Mortgage lending is a risky business. No amount of diligence can help you avoid all future delinquent borrowers. Anyone, even a person with stellar credit, can default on a home loan in the event of financial upheaval. As you know, the proceeds from the sale of a foreclosed property are not always enough to recover your losses, so it is imperative to help you debtors stay in good standing. One good strategy is working with a firm specializing in credit card processing for lending companies. If you have not done so, here are the reasons why you should start accepting mortgage payments:
1. People Want Different Payment Options
It is no secret that Americans are heavily dependent on credit cards. Many people use them to manage their finances, while others to maintain their lifestyles. Based on this logic, you might miss out on chances to collect payment on time. Savvy credit cardholders might not exclusively pay with plastic, but they would rather have the option than not. After all, credit card payments are incredibly convenient, especially with the advent of third-party payment service providers. Furthermore, a borrower can use a credit card to change the due date of a mortgage payment in case the paycheck will not arrive as expected.
2. People Love Earning Rewards
One of the factors behind the constantly high credit card usage of Americans is rewards. Earning points has been an attractive incentive to get more benefits out of swiping. This reward-based system creates an inducement for credit cardholders to continue making purchases, especially large ones over a short period.
There are great examples of intelligent individuals who made the most out of their credit cards. Some of them are Holly Johnson and Greg Johnson, the couple who co-founded the financial blog Club Thrifty, earned 200,000 points after paying off their remaining $100,000 on their house with a credit card. The rewards were then converted to $2,000, which they used on a Mediterranean trip.
Another case in point is the story of Keith Rosso, a credit card blogger, who bought a Tesla worth $60,000 with a credit card. The points he earned exceeded the fee attached to his purchase, allowing him to receive $5,000 in return. Of course, the Johnsons and Mr. Rosso have credit cards that are generally not available to average persons, but they are living proof that there is a way to game the system and create a win-win situation for all parties.
3. People Might Need More Motivation to Prioritize Mortgage Payment
Some lenders use creativity to compel their customers to pay through credit cards. For instance, some lending companies offer a credit card with a cash-back feature that automatically decreases the principal balance of the mortgage. Yes, this means fewer chances to turn a profit through interest for the lender, but it’s only a small sacrifice to help avoid non-payment.
Credit cards can be both straightforward and complicated, but they can also be extremely beneficial to users and merchants when understood well.