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Is the Mortgage Accelerator Program really useful?

Posted on: 21st Dec, 2006 08:04 pm
does anybody here know about the Mortgage Accelerator programs. I have heard it has recently launched. some of my friends are even going for it. can you let me know more on this?is it more useful than other programs?
Yeah, a good way to pay off your loan as early asap. Just get to reduce your expenses and that's it!

It's simple enough. You borrow a home equity line of credit and then deposit your paycheck each month into the account.

You withdraw cash against the line of credit each month for your expenses and the rest goes into paying down the mortgage debt.

The best thing is that by reducing the monthly expenses, you can have more money put towards paying down the debt.
Posted on: 21st Dec, 2006 09:39 pm
Hi,

Let me add that it also helps in paying off the mortgage earlier than the due time period.

Thanks
Clive
Posted on: 22nd Dec, 2006 06:50 pm
In the case of the Mortgage Accelerator Program, I've seen clients enjoy this with a bi-weekly payment. Usually the company that offers this service will require a 'fee' to set it up. It reduces the life of your loan and saves on the overall interest.

A way to do the same thing without paying a fee is to simply send in One extra payment a year and apply it towards the principal the loan.

I tell my customer's to do this in January or February when they get their tax refund check. This way they have the money and it is a habit to aquire at tax time.

If you are not as disciplined as we all like to think we are and feel that is too spontaneous. Divide the mortgage payment into 12 months and add this to your regular payment each month to be applied to principal.

One of my clients liked all of these ideas but still felt she could not remember to do this and liked the 'automatic payment' of the Program. She was paid bi-weekly from the job and felt it would be painless to set this up and forget it. So she enjoys the program.

It's all in what you feel comfortable with.

Good luck
Posted on: 26th Dec, 2006 08:13 am
I believe that these mortgages are daily simple interest mortgages as opposed to the 30 day amortization mortgages we are used to. This is how they work: I get paid and my entire paycheck goes into an account that receives my mortgage payments. Since I can't afford to contribute every pay check to pay off my mortgage, I withdraw cash from the same account as I need it.
Because the mortgage is a daily simple interest mortgage, for every day my paycheck was applied toward paying off my mortgage, my principal balance was lower and therefore the interest was reduced. This adds up over time, even if your paycheck is withdrawn the next day.

Another benefit -If I'd like to withdraw some cash in order to travel or fix up my house, I simply withdraw it by writing a check -no appraisal, no underwriting fee -provided that I have not been delinquent on my mortgage payments and the amount is no greater than 20-30% of the amount I initially borrowed.

Terrific product -originated in Australia and I know some UK banks offer it -but not aware of any US bank doing it yet -that would be awesome.
Posted on: 09th Feb, 2007 11:59 am
Welcome Mortgagemensch,

A great program indeed! My friend has qualified for it and he is quite comfortable with the deal.

In the US two firms are offering the mortgage accelerator programs. They are Macquarie Mortgages USA offering the program in the name of Macquarie Asset Manager and CMG Financial Services providing the loan offer named as Home Ownership Accelerator.
Posted on: 12th Feb, 2007 04:30 am
These programs are not a good deal.

"Because the mortgage is a daily simple interest mortgage, for every day my paycheck was applied toward paying off my mortgage, my principal balance was lower and therefore the interest was reduced. This adds up over time, even if your paycheck is withdrawn the next day."

That doesn't even make any sense. If you pay based on a daily amount of interest and you paid it off one day and then withdrew the money the next you would only save the interest for 1 day. You would still be paying the higher heloc interest rate until the next paycheck. p.s. There is no such thing as effective interest rate of 1-2%. Even at best case scenarios it is better to simply pay extra towards your first mortgage.
Posted on: 09th Nov, 2007 04:37 pm
Mortgagemensch is talking about a totally different product, altogether. Helping User was asking about the Mortgage Accelerator or bi-weekly payment program. It is not a type of mortgage...and Sharlee was right on with her recommendation.

I wrote an article for my blog on this topic last week, and just posted on another thread about this very thing.

http://www(dot)mortgagefit.com/know-how/homeownership-accelerator.html

Is it ok to put deactivated links in post?

Cheers,
Kim
Posted on: 09th Nov, 2007 10:31 pm
kpatrick,

It is ok to put links to mortgagefit threads. If it is outside of MF then simply add " " around the link. Of course only link to valuable resources.

Thank you
Posted on: 10th Nov, 2007 09:36 am
1) Paying extra money on principle of a loan will significantly reduce interest.
2) The majority of people only see interest rate as a number without considering what it really means or how it is calculated
3) Getting into debt to get out of debt seems pointless and idiotic.

With that being said, I would like to provide you a possible alternative.

If you can comfortably afford your lifestyle, then a mortgage accelerator may be an option for you.

Benefits include:
Paying off your mortgage faster
Saving thousands in interest

If you can comfortably afford your lifestyle and do not want to be limited to your cash flow, using the banks money to pay the bank back may be more beneficial to you.

Benefits include:
The fastest way to pay your mortgage
Saving thousands in interest
Not being limited to the money in your bank account and assets
Having a peace of mind with the topic of foreclosure

Good luck with whatever option you choose. There is no one right answer anymore these days.
Posted on: 05th May, 2008 12:23 am
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