Pay Your Mortgage With a Credit Card

Although you can make a mortgage payment with a credit card, you should consider why you want to. Some people use their credit cards because they want the reward points, but this is rarely a good option. Other people use a credit card because they are suffering financially, which is never a good option. If you want to pay your mortgage this way, find an online service or purchase a money order.

Steps

Using an Online Provider

1. Identify online providers. There are many websites you can use to pay your mortgage. You pay using a credit card, and the company cuts a check and sends it to your lender. The more well-known providers include:
   • Tio. This company was formerly known as ChargeSmart.
   • RadPad. Many people use this website to pay their rent, but you can also use it to pay your mortgage.
   • Plastique.
2. Find out the fee. This online service is rarely provided for free. Instead, you will be charged a fee. For example, RadPad currently charges 2.99% on all credit card payments. Accordingly, if your mortgage is $1,000, then you’ll pay $29.90 as a fee.
   • Fees are subject to change, so always check before using the service.
3. Determine if you should pay your mortgage this way. Just because you can pay your mortgage this way doesn’t mean you should. Consider why you want to use your credit card:
   • You are trying to earn a bonus on a rewards card. Some rewards cards will give new users a huge number of points (35,000+) if they spend a certain amount of money during a short period of time. In this limited situation, it might be a good idea to make a mortgage payment with your credit card. For example, your bonus might be $500, which will be more than the fee you pay to use a credit card.
   • You are trying to earn regular rewards. Most cards only offer 1-2% cash back rewards. The online service provider fee will eat up any rewards, so this is rarely a good reason to pay your mortgage with a credit card.
   • You are facing financial difficulties. It’s never a good idea to use a credit card to pay a mortgage because you are struggling financially. Instead, pursue other options with your lender.
4. Read online reviews. Do thorough research before using any online service provider. Check with your Better Business Bureau and pay attention to complaints that the company doesn't get the mortgage payment to lenders on time.
   • New companies crop up all the time. You must perform thorough, independent research before entrusting a company to pay your mortgage.
5. Pay your mortgage. Some providers require that you register with your name and email address. Others don’t require registration. Remember to use the right credit card to make your mortgage payment.
   • Check that your lender received the mortgage payment on time. If not, follow up with the online company to find out why.
   • If you feel you have been scammed, report the company to your local consumer protection office.
6. Pay your credit card balance. Make full payment on the card before the grace period ends. If you don’t, you’ll owe interest on the balance, which will further eat into any reward that you earned. Your mortgage payment also includes interest, so you’ll be paying interest on interest—never a good financial decision.

Paying with a Money Order

1. Buy a PIN-enabled gift card. You can’t buy a money order with a credit card. Instead, you’ll need to buy a PIN-enabled gift card using your credit card. Visa offers a PIN-enabled gift card that works for this method.
   • You can’t buy just any old gift card. Instead, the card must say “debit” on it.
2. Load money onto the card. There’s usually a limit you can load. For example, you can only load up to $1,000 a day on the card. There is also a $5,000 a month limit on these cards.
3. Use the gift card to buy a money order. Money orders are sold at many banks, grocery stores, and large retailers. You’ll have to find one that accepts debit cards. Not all of them do. For example, CVS has refused to sell money orders to people using debit cards.
   • However, the U.S. Postal Service accepts debit cards for money orders, so that is a good option.
   • When you pay, don’t wave around your gift card or tell the cashier that you’re using a “gift card.” Just pretend it is an ordinary debit card tied to a bank account and use it to buy your money order.
4. Pay your mortgage with the money order. Send the money order to your mortgage servicer. If the servicer is a large bank, then you can hand deliver your payment to the nearest branch.
   • Make sure it has been received and the payment credited to your account.
5. Pay off your credit card. If you loaded $1,000 onto your debit card, you now have $1,000 owing on your credit card. If you don’t pay it off before the grace period ends, then you’ll end up owing more money. Pay your credit card off, in full, each month.

