Are you thinking of paying your mortgage with a credit card? It is possible, but you probably need to know first things such as the things to consider, hindrances, and worthwhile. Most people think it is relatively easy to decide to use a credit card to cover mortgage payments.
Your credit card and mortgage are your possessions, after all. However, it is not always about getting bills paid, but thinking of innovative ways to pay your bills.
It is hard to look for companies that are willing to accept debt-for-debt payments.
With this in mind, you should always consider all the factors that can impact your decision to pay a mortgage using a credit card. It is also essential to take into account the use of third-party services to help you. This article will address all your questions about paying your mortgage with a credit card.
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Things to Consider Paying a Mortgage With a Credit Card
There are many factors to consider in paying a mortgage with a credit card. Here, we listed several factors before pursuing this option:
- Rewards to Receive and Required Fees
- Interest Expenses
- Impact on Personal Credit Scores
Rewards to Receive and Required Fees
One of the things that you need to consider is the rewards and fees. It will not be worth your effort if the costs that you are paying outweigh your rewards. You have to think smart when choosing the best option that fits you in paying your mortgage.
It is crucial to weigh the rewards that you will receive upon paying your mortgage using your credit card and the required fees that you have to pay. The tips that you can receive vary depending on the company that is issuing the credit card. Look into the credit card’s sign-up bonus to get the most out of it.
Failure to pay your credit card bills in full monthly can equate to an increase in interest expenses. You have to calculate all your accounts and create reminders to pay on time. Ensure that you can pay your due credit card bills on time to avoid extra costs that might lead you to pay more.
Impact on Personal Credit Scores
Using this option, you are taking up a tremendous amount of your credit limit while increasing your credit utilization ratio. This ratio consists of your total debt and total credit limits. It is recommendable to keep the percentage of your credit utilization at thirty percent or less.
Before paying mortgage expenses with your credit card, contact your provider to increase your credit limit to decrease this option’s impact on your credit scores. By doing so, you can maintain the ratio of your credit utilization.
Hindrances in Paying a Mortgage With a Credit Card
In paying mortgage expenses with your credit card, the mortgage lender, your credit card issuer, and the credit card network should all be in unison for the mortgage payment to proceed successfully. All of the three components have set rules regarding mortgage payments done through credit cards.
Some credit card networks like Visa enable mortgage lenders to accept Visa prepaid card payments and debit card payments. On the other hand, Mastercard only permits credit cards and debit cards for mortgage payments.
You will also encounter some issuers that do not permit mortgage payments. One example is the Bank of America. Some credit cards like Wells Fargo credit cards allow mortgage payments if the mortgage lender accepts them.
Some mortgage lenders accept payments that third-party payment service providers have processed. With these hindrances in mind, it is necessary to have an affirmation from all the three components (the mortgage lender, your credit card issuer, and the credit card network) to avoid late and declined payments for your mortgage.
Why You Must Pay Your Mortgage With a Credit Card
Paying your mortgage using your card is an excellent option with the rewards you can get. It is a wise option to consider if it is within your budget and credit limit. However, if you have a bad credit score and are already on your credit limit, try reconsidering the option to avoid putting further strain on your budget.
Benefits in Paying a Mortgage With a Credit Card
There are many benefits to paying a mortgage with a credit card. Here, we listed several benefits that can push you to pursue this option:
- Get Credit Card Rewards
- Avoid Late Payments
- Prevent Foreclosure
Get Credit Card Rewards
You can either get sign-up bonuses and ongoing rewards. You can get approximately $300 cashback for a purchase worth $3,000 in your first three months as a cardholder for the former. For the latter, you can receive as much as 2% cash back per purchase.
Avoid Late Payment Fees
Mortgage payments are usually due on the first day of every month. Still, some mortgage lenders allow payments until the 15th without charging any extra fees. After the grace period, late charges apply. Some people pay their mortgage on the 14th using a credit card to avoid late payment fees.
It is a given that you want to remain in your home. With this, preventing foreclosure is another benefit and reason why some people prefer to pay their mortgages with credit cards.
Tips in Paying a Mortgage With a Credit Card
Paying your mortgage using a credit card can be challenging for starters, but here are some tips to make your experience relatively easier:
- Try using third-party services
- Gift Cards Conversion to Money Orders
Try Using Third-party Services.
Third-party service provides convenience in paying mortgages using credit cards for a fee. Usually, most third-party services require a 2.85% fee. You will also find that some third-party services offer tremendous amounts of the welcome bonus. Other payment services let users avoid fees by referring friends.
Referral codes are available for those who sign-up for third-party services. If other people enter your code to sign up and pay, you receive “fee-free dollars” in return. You can use the “fee-free dollars’ for free bill payment.
Gift Cards Conversion to Money Orders
You also have the option to purchase pin-enabled gift cards using the rewards credit card to pay for money orders. Pin-enabled gift cards are available at local grocery stores. Grocery store credit cards offer bonus points as well.
You can set your PIN and use the gift card to buy money orders from a grocery store, bank, or other outlets where money orders are for sale.
There are many factors to consider before paying your mortgage with a credit card. As a credit cardholder, you should understand all the fees, requirements, and work needed.
In general, you should consider taking this option if you are equipped with the money and budget to pay your credit card bills in full whenever the due date comes. It is also crucial to pay your mortgage using a credit card; always check if the rewards you get in return outweigh the fees you need to pay.
Your efforts should be worth the outcomes. With this in mind, remember that there are various ways to earn better rewards in the future, and deciding to pay your mortgage with a credit card is just a part of it.
We propose that you regularly check your other due bills requiring you to pay through credit card regularly. Optimize paying your mortgage with a credit card by getting credit card welcome bonuses and focus on increasing points and miles.
If you know someone interested in paying their mortgage with a credit card, it would be a great idea to send them this article. You can also help us out by sharing this article on Facebook and Twitter.
Liked this post? Read more on other topics on the mortgage and saving money. Make sure to check out these other great content:
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