Automatic payments can be a smart and easy way to “set it and forget it.” The automatic withdrawals from your bank account can be set up to pay internet services, subscriptions, phone bills, credit card bills and even a mortgage.
Along with accepting payment by check, over the phone and online, many mortgage providers allow mortgage payments to be automatically withdrawn from your checking or savings account every month on the same day.
One of the best things about having your mortgage on autopay is that you’ll never be late paying that bill. That means no more late fees—and you won’t have to go through the hassle of mailing a check or remembering to pay it. Not having late payments can improve your credit score, since payment history is one of the biggest determining factors.
When setting up autopay, check if you can adjust or cancel your automatic payments, and how easy it is to do. Also, check if you can choose the withdrawal date. Once set, you may not be able to change it.
Some lenders allow these payments to be automatically adjusted if there’s a change in your escrow or interest rate. If your mortgage lender doesn’t easily let you set up automatic payments, you can probably do it online through your bank and set up recurring transfers. If you’re living paycheck-to-paycheck and are unsure if you’ll have enough money in your bank account on the day your mortgage payment is due, then you may want to forego autopay.
Sticking to a payment schedule may make it difficult to make extra payments on your mortgage. While banks are always happy to accept your money, having autopay may require calling the bank or taking a few extra steps if you want to make an extra payment on the principal balance.
To make sure autopay is done right, set up electronic alerts from your bank to email or text you when a bill is due, paid and when your balance is running low. The last thing you want is a low checking account balance when a mortgage bill is about to be paid automatically.