When you click on product links from one or more of our advertising partners, such as credit cards, we might receive compensation. Terms apply to the offers below. See our Advertising Policy for more about our partners, how we make money, and our rating methodology. Opinions and recommendations are ours alone.
Purchasing a home is typically one of the largest purchases in a personâs lifetime. Additionally, a lot of people wonder if they can use a credit card to potentially earn rewards on these big transactions because buying a home comes with significant closing costs.
Generally, the answer to this question is no. Â Mortgage lenders and title companies typically donât accept credit cards as payment for closing costs. Usually, youâll need to use a wire transfer or cashierâs check to pay closing costs.
If you have a sign-up bonus to meet and have recently opened a new credit card, that can be a bummer. However, since credit card processing fees can be high given that closing costs are typically large transactions, credit cards are typically not accepted for mortgage closing costs because mortgage lenders and title companies don’t want to bear the expense.
However, there are certain closing cost expenses—like fees for your application, credit report, and appraisal—that you may be able to pay with a credit card before you even get to the closing table. Alternatively, you might be able to use a credit card to cover part of the closing costs and a wire transfer or cashier’s check for the remaining amount.
Letâs look into mortgage closing costs and which closing costs you can potentially cover with a credit card.
The fees and expenses associated with purchasing a home that you must pay when the seller transfers title to the buyer are known as mortgage closing costs.
Closing costs are variable and depend on the type of loan, location, and type of home. However, you can anticipate paying between 2% and 5% of the purchase price of the home. For example, on a $300,000 home, youâll pay $6,000 to $15,000 in closing costs.
Your mortgage lender will provide you with a loan estimate and closing disclosure outlining your closing costs prior to the closing table. Together with seller contributions, prior payments, such as deposits, and your estimated cash to close—which is the total of your down payment and closing costs less any adjustments—it will also include
Youâll generally have to pay closing costs up front when you close on your mortgage. Before you reach the closing table, you might have to pay for certain costs like application fees, home inspection or appraisal fees. Â.
Buying a home is a big step, and there are many costs involved in the process. One of those costs is the appraisal fee, which can range from a few hundred to a few thousand dollars. You may be wondering if you can pay for an appraisal with a credit card.
The answer is yes you can usually pay for an appraisal with a credit card. However, there are a few things to keep in mind.
- Not all lenders allow it: Some lenders may not allow you to pay for an appraisal with a credit card. This is because they may not want to take on the risk of the charge being disputed.
- There may be a fee: Some lenders may charge a fee for using a credit card to pay for an appraisal. This fee is typically around 3%.
- You may not earn rewards: Some credit cards do not offer rewards points or miles on cash advance transactions. This means that you may not earn any rewards points on the appraisal fee if you pay for it with a credit card.
Here are some of the benefits of paying for an appraisal with a credit card:
- You can earn rewards points or miles: If you use a credit card that offers rewards points or miles on cash advance transactions, you can earn points or miles on the appraisal fee.
- You can build your credit: If you pay your credit card bill on time and in full, you can build your credit score.
- You can spread out the cost: If you don’t have the cash on hand to pay for the appraisal fee, you can spread out the cost over time by using a credit card.
Here are some of the drawbacks of paying for an appraisal with a credit card:
- You may have to pay interest: If you don’t pay your credit card bill on time and in full, you will have to pay interest on the balance.
- There may be a fee: Some lenders may charge a fee for using a credit card to pay for an appraisal.
- You may not earn rewards: Some credit cards do not offer rewards points or miles on cash advance transactions.
Ultimately, the decision of whether or not to pay for an appraisal with a credit card is up to you. If you can afford to pay for the appraisal fee upfront, that is the best option. However, if you need to spread out the cost, using a credit card can be a good option. Just be sure to compare different credit cards and choose one that offers the best terms for you.
Here are some additional tips for paying for an appraisal with a credit card:
- Make sure you have enough credit available: Before you use your credit card to pay for an appraisal, make sure you have enough credit available to cover the cost.
- Pay your credit card bill on time and in full: This will help you avoid paying interest and build your credit score.
- Shop around for the best credit card: There are many different credit cards available, so it’s important to shop around and compare different offers before you choose one.
By following these tips, you can make sure that you are using your credit card wisely to pay for your appraisal.
Frequently Asked Questions
Is it typical for lenders to charge the appraisal fee to my credit card?
Yes, it is typical for lenders to charge the appraisal fee to your credit card. This is because they want to make sure that they are paid for the appraisal, even if the loan does not close.
Can I pay for other closing costs with a credit card?
Yes, you can usually pay for other closing costs with a credit card, such as the home inspection fee and the homeowner’s insurance premium. However, you should check with your lender to see if there are any restrictions.
What if I don’t have enough credit available to pay for the appraisal fee?
If you don’t have enough credit available to pay for the appraisal fee, you may be able to get a personal loan from a bank or credit union. You can also try to negotiate with the lender to see if they will allow you to pay for the appraisal fee in installments.
What if I can’t afford to pay for the appraisal fee at all?
If you can’t afford to pay for the appraisal fee at all, you may be able to get a grant from a government agency or a non-profit organization. You can also try to find a lender who is willing to waive the appraisal fee.
Additional Resources
Can you pay closing costs with a credit card?
Certain lenders might let you use a credit card to cover some of the closing costs, like application, credit report, appraisal, and home inspection fees. However, even in the event that using a credit card is an option, using a credit card will almost certainly incur a convenience fee.
How To Finance Closing Costs
While paying closing costs is customary when closing on a mortgage, there are ways to finance these expenses. You might be able to get the seller to pay some or all of the closing costs, or you might be able to roll them into your mortgage. Â.
Obtaining a personal loan or using a credit card to cover part of the closing costs are additional options for financing these expenses.
A personal loan might allow you to access closing cost funds. However, since personal loans typically have higher interest rates than mortgages, paying closing costs up front or incorporating them into your mortgage would be a better option. Additionally, obtaining a new loan could impede the approval and closing of your mortgage, as lenders typically dislike it when buyers open new credit accounts prior to closing.
Credit cards can help you cover some closing costs, but not many. Although credit cards are usually not accepted by mortgage and title companies, you might be able to pay an appraiser or home inspector with one.
Asking the seller can help you reduce or eliminate paying for the closing costs upfront. Your realtor might be able to work out a deal, particularly if you’re willing to accept a higher purchase price.
Hot Tip: You may have additional options for getting help with closing costs if you apply for a first-time homebuyer assistance program, which may also offer help with your down payment. Homeownership assistance programs may offer grants, interest-free loans, or forgivable loans you can use to cover some or all of your down payment and closing costs. These programs are typically available to low and middle-income homebuyers.