Can You Pay Your Mortgage with a Credit Card? Should You? | Jabar Post Indonesia/a> – This time JabarPost.Net will discuss about Mortgage.
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Can You Pay Your Mortgage with a Credit Card? Should You? | Jabar Post Indonesia
A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession”) to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan)”.
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called “securitization”, which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.
Is it possible to pay mortgage payments via credit card?
Yes. I do this using a service called Plastiq.
I was skeptical at first, but after a couple months of mortgage payments with no issues, I’m very happy with the service.
How much does it cost?
They currently charge a 2.5% fee. So if your mortgage payment is $1,000, they will charge your credit card $1,025 and cut a check to your mortgage lender for $1,000 on your behalf.
The real question is is it worth it?
It depends on the credit card you have and whether the additional rewards you’d get from paying your mortgage are more valuable to you than the 2.5% fee.
For me, it’s worth it and here’s why:
I use the Amex Starwood Preferred Guest credit card to pay my mortgage on both homes I own.
My combined monthly payment is $2,700. With the 2.5% fee of $67, I’m paying $2,767 in total and getting an additional 2,767 SPG points. So essentially, I’m paying $67 to get 2,767 SPG points (Starpoints) that I wouldn’t otherwise get.
How much is 2,767 Starpoints worth? Well, I can often book a hotel worth $150 per night or more for 3,000 Starpoints. So the cash value of 2,767 Starpoints is at least $135, which is double the amount I’m paying in fees.
This was the mental math I did when I decided to give Plastiq a shot.
My wife and I live a couple of hours from Disney World and have annual passes, so we go often and usually stay at a Starwood property in or near Disney.
In fact, I’m writing this now in a Starwood hotel near Disney where we are staying. This weekend, the rate for this hotel is $180 per night, but I booked it for 3,000 Starpoints. With the amount of extra Starpoints I’m getting from using Plastiq, we could, in theory, do this every month.
It won’t make sense for everyone. Like I said, it depends a lot on your credit card and how you make use of your rewards.
If you’re using a card that gives you a measly 1% cash back, charging an additional $2,700 per month to your card would only yield $27 in rewards in exchange for your $67 fee.
But the way I see it, I get way more value than what I pay in fees. At least double. So I win.
Note: This should be obvious, but I still feel like I need to say it. If you do not intend to pay off your entire credit card balance each month, DO NOT PUT YOUR MORTGAGE ON YOUR CREDIT CARD. THIS IS STUPID.
Now that that’s out of the way, if you think using Plastiq makes sense for you, I’d love for you to use my referral link to sign up. We’ll both score some “fee-free dollars.”
Free Tools: http://alyg.thinkific.com/
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