Getting Help with Your Mortgage

1. Identify why you have fallen behind. The reason you are struggling financially will help determine what avenue you should pursue. Consider the following, which are common reasons people face financial difficulties:
   • Job loss. A job loss might be temporary. If so, you have more options for catching up on your late mortgage payments.
   • Illness or disability. If your illness or disability is permanent, you’ll have to consider selling your home. However, if the disability is temporary, you might be able to work with your lender. You can also seek bankruptcy to wipe out your medical debt.
   • Death of a spouse. Unless your spouse had a life insurance policy, your income is probably reduced for the foreseeable future. Reconsider whether you can afford the home.
   • Financial mismanagement. You might be living beyond your means. If so, consider bankruptcy to eliminate credit card debt. In some situations, you can still keep your home.
2. Discuss your options with a housing counselor. You can find a qualified counselor by contacting your nearest Housing and Urban Development (HUD) office. Alternately, you can call 1-888-995-HOPE. Counseling is free.
   • Talk about your options. For example, you might qualify for assistance through the Hardest Hit Fund, which can help homeowners catch up on their mortgages or modify their loans.
   • If you can’t meet with a HUD-approved counselor, then be wary. There are a lot of scammers out there posing as counselors who want to swindle you out of your home. Avoid anyone who charges a fee or wants you to sign over the deed of your house to them.
3. Contact your lender. Call their loss mitigation department and explain your situation. Many lenders will work with you to keep you in your house, but you’ll have to jump through hoops.
   • You’ll have to provide supporting documents and fill out many forms. Your lender wants to make sure you have a legitimate reason for your financial difficulties.
   • Always keep a copy of all documents you provide to your lender. Also keep detailed notes of any telephone conversation. Record the name of who you spoke to, the date, and the substance of the conversation.
4. Reinstate your loan. With a reinstatement, you pay off all overdue mortgage payments and any late fees or penalties. This is a good option if you faced temporary financial difficulties but are now able to make payments.
   • Some lenders might let you pay off overdue amounts on installment, so check.
5. Ask for Negotiate Mortgage Forbearance. A lender might temporarily reduce your mortgage payments or suspend them. After the forbearance payment, you start back up making regular payments and also catch up on the payments you missed.
6. Check if you can modify the loan. Your lender might be willing to alter the terms of the loan. If so, you can often lower your monthly mortgage payment, which will allow you to stay in your home. Your lender can modify the loan in several ways:
   • Reduce the interest rate. This will result in smaller monthly payments and will lower the amount you pay in total.
   • Extend the terms of the loan. You can stretch out a 15-year mortgage to 30 years or a 30-year mortgage to 40 years. You’ll lower the monthly payment but end up paying more over the life of the mortgage.
   • Add overdue payments to the balance. This is a great way to catch up because overdue payments are stretched out longer.
   • Reduce the amount you owe.
7. Consider bankruptcy. Meet with a Choose a Bankruptcy Attorney if your bills are spiraling out of control. They can review your situation and offer tailored advice. You might not have to lose your home in a bankruptcy.
   • Chapter 7. You can wipe out unsecured debt (such as credit card debt) with a Chapter 7. However, you might lose your home in the process unless it has no equity in it or if you can exempt the equity. Your bankruptcy attorney can advise you.
   • Chapter 13. In this bankruptcy, you create a payment plan that lasts three to five years. Any unpaid mortgage payments get added to your payment plan. As long as you stay current on your mortgage, you can stay in your home.

Tips

• American Express’ Bluebird card used to be a popular option for people using a credit card to pay their mortgage. However, American Express has begun to crack down on people using their card to make mortgage payments.
• Some banks offer reward credit cards which allow you to spend your reward points on your mortgage. This can help reduce your principal.

Related Articles

• Make a Discover Card Payment
• Determine the Rental Cost of a Property
• Choose a Home Loan
• Follow the Mortgage Accelerator Plus Program

Sources and Citations

See also

• Assume a Car Loan
• Pay Off Student Loans with a Mortgage
• Apply For a Fannie Mae Loan
• Calculate How Much House You Can Afford
• Get Payday Loans With Bad Credit
• Get a Home Improvement Loan
• Get a Collateral Loan
• Refinance Student Loans
• Get a Home Equity Loan
• Calculate Mortgage Payments

Read more ...