on time when its due, youll likely pay more in interest.
Weigh The Signup Bonus Against The Transaction Fees
As a savvy credit card user, you also might want to pay your rent or mortgage with a credit card to meet the spending requirement for a juicy signup bonus. Some cards require a minimum $3,000 spending in a 90-day period, which can be tough if you dont have many expenses.
Since housing payments typically make up at least a third of the budgets of most consumers, making those payments with your card can take you a long way to the spending requirement. In this scenario, the associated fees are outweighed by the long-term reward.
The cards below routinely offer inticing signup bonuses. Check current offer details to determine whether the card meets your spending and credit-building requirements.
The minimum spending requirement for some cards may be more accessible than others. We urge readers to compare popular card offers, heeding the advice of finance experts, and pull the trigger on a card that makes the most sense for your personal situation. The top-dollar signup bonus may not be the best deal long-term.
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Can I Get A Mortgage With No Job But Savings
Traditional mortgage lenders like to see that you have at least two months worth of living expenses stashed in your savings account for a rainy day. … You’re likely to need at least six months worth of expenses in your savings account before a lender will even consider you without a job, so save as much as you can.
Paying Mortgage With Credit Cards: Is It A Good Idea
Here are some factors you need to consider
There are scenarios in which paying your mortgage with a credit card can be a good idea, especially if the rewards you earn outweigh the fees. There are, however, other cases in which using your credit card to pay off a mortgage can put you on a slippery slope financially . Here are some important things to consider.
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Is It Possible To Pay Your Mortgage With A Credit Card
Yes, though it’s not always a good idea from a financial standpoint. The reason is that most mortgage servicer companies charge a convenience fee to offset their cost in accepting a credit card transaction, as they need to collect 100% of the mortgage amount owed each month. There are third party payment providers that essentially accept card payments and then cut a check and mail the funds to the mortgage provider but they too charge a fee for their service. The deciding factors in using a credit card to pay a mortgage include having a large enough credit line to absorb such a large transaction in addition to any other spending that might go on the card and the value of any potential rewards being earned being higher than the convenience fees charged to make the transaction.
Get A Prepaid Card Or Money Order
Another option is to use the prepaid card to purchase a money order then take the money order to a local bank branch to make a mortgage payment. There are several important points to consider here:
- Double-check that the local post office or grocery store allows money order purchases using a prepaid card .
- Make sure its possible to bring the money order directly to a local brick-and-mortar bank branch. Mailing a money order to a lender has its own risks and headaches worst-case scenario the money order is lost or stolen and the borrower has to wait for a refund and make a late payment.
- Consider any fees associated with using a credit card to purchase a prepaid card as well as purchasing a money order using a prepaid card. The fees may end up costing more than any potential rewards.
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Prepare For Payments To Be Coded As Cash Advances
Unfortunately, the third-party processor that handles your credit card payment may not be the only source of fees when it comes to paying your rent or mortgage.
In some cases, your credit card issuer may interpret your payment as a form of cash advance. Not only does this mean big cash advance fees, but your payment will start accruing interest right away often at a higher rate than normal purchases.
Using those handy convenience checks often provided by your credit card company is the surest way to incur big cash advance fees. Although it seems like an everyday check, convenience checks are always treated as cash advances by credit card companies.
How To Pay Off A Mortgage Faster With Credit Card
Before making your mortgage payment by credit card, it is important to know how to pay mortgage faster by credit card. You pay a fee equaling 2.85% of your mortgage payment every time. During paying this fee, you use your credit cards. If the mortgage lender accepts it, some third-party payment services deliver an electronic payment. Moreover, some third-party payment providers cut a check to the mortgage lender. This check does eliminate the need for all three parties to approve the transaction. These three parties include mortgage lenders, issuers, and credit card payment networks.
In this way, you can pay manually. Also, you can set up automatic payments. Alternatively, you also have the choice of making a one-time payment. After that, you turn around and immediately pay back your credit card for processing fee amount and mortgage payment. Due to this, you will earn more rewards after making transactions with an eligible rewards credit card.
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