Using credit card to pay mortgage for less interest?

[Ben Kirchner]

I attended a seminar yesterday.  I didn't know much about the company.  I still don't know a lot, but the company was Renatus (myrenatus.com).  The presenter talked about paying off your mortgage with your credit card to avoid the front loaded interest in a typical mortgage.  Below is an example used to communicate her

$200,000 loan, 30 years, 4.385 interest

With the amortization: $1000 payment per month - Your numbers in year 1 would be:

$8704 going toward interest

$3293 going toward prinicpal

If you paid for the year with a credit card with 21% interest, you would pay $12,000 in principal that year, while paying only $2520 interest toward that credit card.  Essentially saving over $100,000 and paying your house off earlier.

What people of course were asking - Pay your mortgage with a credit card?  Her short answers were cash advances or paypaling money from your credit card.  Unfortunately, questions started to lead the presenter down a different path, and I had to leave the seminar to get to an appointment.  

This is the first I've heard of this concept.  I'm wondering if anyone has experience doing this and can shed some more light on it.  All help is appreciated.  

[JD Martin]

Without looking at amortization charts, I assume what was meant was taking an advance on day 1, more or less, to pay $12k towards the mortgage, so that you were saving on 11 months of interest on that principal payout. 

The rub is in getting the credit card paid off. Most CC's usually have about a 12 month grace period on special offers (that's what I assume you would use if you weren't crazy), then you are back to the higher interest rate. If you can't pay off that $12k before the grace period is up, you are going to be shoveling out a lot of cash on interest carrying costs - costs, btw, which are not eligible for deduction like mortgage interest. So if you had/were going to have the $12k somewhere to pay it off before the piper came due, there might be a situation where it made sense. But that's a lot of "ifs". You still have to make your mortgage payment each month, so now you are making your mortgage payment AND the credit card payment. In other words, you're not trading one for the other, i.e. paying the credit card company and not the mortgage company. If you were, then you would have 11 months of amortized interest added to your total indebtedness on the note, which cancels out your entire strategy.