One of the most important purchases you would have to make in your life is your first home.
Whether it would be a one-floor bungalow in the country or a large apartment in a prominent location in the city, you should learn how much your future monthly mortgage will cost before owning one.
According to SmartAsset, the average cost to rent or pay a mortgage is at least $800 a month in many areas even if you do not live in an expensive city.
In this article, I will discuss how you can keep paying for your mortgage using your credit card and what are the benefits and risks involved with it.
Before that, do watch this video on some tips you can use when it comes to buying your house for the first time:
What Fee-Free Options Do You Have?
One way for you to pay exactly for the property you want without the burden of extra fees is to find one that can accept credit cards or another form of online payment. According to The Points Guy, they recommend this tip to first-timers to buy properties with a potential increase in their value within the next year.
An example is if you opt to pay for a property with a monthly rent of $1,200 using a Chase Freedom Unlimited card, you can earn 1.5% of it back as cashback and 21,600 Ultimate Rewards points.
Another option is to negotiate with your landlord or local bank to create a debit card to pay for these costs. According to the Durbin Amendment, interchange fees are made smaller meaning maintaining one’s home will take less money.
Also read: Review of Better Mortgage: A smart mortgage lending
Options for Paying Mortgage with a Credit Card
In this section, I will show you the different services you can ask for help from in order to pay for your housing fees.
1. Plastiq
Plastiq is a third-party service that assists individuals to pay their dues using major credit cards. They advertise themselves to those who need to pay their expenses for their businesses, however, you can use this to your advantage.
How to Use
Using this service starts by visiting their sign-up page here. Then, you are asked to create an account with the credit card information you want to use and who will receive the amount.
Transaction Fees
Sending the payment through this service would only charge you 2.5% per transaction. Aside from that, the recipient does not need to sign up with the service as they can receive it through a bank check or transfer.
Do take note that they will only accept cards from American Express, Discover, Mastercard, Visa, JCP, and Diners Club.
2. Radpad
Similar to Plastiq, Radpad allows property owners to pay for their mortgage without asking the receiver to sign up for an account on its website.
This service also features its own Rent Assurance. If the payment arrives late or does not arrive, the service will pay up to $50 for those charges and have it reimbursed back or sent as soon as possible to your landlord.
How to Use
After creating an account for this service, you would have to provide them information on where the payment will be sent to and how to pay for it. Then, they will send a bank check to the property owner three days before it is due while being able to receive notifications along the way.
Transaction Fees
However, this service focuses on making payments better to renters. With that in mind, they only charge a monthly total of $4.95 for a bill of less than $5,000 while it is $9.95 per month for a total of $5,000 or higher.
With that in mind, if you pay through a credit card, you will be charged 2.99% per transaction. They can accept payments through American Express, Discover, Mastercard, and Visa under credit card holders.
3. PlacePay
This third-party service offers this service to landlords and home sellers the option of their clients to pay online without the hassle. With this system, renters and mortgage payers can be sent personalized notifications of when to pay.
How to Use
This asks the clients to sign up for their platform using their personal and payment information. After that, you fill in the transaction details such as the recipient of the money and where will the money be coming from.
Transaction Fees
You can also opt for either credit card, debit card, or bank account on your own whether you have to pay with or without roommates. It will be charged 2.99% for each transaction done on a credit card.
Finally, they only accept payments from credit card carriers such as American Express, Discover, Mastercard, and Visa.
4. RentMoola
Similar to PlacePay where both property managers and tenants have to sign up for the service to receive payments seamlessly, this service features a dedicated software service in order to make payments on time and keep private information secure.
Tenants who are under this service can have the option to pay through credit card, debit card, bank account, or cash.
How to Use
To sign up, you would have to go to their page here. After logging into your account, you can then schedule payments and set up multiple payment methods to avoid losing track of your pay and be able to make it using any option you have.
Transaction Fees
When paying for credit cards, they have slightly different fees depending on which one you use. For Visa or Mastercard credit cards, the charge is 2.99% while for American Express credit cards it is 3.99%.
5. Venmo
This last option for homeowners and renters is yet another online payment platform. However, this gives more flexibility on two accounts.
