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What's the old adage about things being too good to be true?
I think Jeo123 has done a phenomenal job of breaking down the numbers for you and showing you how your plan will actually end up costing you more money than just simply making extra principal payments to your mortgage on your own, without involving credit cards or chargesmart.
Yes, @Jeo123 has done a great job. But the 'more money' is barely $300 spread over 15 months. And I think I had explained my rationale in post #82 above should I take the credit card route.
I'm not sure what this means. You write out a balance transfer check and mail it to your mortgagor, or you instruct the credit card to send a balance transfer check to your mortgagor.
I know.
But, as I said, paying the mortgage company via Cash Advance or Balance Transfer is not better option because of the Cash Advance limits (which are less than the Purchase limits--often half); in case of Balance Transfer I'd have to actually have the 'Balance' from some Purchase from somewhere, right? We can't have the Balance from paying the mortgage company.
At any rate, the 'fees' charged by Charge Smart are comparable, if not even slightly cheaper (if $5000 payment) to C.A or B.T fees.
But if I take a gamble and put the entire $24,000 on credit card early January then I can spread out the payments to 15 months while paying $1500/month.
There are other things to consider too, many cards don't allow you to either withdraw all of your available credit in cash, mine doesn't and I have a near 900 credit rating and perfect payment records and own my house outright.
The other issue is, carrying $24,000 on credit cards would be a big red flag on your credit score/history, having such a high balance on a credit card is very bad.
This thing reminds me of a scheme years ago using a couple dozen or more credit cards- getting cash from each and then buying a $100,000 house for all cash and then the scheme went on about the repayment of all those cards and how it worked so well, these days no one but Bill Gates would ever be able to get two dozen credit cards in the first place and get $5,000 off each cash advance!
Also, in that kind of case, or even running one card up $24,000, what if you get laid off? fired? your employer shuts their doors? you get sick and wind up in the hospital and can't work?
That credit card has to be paid that month, next month and every single month or it goes into default, then you have a card that's maxed out- unusable, a house you just moved into that you can't sell immediately, and big problems.
I don't know why people can't simply buy a small cheap house and not go into huge debts in extraordinary ways using credit cards for a down payment they can't afford in the first place.
I bought my 2 bedroom farmhouse with a full basement on 1/2 acre of rural midwest land for under $10,000, I paid the 10 year loan in full in 4 years easy by simply putting extra money on the principal every month and making extra payments.
I bought my 24x96 brick with a full basement, gallery building in town 2 years ago for $15,000, I put $5,000 down and I've been paying $200/mo on the $84 a month mortgage so I will easily have it paid off in 3 years so as to completely avoid that $5000 balloon payment then or refinancing it.
When I first bought the building I paid two months' payments each month, within 12 months I was a year ahead of schedule, that gave me a comfortable year worth of a security cushion, as well as paying the loan off in half the time and avoiding abig balloon payment in 5 years. I did the same on the house- I was a year ahead of schedule after the first year.
To me, having a one year safety cushion should be the first priority.
There are other things to consider too, many cards don't allow you to either withdraw all of your available credit in cash, mine doesn't and I have a near 900 credit rating and perfect payment records and own my house outright.
The other issue is, carrying $24,000 on credit cards would be a big red flag on your credit score/history, having such a high balance on a credit card is very bad.
Correct. And that's where Charge Smart comes into picture: They let you use the Purchase part of credit card to make mortgage payments.
About the 'red flag', now that does sound scary and I need to think through. What do you say about it, @DrD? You had $40,000 on credit cards to pay off your mortgage.
I know.
But, as I said, paying the mortgage company via Cash Advance or Balance Transfer is not better option because of the Cash Advance limits (which are less than the Purchase limits--often half); in case of Balance Transfer I'd have to actually have the 'Balance' from some Purchase from somewhere, right? We can't have the Balance from paying the mortgage company.
At any rate, the 'fees' charged by Charge Smart are comparable, if not even slightly cheaper (if $5000 payment) to C.A or B.T fees.
