How to Pay Mortgage: 7 Payment Methods

Paying your mortgage on time each month is one of the most important aspects of homeownership. It gives you the right to occupy the home and helps you prevent any negative effects on your credit score.

Depending on your mortgage lender, there may be several different ways to pay your mortgage. Keep reading as we dig into some common methods for paying your home loan as well as ways to pay it off faster.

7 ways to make your mortgage payments

Unless you make special arrangements with your lender, you will be making mortgage payments monthly for the life of your loan. With that many payments, it’s important to make them convenient for you.

While some lenders might differ from others, these are seven of the most common ways to make your loan payments.

1. Utilize online digital tools

We live in a world where digital tools are becoming a way of life, and artificial intelligence (AI) is helping to make our daily tasks easier and more efficient. One of those necessary tasks is paying a mortgage.

‌Rocket Mortgage, one of the nation's largest mortgage lenders, utilizes AI to help with all aspects of the mortgage process, including payments. Using their chatbot Liv, you can receive personalized information about your mortgage. Liv will inform you when your next payment is due, help you make your next payment, or even make one-time principal payments.

2. Make mortgage payments conveniently through a mobile app

If your lender has a mobile app, this can be a simple way to pay your mortgage every month. For example, with the Chase mobile app, you can simply log into your account from your smartphone and schedule your next payment within minutes.

3. Automate your payments by scheduling withdrawals

Having your mortgage payments automatically withdrawn from your checking or savings account each month is a hassle-free way of making sure you’re never late on a payment (though most lenders do have a grace period of a couple of weeks before you’ll be charged a late fee on your account).

To set up an automatic mortgage payment, you can take care of everything in your mortgage lender’s online dashboard or through its mobile app. Once your recurring payment is set up, the mortgage payments will be automatically withdrawn from your account on the day you choose.

If your lender doesn’t give you the option to set up recurring payments, you could use the payment app Cash App to pay your mortgage from your bank account.

You can set up your recurring payment to take place on a day when you typically receive your paycheck.

4. Pay your mortgage with a credit card

Some people may want to pay their mortgage with a credit card to earn credit card rewards. Unfortunately, most lenders will not allow you to use a credit card to make a loan payment.

You can, however, use a third-party processor like Plastiq to make a mortgage payment with your credit card. They will charge a small processing fee and pay your lender on your behalf.

5. Pay in person (give your lender a check)

If your mortgage lender is local, you can stop by the branch to make your payment. Typically, they will accept a regular check, certified check, or cashier's check.

Checks are a popular way for many people to pay their mortgage because there is no limit on the amount. Unfortunately, they include your personal information, so there is the risk of fraud.

Regardless of the method you use to make an in-person payment, this is ideal for anyone who would prefer to pay their mortgage without technology.

6. Mail in your mortgage payments

Sending your payments through the mail each month is how many people used to pay their mortgage. Similar to in-person payments, you can use a standard check, cashier's check, or certified check.

One downside to mailing your payment is the speed at which it will get to your bank. Because you’ll need to rely on the postal service, there could be a delay of several days from when you put the check in the mail to when your lender receives it. You’ll need to be careful that your payment doesn’t arrive after the grace period, or you’ll be charged a late fee.

Another risk is check washing, a scam that involves changing the payee name and sometimes the amount on a check and then fraudulently depositing it. One way to avoid being a victim is to mail your check at the post office or in a blue collection box just before the last pickup of the day.

7. Make your payment with a money order

‌Western Union is a great choice for paying via money order, which is a popular payment method because they don’t contain any personal information. Unfortunately, most retailers limit the size of money orders that can be purchased to between $700 and $1,000.

Tips to pay your mortgage

When paying your mortgage, it’s important to consider what will be most convenient for you. Convenience is going to help you pay your mortgage on time. If you struggle to remember to make on-time payments, it might be a good idea to set up your mortgage to be paid automatically on a day that works best for you.

How to pay off your mortgage faster

If your goal is to become debt-free, you might be looking to pay off your mortgage early. Below are some of the best ways to accelerate the pay-off of your mortgage.

Contribute additional principal monthly

If feasible with your budget, one of the best ways to pay off your mortgage faster is to increase the amount you pay each month. However, ensuring the extra payment amount is allocated to your principal balance is important. Not only will this help reduce your balance, but it will also save you on interest over the life of your loan.

Increase annual principal payments

If you cannot make additional principal payments each month, consider making a lump-sum principal payment at specific times of the year. Unless you need to pay down other debt, you can take your tax refund or annual bonus from your job and make a large payment to your principal balance.

Adopt a biweekly mortgage payment schedule

Most people make a single mortgage payment each month. What many people don’t know is that some lenders will allow you to switch to biweekly payments, which can speed up the amount of time it takes to pay off your mortgage.

If you can make biweekly payments, you’ll essentially make an extra payment each year. Double-check with your lender to see if they charge fees for biweekly payments. If they do, you’ll want to make sure it makes sense financially.

Explore refinancing for lower rates, shorter terms, or both

Refinancing your mortgage for a lower rate or shorter term is another way to pay off your mortgage faster. This means you’ll be replacing one loan with a new loan.

If you can refinance to a lower rate, your monthly payment will be reduced. Instead of paying the lower monthly payment, continue paying the old amount, allocating the difference as an additional principal payment.

Alternatively, you could refinance a 30-year loan into a 15- or 20-year loan instead. This might increase your monthly payment but would help shorten the time until it’s paid in full.

Consider mortgage recasting options

If you have a lump-sum amount of money you want to put toward your mortgage balance, another option would be recasting. To do this, you would make a lump-sum payment to your mortgage balance. Your lender would then re-amortize your mortgage with the lower principal balance.

With mortgage recasting, your interest rate and loan terms would stay the same. You would just reduce your monthly payment due to the decreased principal balance. Most lenders charge a service fee to recast a loan, but it’s significantly less than refinancing.

TIME Stamp: Find the method of mortgage payment that makes the best sense for you

Paying your mortgage on time is an important part of home ownership. Late payments can have a serious impact on your credit score. Most people find that setting up monthly automatic mortgage payments is the best way to avoid late payments. However, if you would prefer to pay your bill manually, many options are available. Just make sure you set a reminder for yourself to avoid a missed payment.

Frequently asked questions (FAQs)

What is the best way to pay off your mortgage?

The best way to pay off your mortgage is to set up automatic payments from your checking or savings account. This allows you to make sure your payment is paid on the same day every month, and you’ll never miss a payment or have one arrive late.

What happens if I pay an extra month on my mortgage?

If you make an extra mortgage payment each year, you can pay down your mortgage balance faster, which will help you save thousands of dollars on interest over the life of your loan.

What if I’m late making a mortgage payment?

Most lenders provide a grace period of around 15 days. As long as you pay your balance within the grace period, you won’t pay a late fee, and your lender won’t report a late payment to the credit bureaus. However, if you’re 30 days or more late, that could be reported to credit bureaus, negatively affecting your credit score.

Should you make biweekly mortgage payments?

Biweekly mortgage payments are a great way to pay off your mortgage balance faster. Check with your lender to ensure they allow this and have no prepayment fees.

Should I pay off my mortgage or invest?

Deciding whether to pay off your mortgage or to invest is a personal choice. Both have their advantages, so it will depend on your own financial goals.