First, it is one of the few services available that has its own card where you can use it as a Mastercard on its own in shops that accept it. Second, you can have the payment shared amongst friends who use the service at the same time as you.
How to Use
First, you would have to sign up for the service here. Second, you can fill in the details of who you need to send the money to, how much, and where the money will be coming from.
Transaction Fees
However, if you do send money through people through your credit card, you are charged 3% extra. They only accept cards under the Discover, Mastercard, and Visa carriers.
Reasons Why You Should Pay It Using a Credit Card
Learning that all of these options to pay your mortgage using your credit card require you to pay a fee on top of whatever amount you would have to pay to your property manager, here are several reasons as to why you should opt to have it paid through the card.
Earn More Credit Card Rewards
Credit cards reward you in two ways: sign-up bonuses and ongoing rewards. The first type may be given to you during the first few weeks or months you signed up for the card while the other happens while you use your card after that.
These are the following rewards you should take note of when choosing which card to pay your monthly mortgage in:
- An ongoing cashback, paid in points or miles, of 3% or more for each payment
- The third-party processing service fee is not recognized as a cash advance by the credit card company
- A sign-up bonus that is worth more than the credit card processing fee that cannot be earned through normal spending
- A benefit, such as an airline status, hotel status, free nights, or free airline tickets, in exchange for paying the mortgage using the credit card
Earn Interest on Your Credit Card
This tip aims towards those who do not carry a balance on their credit card.
Most companies offer an interest-free grace period between 21 to 25 days between when the card’s statement is issued and your payment is due. Taking advantage of this will help you earn interest as long as you do not pay the balance late or never carry one at all.
Do take note that most credit card companies pay an extra fee of 2.5% on top of third-party fees per transaction so you should make it a habit to take advantage of this as much as you can.
Prevent Paying Late by Using Your Credit Card
Do take note that most mortgage payments are due on the first of every month. Even if you are able to delay the payment to the 15th if you went to a moneylender, this could spell hefty late charges if not paid by then.
Since paying it past 30 days will decrease your credit score, do try using your credit card on a payment you are able to pay once you can shoulder your monthly balance.
A strategy to extend your mortgage payment is by using your credit card on the 14th in order to buy 25 more days to pay for it. Doing this is also an advantage as the payment processing fee will be less than your credit card company’s late fee in comparison.
Avoid Getting Your Property Foreclosed
Aside from using your credit card in order to get an extension in paying for your mortgage, you can also use this in order to avoid foreclosing.
Foreclosing is defined by Investopedia as a legal process where a lender takes control of a property and evicts the homeowner after the homeowner is unable to make full payments based on their contract.
Do take note that you should pay your dues before 120 days and make sure to think the risk of adding credit card debt to your financial woes. Sitting down with your lender and housing counselor should be a must before going through your first swipe.
A Word of Caution Before Using a Credit Card
If you are opting to sign up for one in order to make advance payments for your future house mortgage take note of the following:
- Ask your landlord in advance if you can opt for a payment through your credit card or using a third-party service to process it.
- Be diligent to learn the needed processing fee for each credit card carrier in order to choose one with the lowest top-up.
- Compare the fees you would be getting against the points or air miles you will be gaining per transaction.
- Call your card issuer to request any cash advance fees in line with these mortgage payments be lowered to close to $0 as much as possible.
- Give yourself plenty of time when paying using a credit card and when the payment will be sent through a physical check.
- Never charge your mortgage to your credit card to pay for something you cannot afford once the card bill shows up on your doorstep.
- Pay using this method as a last resort to meet a minimum spend on newer credit cards in your wallet.
Also read: Pros and cons of opting for Lemonade insurance
Conclusion
Due to the rise of payment options available to the average man, it is possible to pay for your house’s mortgage every month using your credit card.
There are advantages to be made, such as getting cash back and physical rewards when it comes to using this method.
However, do consider checking whether you are financially capable of handling any transactions made with this credit card. Opting for this every time without thinking of how to pay it back will set your credit score and financial stability back at the same time.
Did this help you get yourself back on your finances? Read some more articles here:
- Your guide to finding the Best Homeowners Insurance Quotes in 2020
- How can you avoid paying for Mortgage Insurance
- What are Finance charges and why you should avoid them
If you have any other awesome tips about paying your mortgage,comment below!.
