Mortgage Acceleration: What You Really Need To Know

When you first moved into your home it seemed like the best financial move.

A home is the best gift and investment any family can have.

The only challenge with owning a home is the huge monthly mortgage bill. On average we spend 35% to 40 % of our paycheck towards the monthly mortgage bill.

Thats perfectly acceptable but

Do you realize that your hard earned paycheck is applied towards mortgage interest making the bank rich?

And before you even realize it you are set up to pay for your mortgage for a lifetime. It could take anywhere from 30 to 40 years to repay the mortgage debt.

And what if your are extremely close to retiring

Just imagine your mortgage outlasting you in retirement. When you pass on the home on to your kids they think they have a home but may be saddled with mortgage debt as well.

Their much anticipated inheritance could well turn out to be debt.

You have worked hard your entire life and been conservative and responsible with your money.

Living debt free is the ultimate retirement dream. Is there a way to do this without changing your lifestyle or spending more of your cash?

There certainly is. This overview will reveal how to accomplish this.

Lets assume that your largest debt and your largest bill is

Your mortgage.

You now can eliminate the significant amount of the interest payable on the mortgage debt.

Using the method of mortgage acceleration, you could save thousands in interest and pay off your mortgage at least 13 earlier, without spending more or refinancing.

Government Statistics (by mortgage insider) show that over 80% of Americans live in debt.

And now most retirees have to postpone their impending retirement or take on a part time job in retirement and you know why? They have to pay for the mortgage bill each month which is competing with the medical and other retirement costs.

To retire without the burden of debt the easiest step is to pay off your mortgage first.

The fastest way to eliminate your mortgage debt is to use a mortgage acceleration system.

Mortgage acceleration is a term used to accelerate the pay down off your mortgage faster than that is shown in your mortgage amortization schedule.

By making additional payments towards your mortgage in the early years, you could pay off principal at a rapid pace and end up paying off your mortgage earlier.

You may not have extra payments each month as you may want to invest this or use this for personal spending. By applying the mortgage acceleration system it is a smart way of making more of your payments to principal and ends up paying your mortgage faster, all without paying more.

It allocates your monthly repayment more towards principal and less towards interest costs.

And the biggest benefits of all, your mortgage could be paid off in less than 10 years. Imagine saving thousands.

This is the most important benefit of the mortgage acceleration strategy.

By living debt free in retirement you have the option to travel and set the way for your kids to follow your good financial habits. They never have to work just to pay off debt.

Start by asking yourself:

Have you asked your broker or banker how much you are scheduled to repay on your mortgage over the entire 30 year term?

Below, you will understand why you need to ask yourself this important question.

Your payment for your mortgage is structured in favor of your bank. This is considered acceptable banking practice. But if you ever found out the true cost of your mortgage, you probably want to change this so that you can keep more for yourself.

The following examples will give you more insight to how you can use the mortgage acceleration system for your situation.

Situation 1: You Are in Your 20s and Have at least 40 Years to Retirement

Lets assume you have a 30 year fixed rate mortgage. The value of your mortgage is $300,000. If your interest rate is 6%, you will end up spending at least $347,514 over the entire life of your mortgage in interest payments alone.

Isnt it interesting you have to pay back more than you initially qualified for on your mortgage.

By using the mortgage acceleration strategy, this same mortgage can be paid off in half the time saving you $60,000 in interest.

Say goodbye to your mortgage payment, and have a home that has no debt by the time you hit 40.

You will now be able to use the extra cash you have each month to buy a 2nd home or an investment property.

Once your mortgage is paid off, that could represent financial independence and could be the starting point for an early retirement.

Imagine how you life would change when you dont have any major financial burdens.

Heres the best part. You dont even have to change your existing standard of living at all.

What If You Are Already In Your 40s?

One of your goals may be to pay for your kids college education

Imagine your kids stuck in a corporate job spending 10 -15 years of their life paying off college debts. That financial legacy will continue to perpetuate itself to their kids and so on.

Using the equity acceleration system you can finance their education using the equity in your home.

Imagine the gift of a debt free college experience at graduation.

Now that you may have taken on more debt to fund your kids college education you could use the mortgage acceleration system to repay this debt. The double benefit is that you can still retire with no mortgage payment.

And lets assume there is a medical emergency. Building equity in your home allows you to use this as an emergency fund for your family.

What if You are In Retirement Or Close To Retiring

If you are already close to or at retirement age, the silent threat to your retirement is making a mortgage payment while you are in retirement. Imagine using your retirement funds to pay for debt.

If you had all your funds invested in the stock market last year, you would see that your retirement nest egg slashed by almost half.

If you nest egg has dropped significantly and you have outstanding debt, then it is going to be a real challenge to retire on time as your retirement savings will now only be enough to service debt and you may have to delay your retirement.

And you can not completely rely on social security. You may need to cut back spending time with the family and figure out ways to supplement your retirement income.

Even though you may be financially stable at this point, you would still benefit from the mortgage acceleration strategy by simply knowing that you are protecting your future by eliminating one of your biggest debt before retirement.

