Making your monthly mortgage payment is an important task if you wish to keep a roof over your head. There are different ways to tackle this so you don’t miss the payment date.
If you’ve been mailing checks, there are other ways to pay your mortgage that are convenient, reliable and cheap. Here are the pros and cons of the various methods of how to make a mortgage payment:
How to pay your mortgage with online banking
The easiest option for most homeowners is to pay for their mortgage through either through their bank or mortgage lender’s website. Paying online means consumers can decide when they want to make the payment, maintain a record of when it was made and ensure that it is paid by the due date.
Depending on the lender or the bank, payments can also be automated without the homeowner having to log into the their bank’s website each month. Online payments are fast, free and efficient way to maintain your budget.
“Going to your lender or loan servicer’s website and making the payment puts you in control of the timing,” says Greg McBride, CFA, chief financial analyst for Bankrate. “The downside is that this is something else each month you need to do or be reminded to do.”
How to pay your mortgage with automated withdrawals
Choosing automated withdrawals pulled from your checking or savings account is another easy option to make sure your mortgage is paid on time each month.
This option is set up the lender’s website and it means the lender will automatically withdraw the mortgage payment from your bank. Once this is set up, the payments will repeat each month. This works especially well if you have recurring deposits on a set day such as a payroll or government check.
“Automatic payments via ACH withdrawal are the easiest way to make the monthly mortgage payment,” McBride says. “It happens without the homeowner needing to take any action and it can happen even if you’re away on vacation and completely unplugged. The only downside is for those that have trouble with overdrafts as you need to make sure the money is in the account and available for immediate withdrawal each month when the payment is taken out.”
You can begin by going to the lender’s website and creating an account. Choose the date when you want the withdrawals to occur every month.
You can log into your lender’s website to see when the payment was credited. The one disadvantage is that you may not be able to easily change the date the payment is withdrawn from your bank account, especially at the last minute.
Setting up automated withdrawals helps homeowners who want to make additional or semi-monthly payments to pay off a mortgage early to cut their interest outlay. Paying off a mortgage sooner makes sense for people who do not have other debt such as credit cards or are planning on retiring soon. Before doing this, check with your lender to make sure the extra payments are credited correctly.
If you have other debt that has high interest such as credit cards, it’s wise to tackle that debt first before making extra mortgage payments.
Homeowners who have a low interest rate for their mortgage should consider putting their extra money into a retirement account or towards emergency savings since the money will not be liquid. Instead of paying off a mortgage that only has a 4 percent interest rate, socking away your money in an IRA that is generating 6 percent or more may be a better financial decision.
If you are not sure you will be living in the same house five or 10 years from now, reconsider paying off your mortgage early.
How to pay your mortgage using a credit card
Problems and emergencies can crop up such as an illness or a loss of a job. Until you get back on your feet, paying your mortgage with a credit card could be your only option for the short-term.
Other people think it’s an easy way to gain some points on their rewards credit card, but the fees involved with this method can be substantial.
Paying for a mortgage online with credit card is an option, but not all credit card networks such as Discover, American Express, Mastercard or Visa permit mortgage payments. In addition, many mortgage lenders are not fans of this option and most do not accept credit cards.
Check with your credit card issuer first. While Mastercard allows mortgage lenders to accept debit and credit cards for payments, Visa has only given the green light for mortgage companies to take Visa debit and prepaid card payments.
As a last resort, some third-party companies allow you to make a payment, but charge you a hefty fee that will likely erase the value of any points or cash-back you gained.
“Most lenders won’t accept credit card payments for the mortgage and the services that do offer the ability to pay via credit card tend to charge a service fee that offsets the value of any rewards you’d be earning,” McBride says.
How to pay your mortgage by phone
Making a mortgage payment over the phone is another option to avoid paying a late fee, especially if you forgot to mail in your payment before the deadline or have not set up a payment process online.
The phone number will be on your monthly bill or found online.
The process is typically fairly straightforward – be prepared to have your mortgage account number handy and your bank account information such as the routing and account number.
The payment is typically credited to your account quickly. Before you make the payment, ask the mortgage servicer if there is a charge for this convenience.
How to pay your mortgage in person or by post
If your mortgage servicer is located in your hometown, the company might accept payments in person. You can make a payment by check or even using a money order. Money orders are secure payments since they do not include any personal information, but they have one major drawback. The amount of a money order is often limited to $700 or $1,000.
Another option is to use a certified check or a cashier’s check, which do not have a limit.
Mailing a check is an old tried and true method. Make sure you include your account number on your check. Just having your home address on the check may not be sufficient, even if it matches the address your mortgage provider has on file.
Sending a payment by mail means you have to take into account the time it takes to mail your payment and for it to be processed by an employee at the mortgage company.