Using A Mortgage Accelerator To Pay Off Your Home In 10 Years

Posted on | June 9, 2008 | Leave a Comment

With the present economical downturn we are going through, we find ourselves in a position to make sure that we make the best possible use of the money we make. In order to do so, many of us need to change the way we think about our finances and how we can change our financial habits to make optimal use of every dollar we make.

For example, many of us are ok with receiving very little return on our money by having it sit in a saving or checking account with very little return. By doing so, the bank is the one making use of our money and getting richer at the same time.

Another common example is the traditional mortgage. In a typical 30 year home loan, it’s not until the 20 years and 2 months mark that we make the same amount toward our principal that we do toward the interest.

If we take into consideration that the typical American stays in their homes for 5-7 years, they hardly make a dent in the principal of their home loan. In other words, the structure of the home loan greatly favors banks because almost all of your initial monthly payments go toward paying the interest portion.

For over 20 years, people in countries like Australia, the U.K. and Canada have used mortgage accelerator program to pay off their homes in 10-15 years saving an average of $150,000 on their mortgages. This kind of programs is now available in the United States.

A mortgage accelerator program works without making additional payments toward the mortgage. It works in 4 easy steps:

1. At the beginning of the month, a software will indicate you the optimal amount to pay to your 1st mortgage to make sure you are paying as little interest as possible. The money for this payment will come from an advance line of credit (HELOC.) This transaction decreases the debt in the 1st mortgage and moves you further down the amortization schedule.

2. You then deposit your monthly income in the HELOC in order to decrease the balance on your HELOC. When you do so, you reduce the interest paid in the HELOC.

3. You charge your daily expenses on your credit card to let your money to sit in the HELOC for as long as possible.

4. At the conclusion of the month, you pay off the balance in your credit card with moneyfrom the HELOC and therefore avoiding interest charges from your credit card company.

By carrying out a few changes in your financial habits and using a mortgage accelerator program, you can begin making the bank’s money work for you and no the other way around. Utilizing other people’s money (the bank’s money) is one of the surest and fastest ways to become financially sound.

Even though it may take a little to get used to the changes, you can think of the alternative; Nevertheless, how much time and effort would it take you to make the money you would save if you could pay off your home loan in half the time?