You can accomplish your individual goals as fast as you like with a mortgage acceleration program. You are not are not restricted as to how long or quick you can eliminate your mortgage debt.

What Are The Options Behind The mortgage acceleration strategy and How Does This Work?

Real Estate has to be in your own name

Have an existing Home Equity Line of Credit or you can qualify for a Home Equity Line of Credit

Your total expenses for the months is less than or not more than your monthly income

The key behind the mortgage acceleration strategy is the HELOC. The HELOC is used as a means to do your monthly banking. Your income is transferred to the HELOC and all your bill payments are made directly from the HELOC. This is one way your mortgage payoff is accelerated.

The average daily balance allows you to pay off the home loan much faster than a traditional mortgage. This reduces the principal balance on your mortgage at a rapid rate. You also benefit if you have any extra cash that can be applied daily to the principal on the loan.

Will The Mortgage Acceleration System Only Work With A Fixed Rate Mortgage?

A mortgage acceleration program can work for most types of mortgages for example ARM and an interest only mortgage.

And if you have an adjustable rate mortgage (ARM) the benefits are amazing. What you dont realize when you take out an ARM is that you mortgage term is longer than 30 years. So a 5 year ARM will take you 35 years to pay off. Why? Because once the adjustment period expires, the mortgage resets and you begin with a whole new 30 year mortgage all over again. And with a mortgage acceleration strategy you could end up paying off your mortgage in 20 years or less rather than the 35 years you are scheduled to pay off your mortgage.

Assume you have an interest only mortgage and scheduled to make minimum payments. Do you know that an interest only mortgage takes 40 years before it is fully paid off? Heres why. The first 10 years are interest payments only. Once your interest only mortgage resets then you may take out a 30 year mortgage. It takes 40 years to pay it off. A mortgage acceleration strategy can help you slash off this interest only mortgage by 20 years without changing your lifestyle.

And heres what could happen when your mortgage is fully paid off in retirement. You could borrow from your home equity in the case of retirement emergencies and the worst case, you end taking on a reverse mortgage. The reverse mortgage will give you the option tap into additional cash if ever you run out of retirement funds.

Once you fully understand the benefits of the mortgage acceleration program, one suggestion is to get started immediately. Interest accumulates over time and the faster you are able to accelerate the pay down of the mortgage, the earlier your mortgage could be paid off.

What is The Best Starting Point For The Mortgage Acceleration Program?

STEP 1: Where to Begin

A personal plan is always the starting point for the mortgage acceleration system. You can figure out how to slash you mortgage debt and what it would take for you to accomplish this goal. You can create one yourself or you can seek some guidance. Any acceleration plan should take into account your income, bills and mortgage information.

To start your plan, please make sure you have done some research, understand exactly how it works and any costs involved. In this way, you will know how applying extra principal payments accelerates your mortgage. Knowing and understanding this benefit will keep you motivated to use the mortgage acceleration strategy.

Step 2: Decide On A Date You Want To Be Mortgage Free:

The best way to eliminate your mortgage is to first set a date you want your mortgage fully paid off. Once you have this in mind, enter your information in a mortgage acceleration strategy calculator and a mortgage acceleration plan will automatically be calculated for you. In this way you can decide whether the plan meets your goals or you want to use other means to accelerate the payoff of your mortgage.

mortgage acceleration strategy is just one way to pay off your mortgage faster without spending more of your own funds. Other methods are also available to help you with early mortgage payoff.

Alternative Methods To A mortgage acceleration strategy

1. A Bi-Weekly Program.

This is the most common way to pay off your mortgage faster. This is a simple plan because, instead of making one monthly payment, you will make half of your mortgage payment every 2 weeks. As there are 52 weeks in the year, this enables you to pay 26 bi-weekly payments. This calculates out to one extra payment a year. Doing it this way, you don't realize you have spent any extra cash.

Tip: Depending on your financial institution, your bank may not be able to accept bi-weekly payments. The best way to overcome this is to transfer bi-weekly payments to a savings account and pay the mortgage bill at the end of each month. At year end you will end up with one extra payment in your savings account which you should designate to mortgage principal.

2. Pay Extra Towards Your Mortgage Each Month

The second method of paying off your mortgage is to pay extra to rapidly reduce your mortgage principal. One way to do this is to have a budget in place to save extra money each month to spend towards your mortgage. Other ways typically include using overtime funds, bonus or your paycheck from a second job.

mortgage acceleration strategy Program

The choices of mortgage acceleration programs can sometimes be very confusing. The may be described in various names such as accelerator, acceleration, equity, equity genie, mma, and other similar names.

One common trend across various mortgage acceleration programs is the use of software to help you navigate your finances and help with the goal of an early mortgage payoff. The starting point of these programs is for you to enter your information and the software takes care of the rest. The software is one part of the overall mortgage acceleration process. The key of any mortgage acceleration system lies in the set-up. If you set up the program for your situation ineffectively, you may not achieve the goal of slashing your mortgage early. The software is only as good as the initial set-up.

