Yes, you can pay your mortgage with a credit card. While you can use credit cards for mortgage payments, it’s not always easy since oftentimes, mortgage providers do not accept direct credit card payments for payment of the mortgage or closing costs, or credit card issuers might not allow it. But, there are a few things that you can do. You might need to pay with your credit card for reasons like avoiding late charge or earning credit card rewards.
How to Pay Your Mortgage with a Credit Card?
As mentioned, several mortgage providers do not accept credit cards directly. However, there are a few workarounds to payment options. Here is how to pay your mortgage with a credit card:
Use Third-Party Payment Service
Plastiq is a third-party payment platform that you can use to pay off your mortgage loan using Discover or Mastercard credit cards. However, keep in mind that there’s a hefty processing fee that you have to bear as well, which is 2.85 percentage since Plastiq is a third-party service. Moreover, the mortgage doesn’t immediately go to the mortgage servicer. It usually takes around 8 business days for the lender to get the money, so that factor that into the equation. Remember that you will be earning rewards credit cards.
Get a Prepaid Card
Another option for paying your mortgage is to use a prepaid card. Purchase a prepaid card from your local store and make sure that your mortgage loan servicer accepts prepaid cards and online payments. Once you make sure of that, you can make the payment online but keep in mind that there might be fee along with it.
Obstacles to paying a mortgage with a credit card
While paying a mortgage with a credit card can be convenient for some people, there are a few things which name it not a very popular option. Here a few obstacles to paying mortgage with a credit card:
Complex: Paying a mortgage with a credit card isn’t a cakewalk since most mortgage refuse to accept credit card payments directly. This compels credit card holders to look for workarounds.
Risky: Paying off mortgages with credit cards can be risky business since it can harm your financial situation in case you’re keeping up with your credit card payments.
Processing fees: There is usually some kind of a fee involved when paying using your credit card. For instance, Plastiq, which is a third-party payment provider, charges 2.85%, which can make the reward seem pointless.
Get approval from everyone: Just because you want to pay your mortgage with your credit card doesn’t mean that you can do it so easily. Your payment or card network, mortgage lender, financial institution, and credit card company all have to check your application and give you a thumbs up for credit approval.
An Example of Paying Your Mortgage with a Credit Card
A great example of paying your mortgage with a credit card is that of Holly Johnson, who is a blogger. She earned credit card rewards worth $2,000. It was possible for her to do so since she could refer Plastiq to her readers. However, not everyone can do that. Regardless, with excellent credit, citizens can earn hefty rewards, especially if they are deciding on spending money within 3 months of getting the card.
What Should You Consider Before Paying Your Mortgage With A Credit Card?
Here are the things you should consider before paying your mortgage with a credit card:
Rewards vs Fee
The processing fee levied can sometimes exceed the rewards, card’s sign-up bonus (which you get on completing minimum spending requirements), or cashback you get. So, keep that in mind when using a credit card for payment.
It only makes sense to use your credit card to pay off your mortgage payments if you’re paying off bills with credit cards every month in a timely manner. Otherwise, the average credit card interest might keep on accumulating and you will have to bear more amount than the rewards you will be receiving due to the credit card interest rate.
Impact on Credit Score
Using your credit card to pay off thousands of dollars can throw off the credit utilization ratio and impact your credit score, which will show up on your credit card statement. Hence, it’s usually recommended you ask for a higher credit limit on your credit card.
When Does it Make Sense to Charge Your Mortgage to a Credit Card?
It makes sense to charge your mortgage to a credit card only if the cost of the convenience or processing fee is less than the credit card rewards you are receiving. Rewards come in different forms such as airline miles, points, sign-up bonus, and cash back rewards. But, make sure that the processing fee isn’t larger than the rewards, because otherwise it doesn’t make any sense.
Should You Pay Your Mortgage With A Credit Card?
Whether or not you should pay your mortgage with a credit card depends on a lot of factors, including your financial situation. For instance, it helps if the credit card rewards outweigh the processing fee. Moreover, you must also make sure that there is no negative impact on your credit score or budget if you don’t have a high credit card balance. However, if you want to avoid making a late payment to your mortgage company or you are facing financial hardship, using a credit card can be a good option. While you get a 15-day grace period for the payment, you might still want to ensure to avoid any extra cost. You just have to make sure to complete your monthly payment.
For help with great tips how to pay off your mortgage without using a credit card contact the Cain Mortgage Team today.