A mortgage loan is used to purchase or maintain a home, land, or other real estate. When you get a mortgage, you have to pay the lender over a given time. The lender divides the loan into regular payments with a principal and interest. You can make payments with your bank or credit card. We will see how to pay mortgage with credit card without fee.
Once you get a mortgage loan, your property serves as collateral to secure your loan so that in case you cannot afford to repay your loan, your creditor can sell your property to get their money. That means you should have a reliable source of money so that when the due date for paying your loan reaches, you do not begin running up and down to get money. Late payments can damage your scores, and thus you should avoid them as much as possible.
It is not easy to get a mortgage. You must apply for a mortgage through your suitable lender as long as you meet several requirements, such as the minimum FICO scores and down payments. Your application must undergo a rigorous underwriting process before reaching the closing phase. You can get a conventional or fixed-rate loan depending on your preferences. Again, the cost of a mortgage depends on the term, type of loan, and interest rate.
How do mortgages work?
You can use mortgages to buy real estate in bits without depositing upfront. You repay the loan together with interest over a specified period, usually years, until you completely own the property free and clear. If you stop paying the mortgage, your lender can foreclose (seize and sell) the property. That means you lose your home or land, making your life hell. During the foreclosure, the lender evicts you or the residents in the house then sells the property to pay off the mortgage debt.
How to pay mortgage with credit card without fee?
A credit card is a payment tool that allows the user to borrow money from the card issuer. We have two types of credit cards. They include secured and unsecured ones. Secured credit cards require a security deposit to get them. You can get a secured credit card for rebuilding credit if you start from scratch.
Unsecured credit cards require FICO scores when applying for one. There are unsecured cards for bad and good credit. The ones for good credit have low-interest rates as there are low risks associated with the borrowers, while those for bad scores charge high-interest rates.
You can make your mortgage debt payments using a credit card. However, the cost is high and may not benefit you effectively. You need to understand that mortgage lenders do not accept credit cards. Therefore, you cannot pay directly using a credit card. That means you should get a third-party company to process your payments. We have a company called Plastiq that processes mortgage payments with a credit card. The company charges you a transaction fee of 2.85%.
To pay with your credit card without fees, you must refer others to join Plastiq. The more your referrals join the company, the more you get free transactions. However, Plastiq does not allow you to use a Visa or American Express card to make payments.
How do you get a credit card?
If you desire to use a credit card, you might be wondering how to get the card. You can get one from various financial companies such as banks, credit unions, or mobile money wallets. For you to get a credit card, you must meet various requirements. I have mentioned how you can get either a secured or unsecured card.
Most importantly, you can get approved for a credit card with no credit when you apply for a secured credit card. However, you will need to pay the required deposit amounts. The more you make your payments, the higher your limit. You can apply for your card online. However, you must deposit the required amount in your checking account before getting it, then receive the card and activate it accordingly. You may even get a virtual card to use online while waiting for your plastic one.
The issuer must run a credit check for unsecured cards, mainly if you apply for fair-excellent cards. Card issuers can get your scores from the credit bureaus. They call the process a hard inquiry to ascertain whether you can repay a particular loan amount. FICO scores range from 300 to 850, whereby 300 represents poor, and 850 represents excellent. The issuers also allow you to apply online or at a branch and get them at your location.
Looking at the two types of cards closely, you can see the difference between secured and unsecured credit cards. Secured ones require a security deposit, while unsecured ones require credit scores.
How to use a credit card?
There are various uses of credit cards that you can benefit from. They include the following.
i) Build credit
Credit cards allow you to build your scores with time. You can build scores from scratch using a secured card, as I mentioned earlier. The unsecured ones also allow you to grow your FICO scores. All card issuers usually report your card usage to the credit bureaus. The bureaus are bodies that the government entrusts to receive and keep borrowers’ details from the creditors. They come up with scores and credit reports.
The FICO scores show someone’s creditworthiness. In short, they show the ability of someone to pay a given loan.
ii) Buy goods and services.
The primary use of the cards is to pay for goods and services online and at physical stores. When purchasing online, you should provide the card number, the CVV, and the expiry dates. The merchant then deducts the amount, which reflects in your account. You can also buy goods and services at physical branches. But can you purchase a money order with a credit card? Using your card to buy a money order is possible, but it can be an expensive affair.
Most card issuers consider that as a cash advance and charge high fees. Therefore, it is not a good decision to use your card for the transaction.
iii) Withdraw money
A credit card can work at an ATM. Therefore, you can withdraw money from your card account for various uses. However, that is also a cash advance and attracts fees too. The best cards to withdraw money at an ATM are debit and prepaid cards.
How to choose the best credit card?
It may be challenging to get a good credit card especially if you are new to credit cards. However, if you consider the following things, you can end up with a good card.
i) Interest rate
Interest rates are significant when choosing a credit card because they determine how much you will be paying on top of the borrowed amount. Creditors charge different rates for the same scores or deposit amounts, and you should research thoroughly to ensure you get the best card.
ii) Fees
Getting a card with fewer fees is very important. Various fees charged by creditors include monthly fees, annual fees, late payment fees, foreign transaction fees, and balance transfer fees.
iii) Balance transfer APR
Balance transfer credit cards allow one to move their existing debts from the current credit card and enjoy lower interest rates and a higher credit limit. The best balance transfer credit cards for fair credit should have a 0% APR for a given period to allow you to repay your debt effectively.
iv) Rewards
Everybody likes gifts, and it is essential to get credit cards with rewards such as points, miles, and cashbacks. That way, you can realize the value of your money.
Why should you use a credit card to pay for your mortgage?
Even though the cost incurred when using a credit card for your mortgage payment is a disadvantage, there are various advantages to using a credit card to pay for your mortgage. They include the following.
- To earn rewards from your card issuer
- To buy time to pay your mortgage, thus avoiding late payment
- To avoid foreclosure
What are the various types of mortgage loans?
There are various types of mortgage which include the following.
- Fixed-rate mortgage. It is the one whereby the interest rate does not change for the entire term of the loan. Your monthly payments toward the mortgage stay the same throughout the payment period.
- Adjustable-rate mortgage (ARM). The interest is fixed initially, after which it may change periodically based on current interest rates.
- Interest-only mortgages. The loans may involve complex repayment programs and are best suited for sophisticated borrowers.
- Reverse mortgages. These allow beneficiaries to convert part of their equity in their homes into cash. They best suit borrowers with 62 years and above.
Bottom line
A mortgage loan is used to buy or maintain a home, land, or any other type of real estate whereby you agree to pay the lender over a given time. Like any other loan, mortgage loans involve a credit check to see your borrowing ability. There are various categories of mortgages, including fixed-rate mortgages, adjustable-rate mortgages, interest-only mortgages, and reverse mortgages. You can pay your mortgage using a credit card but indirectly.