Cash advance limits apply to cash advances. A balance transfer is not a cash advance. I have never seen a balance transfer offer that did not state it would be honored up to your entire available credit limit.
No, you do not have to purchase anything. If your mortgage servicer is Wells Fargo Home Mortgage, you make your balance transfer check payable to "Wells Fargo Home Mortgage".
If the Charge Smart fee is less, that's great. However, you can often find balance transfer offers with no balance transfer fees. Zero is much less than 3%.
I don't know why people can't simply buy a small cheap house and not go into huge debts in extraordinary ways using credit cards for a down payment they can't afford in the first place.
I bought my 2 bedroom farmhouse with a full basement on 1/2 acre of rural midwest land for under $10,000, I paid the 10 year loan in full in 4 years easy by simply putting extra money on the principal every month and making extra payments.
He said quite clearly he is paying the existing mortgage in full, not buying a house with a down payment from credit cards.
Correct. And that's where Charge Smart comes into picture: They let you use the Purchase part of credit card to make mortgage payments.
About the 'red flag', now that does sound scary and I need to think through. What do you say about it, @DrD? You had $40,000 on credit cards to pay off your mortgage.
Any hit to your credit score is going to be temporary. As you aggressively pay down the credit card debt, your score will bounce back. Unless you plan to do more borrowing before you pay the credit cards off in full, it's not much of an issue, IMO.
Correct. And that's where Charge Smart comes into picture: They let you use the Purchase part of credit card to make mortgage payments.
About the 'red flag', now that does sound scary and I need to think through. What do you say about it, @DrD? You had $40,000 on credit cards to pay off your mortgage.
Meengla, all I want to say is I have done this in the recent past, and I have had no "red flag" issues. I hesitate to mention these personal facts, but here we go:
1) The first time I did this was in early 2013... used 0% BT CC to pay down 35k mortgage debt. Used the next 12 months to pay off the CC
2) I did this again in early 2014... used 0% BT CC to pay down 40k mortgage debt... I am almost done paying off the CC
I check my creditkarma score once a week... yes credit score goes down when you carry a high balance... and then it goes back up when you pay it off! I check my creditscore on Discover IT card once a month... same thing... it was in low 800s... I did the BT... it went down to 700s... I paid them all off... it went back up.
Yes Yes Yes I know I wasted money on BT fees... but I was well aware of that... To me, eliminating my mortgage debt today was more important than carrying credit card balance.
I faced no problems because I make enough money to be able to pay off the CC balance before the 0% expires. Yes I took risk. But I did it with no problems.
I don't really spend much. So I don't have the need to use all my CC. So in the (early 2000s) past when I stopped using CC, the limits decreased and eventually they closed the accounts. Since my recent credit history is excellent, they keep raising my limits and keep offering me 0% BT offers for 12-18 months. So I used them to my advantage!
As long as you are aware of the extra money involved, and as long as you finish paying off the CC before the 0% offer expires, and as long as you DO NOT use those CC for other purchases (while paying off the BT), you should be good.
If you regret the fees, don't do it!
If you think you cannot pay off the CC before the BT offer expires, don't do it!
If you think you will need to use the CC while still paying off the BT, don't do it!
If you get upset with the fluctuating credit scores, going up and down and up, don't do it.
With credit cards, the game is to be a responsible borrower... as long as you borrow and repay and borrow and repay without any mistakes on your part, CC will love you and keep giving you perks and high scores.
If you hardly use CC, you appear unattractive to CC and there goes your score...
Again, key is to be a responsible borrower. I make sure I don't become a slave to CC debt. It is a business transaction. Both parties need to benefit. In my case, that is precisely what happened. I am happy. CC companies are happy. Mortgage is paid off sooner than later. Family is relieved!
Cash advance limits apply to cash advances. A balance transfer is not a cash advance. I have never seen a balance transfer offer that did not state it would be honored up to your entire available credit limit.
Maybe I have failed to explain the role of Charge Smart in my plans?! Balance Transfer is not an option unless I can transfer the mortgage balance itself to some credit card. Please read my last few posts above.
DrD, what was your mortgage rate while you were doing this?
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