Mortgage Rate Drop: Time to Strategize Your Card Rewards

NerdWallet recently reported a noticeable dip in mortgage rates, a welcome sign for potential homebuyers and those considering refinancing. While lower rates are great news for your long-term finances, this event also presents a unique opportunity to strategically use your credit cards to rack up serious rewards. At RewardSmart, we're all about turning everyday expenses – and even large ones like mortgage-related costs – into valuable points, miles, or cashback.

Leveraging Your Credit Card During the Home Buying/Refinancing Process

While you can't directly pay your entire mortgage with a credit card (most lenders don't allow it due to processing fees), there are several stages in the home buying or refinancing process where you can use your plastic to your advantage.

  • Earn Rewards on Down Payment Funds (Indirectly): While you can't directly put the down payment on a credit card, you can strategically use your card for everyday spending in the months leading up to the purchase. Shift your spending to cards with strong rewards programs, focusing on those with welcome bonuses that require a certain spend within the first few months. Meeting that spend threshold becomes much easier when you're anticipating upcoming home-related expenses.
  • Earn Rewards on Closing Costs: Some closing costs, such as appraisal fees, inspection fees, and even some title services, can be paid with a credit card. Check with your lender and service providers to confirm their payment policies. If you can, use a card that offers a bonus for spending in the 'real estate' or 'professional services' category. Remember to pay off the balance immediately to avoid accruing interest.
  • Furnishing and Moving Expenses: This is where your credit card can really shine. Buying new furniture, appliances, and moving supplies can add up quickly. Use a card with a high cashback rate, or one that offers bonus points for purchases at home improvement stores or retailers like Wayfair. Consider opening a new card with a generous welcome bonus if your spending will be significant. For example, spending $5,000 on furniture could easily net you $250 in cashback with a 5% rewards card.

Choosing the Right Card for Mortgage-Related Expenses

Before you start swiping, it's crucial to choose the right credit card. Consider these factors:

  • Welcome Bonus: Look for cards with substantial welcome bonuses that you can realistically achieve within the spending timeframe.
  • Rewards Category: Opt for cards that offer bonus rewards in relevant categories like home improvement, furniture, or general travel (if you're moving long distance).
  • 0% APR Introductory Period: If you anticipate needing some time to pay off your balance, a card with a 0% APR introductory period can help you avoid interest charges. Be sure to pay off the balance before the promotional period ends.
  • Redemption Options: Choose a card with redemption options that align with your goals, whether it's cashback, travel rewards, or statement credits.

Actionable Takeaways

  • Contact your lender and service providers: Inquire about acceptable payment methods, specifically whether credit cards are accepted for any portion of closing costs or other fees.
  • Analyze your upcoming expenses: Estimate how much you'll be spending on moving, furnishing, and other home-related purchases.
  • Compare credit card offers: Use RewardSmart's card comparison tool to find the best card for your spending habits and upcoming expenses.
  • Pay off your balance promptly: Avoid high interest charges by paying your credit card balance in full each month.

By strategically using your credit cards during the home buying or refinancing process, you can turn a significant financial transaction into a rewarding experience. Don't leave money on the table – let RewardSmart help you maximize your credit card rewards!