Mortgage Management

[Melitta]

Has anyone ever used a credit card to pay off their mortgage? My mom who is a co-signer on my home has a credit card that she wants me to use to pay off our mortgage. The credit card has a 2.99% interest rate on it (for life of the loan as long as you don't default, $50 transfer fee), we pay 11% on our mortgage loan. We bought the home 11 years ago, hence the high interest rate. Just wondering if any one knows if you can actually use a credit card "check" to do this or not. I would have to use the check to pay off the mortgage, if I was to get a cash advance the interest goes up to about 16%.

[mrdobolina]

Melitta....why haven't you re-financed recently? Not to :nono you or anything, but that's a really high interest rate for a mortgage.

I am not sure about the credit card deal. Does her card have a large enough credit line? Are you absolutely sure that that 2.99 is for the life of the loan? Does she use the card for everyday purchases??(As in, does she charge other stuff on there, which will cause the credit card company to keep her daily charges at a higher rate, while any payments made will be applied to the mortgage/the lower rate).

I would say: 1)READ ALL OF THE FINE PRINT in the offer, carefully. 2) Check out some Suze Orman books or her website(or just search her name on Google). She has a ton of tips/guides in easy to read language that is actually quite interesting, and totally good stuff.

Good luck!

[John]

Another thing about using a CC for paying off your mortgage is that the interest is no longer tax-deductable. A big thing to think about if your payments are up there.

[mrdobolina]

Home Run by John. I knew there was something I was forgetting about. That tax deduction is HUGE for me.

[Brodie]

What about the tax implications? Mortgage interest is tax deductable... Credit Card interest isn't... Credit cards are ruthless... If you're late on one payment you're interest rate can jump up to 22%...

How long have you owned the house? If it's been a few years, you may qualify for your own mortgage... I would try to refinance at a lower rate.

It may be worth paying a couple a hundred bucks to a tax attorney before going through with this... If you find that it was a mistake it may cost a LOT more than that to get out of it...

Who's name is the credit card in? Hers? Are you making the payments? Your name was on the mortgage but not on this credit card... Would this legally put the house in her name? What are the implications with that? What if something happens to her? What if something happens to you?

Edited to say I was typing my response while the other two came in... But it seems like we're all on the same page...

[Melitta]

Yes, I have read all the fine print and it is for the life of the loan unless I default. Yes, her card has a large enough credit line to pay the mortgage. I do not pay enough in interest each year to be able to claim it as tax deductable. I haven't refinanced because this is a mobile home and no one will refinance a mobile home. So, I will be stuck with a high interest rate until my mortgage is paid off, which is another 9 years. My mom's name is on the loan as a co-signer so no the home shouldn't go into just her name. Even if it did, I would be fine with that. It would show as being paid off under my name, so yeah I could handle that. I don't plan on keeping this trailer for much longer, if I can get it paid off. No way I can sell it for what I owe.

[John]

Well, being a mobile home changes the picture a bit. But, remember if you sell the mobile home, you've still got the credit card payments to make. And as has been mentioned before, be late even once by a day (even if it's because of the mail), and your interest rate will jump to up to 29%, and won't go down on the balance no matter how well you pay after that.

[Marleybone]

So, I will be stuck with a high interest rate until my mortgage is paid off, which is another 9 years.

We are in the middle of a re-fi right now and I've been told that if you can manage one extra house payment per year it will knock 7 years off your mortgage. I figured one payment divided by 12 and it's not that hard to do. Maybe that might help?

[SheltieMom]

Also, for what it's worth, mortgage debt looks better than high (credit card) debt. Having a lot of unsecured debt can actually lower your credit rating. Plus, I believe any mortgage interest is deductible, no matter the amount, so you should get a break on your income taxes. My 2 cents :-)

[SheltieMom]

Sheesh, I would need a credit card with a limit of $175,000 to pay off my mortgage, lol!!!