How to Make Your Payments

Confused on how to make your home payments? We’ve unpacked the 5 most important monthly payments and how to make sure you’re taking care of them below.

Mortgage

Without a doubt, the best way to pay your mortgage is to do so via auto pay directly from your checking account. This is the smoothest way to ensure you never miss a payment, and reduce unnecessary fees. 

Secondary to auto pay is mailing in your checks after receiving your statements in the mail. This can be problematic if you aren’t timely with checking your mail or have a hard time keeping up with paperwork.

You can typically pay over the phone if you find yourself in a bind, but again, you have to be on the same timeframe as the mortgage company for this to work. 

You can pay your mortgage with a credit card, however it is difficult to do so. Only Mastercard allows this, with most other credit card companies blocking these transactions. You can utilize a service like Plastiq to pay your debt (mortgage) off with more debt (credit), but it’s not really recommended.

Private Mortgage Insurance (PMI)

Depending on your lender, you may not even have a PMI. If you do, however, there are a few options. Whichever you choose, you won’t have to figure out much in terms of how to pay this…it will be included with your mortgage if necessary.

• Pay upfront: This is the most desirable option, as it leaves you with the least interest and least monthly payments. Paying for your PMI at closing and never having to deal with it again.
• Pay monthly: For those who may not have the cash to front the PMI payment at closing, you can tack it on to your monthly mortgage payment. 
• Split the cost: Here, you partially pay the PMI upfront and pay the rest monthly. Whatever you do not pay at closing will be added into your monthly mortgage bill.
• Lender pays: If the lender covers the PMI, your interest payment will go up on your mortgage. We don’t recommend this option. 

Insurance

Homeowner’s insurance is typically paid in one of two ways: via escrow account, or manually. Most of the time, your lender will handle homeowners insurance for you. Your mortgage includes a premium for homeowners insurance, and a portion of your payment gets set aside into this escrow account to be used for insurance payments. In many cases, especially for those with lower down payments, this is the standard and you won’t have to worry about too much else.

However, in some cases you can work directly with the insurance company. Then, your options are standard: choose to pay monthly, quarterly, or yearly. Opt in to auto pay, mail in your checks, or pay with a credit card. 

HOA

HOA fees are only applicable to those who live in condos, townhomes, or closed communities with amenities. These communities will oftentimes have strict guidelines regarding the upkeep of buildings and yards, and require a fee for living there for the amenities and community perks. 

Since these are unrelated to your mortgage lender, you will have to work directly with the condo or Homeowners Association that you are dealing with. Most of the time, these fees are paid on a monthly or quarterly basis and are typically paid via check or autopay. You will have to confirm with your local HOA to determine if they have a digital option or if they accept credit cards.

Taxes

There are two ways to pay for your home taxes: by incorporating it into your monthly mortgage payment, or by paying a lump sum directly to the local tax office. 

You’ll need to speak with your lender to determine whether or not these taxes are already included in your mortgage payment. At the end of the year, you may be eligible to receive some of that money back if you overpaid in taxes, or you may owe extra taxes if the estimate was too low. Your lender will send you IRS Form 1098 by the end of January, where you can find exactly how much you paid in interest.

The second way to pay property taxes is by paying via check, money order, credit, debit, or e-check directly to the local tax office. You’ll receive a letter in the mail with how much you owe and what your local payment options are (they may differ depending on your location). 

Conclusion

Luckily, these payments are not as confusing as they seem. Most are typically wrapped up in your mortgage payment. When in doubt, communicate with your lender or your real estate agent to make sure you’re getting everything paid in a timely manner!

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