Making a mortgage payment is one of the largest financial commitments that you have, so it makes sense to wonder if you can pay this through your credit cards to make it a little easier and probably make money from it. While in theory, yes, it can be done, it is not always the easiest or most cost-effective method. There are a few workarounds and lots of factors to consider in even taking the route. Here is everything you need to know regarding paying a mortgage with a credit card, as well as whether or not it fits your unique situation.
Is it possible to pay your mortgage with a credit card?
The short answer is yes, but it is not advisable. Most mortgage lenders do not accept credit card payments directly, which means you cannot just enter your credit card details on your lender’s website. However, there are ways to make it work, like using third-party services. Still, it is important to weigh the potential costs and risks before choosing this route.
How can you pay your mortgage with a credit card?
Since most lenders do not accept credit card payments directly, you will likely need to use a third-party payment service, such as Plastiq. These services act as a middleman:
- You pay them with your credit card.
- They send the payment to your mortgage lender, either electronically or by check.
But there is a catch – these services charge a processing fee, typically around 2.9% of the payment amount.
For example, if your mortgage payment is $2,000, you will pay an extra $58 in fees. Depending on your credit card rewards or cashback, this fee might outweigh any potential benefits.
What are the benefits of using a credit card for mortgage payments?
Paying your mortgage with a credit card can make sense in certain situations:
- Earning rewards: Some credit cards offer generous rewards, points, or cashback, which might make the extra fee worth it in specific cases, like meeting a sign-up bonus spending requirement.
- Short-term financial flexibility: If you are temporarily low on funds, using a credit card might help you avoid missing a mortgage payment, though this should be a last resort.
How much will you pay each month for a $550,000 mortgage?
What are the downsides of paying your mortgage with a credit card?
There are several drawbacks to consider before using a credit card for your mortgage:
- Processing fees: As mentioned earlier, the third-party fee can make this option expensive.
- High-interest rates: If you do not pay off your credit card balance in full, you could face high interest charges that will quickly outweigh any rewards.
- Impact on credit score: Large mortgage payments can increase your credit utilization ratio, which is the percentage of available credit you use. This could lower your credit score.
Why do mortgage lenders rarely accept credit card payments?
Because of the extra processing fees and further risks associated with credit card payments, mortgage lenders will not take this form of payment. Furthermore, it is commonly believed that one should not pay debts with debts as doing so complicates matters concerning personal financial stability.
How much will you pay each month for a $500,000 mortgage?
When might it make sense to pay a mortgage with a credit card?
If you are trying to hit a credit card’s sign-up bonus that far exceeds the processing fees, it could be worth it. However, you should only do this if:
- You can pay off the credit card balance immediately.
- The rewards or benefits significantly outweigh the fees.
Continue Reading:
How much will you pay each month for a $450,000 mortgage?