There are some mortgage acceleration software programs that take care of this for you without any of the detailed entry and input. You dont need to enter a lot of data each month. Acceleration calculators can also give you a detail of how much money can be saved by pointing out what areas you can curb spending in. If used on a yearly basis, mortgage acceleration strategy programs and/or software tools, will enable you to achieve a financial freedom you might not otherwise attain with a traditional way of paying your mortgage.

Have You Ever Wondered Whether This Sounds Too Good To Be True

If you ever had that though then that is a valid concern. You see this method has been used extensively in Australia and New Zealand. Since it is now in the U.S most banks have been reluctant to show this method to their clients with good reason. They are bound to make less money if you pay off your mortgage early.

One way to get comfortable with this technique is calculate the numbers yourself. Enter your information into a mortgage acceleration calculator and you will find out whether this works for your situation.

For example, let's use the same example as above but this time you have a $200,000, 30 year mortgage, with a 6% interest rate. If you can afford the fee of $397 to set up the mortgage acceleration program you can save over $64,000 in interest. You can get over a 460% return on your investment. Ask your financial advisor to run the numbers and you can judge for yourself whether this works or not. Who wouldn't like to accumulate money at this fast pace? And, you are not changing your current lifestyle, but are helping your kids or grandkids go to college and imagine what you can do with the additional savings.

Lets Take A look at The Following Situation In More Detail

Assume you plan to move in the first 5 years. As you know than in the first years, your mortgage company charges you almost five times more in mortgage principal rather than interest. So if you decide to move in 5 years or refinance very little progress is made toward your mortgage balance.

Lets take a specific example to explain the situation above. Do you know if you have a $200,000 mortgage at 6% interest rate, you would end up spending almost 5 times more on interest than principal in the first 5 years? In this case you would spend $58,054 in mortgage interest and $13,892 in mortgage principal.

And now that you refinance or move the entire process repeats itself again. So a 30 year mortgage now becomes 35 years because after the first 5 years you start all over again. In 10 years you end up spending $166,000 in interest and $28,000 in mortgage principal. Almost no progress is made and now you are really working for your bank spending all your hard earned money on interest.

You dont have to let the banks take advantage of your situation and you can stop this vicious cycle

The banks expect you to pay mortgage interest and stack high interest payments upfront. One way to reverse this situation is to use the mortgage acceleration system. Enter your numbers directly in a calculator and see for yourself how you can pay the least amount of interest and slash your mortgage even though you plan to move or refinance.

What About The Home Equity Line of Credit (HELOC)

The main reason why you can pay off your mortgage faster without spending more is due to the HELOC. The HELOC now becomes your new checking account and turns the entire method into a system which enables you to pay off your mortgage earlier.

Lets examine some of the advantages of using a HELOC

A specific limit (which is usually the equity amount) enables you to borrow money only as it is needed. This is similar to a second mortgage

A line of credit may last for 10 to 15 years

Some HELOC are available with no transaction fees to deposit your income and make bill payments

You can avoid the payment of HELOC interest where your salary deposited into the HELOC is more than your bill payments

Also, you dont have to start paying interest on money until it is actually spent. When compared to conventional credit cards, HELOCs usually have lower interest rates but higher spending limits

HELOCs are tax deductible

A HELOC can also be used as an emergency fund. This is where you can reserve your extra cash for day to day spending or for emergencies, as state briefly above

What You Must Know About The mortgage acceleration strategy Program

1.Your Heloc May Be Frozen

The first thing to do is to find out why this happened. Banks sometimes slash the appraised value of your home using an automated valuation computer program and may freeze your HELOC. One way to overcome this is to have your home reappraised in order to prove exactly what your home is still worth. Asking for the funds to be unfrozen is an option but you may have to ask for a lower line of credit. If the bank still disapproves, as long as you have at least 20% in equity, there are many other institutions that will approve you. As an alternative you could use your credit card in place of your HELOC to pay off your mortgage.

2.Your loan office may inform you, that you need to change your home loan

Your bank my encourage you to borrow more on your line of credit in order to get a lower rate. You generally dont need to borrow more money. Only use exactly whats required by your plan. In his way you are sure to pay off your mortgage early.

Can YOU use The mortgage acceleration strategy to pay off other debt other than your mortgage

There are different uses for the mortgage acceleration program. Here are some of them:

1. Pay off Car Loans

Assume you have a car payment for 7 years. Instead of paying off the minimum each month you can use the HELOC and the mortgage acceleration system to pay off your car in about 4 years without changing your lifestyle and saving thousands. The mortgage acceleration system works the same way you are scheduled to pay off your mortgage and only substitutes your mortgage for your car payment. Imagine having a freehold car with no payment.

Credit Cards

Using the mortgage acceleration strategy you could completely eliminate your credit card debt using the same methods to pay off your mortgage faster. This will put an end to high interest charges on your monthly credit card bills.

As you can see, the possibilities could be endless with the mortgage acceleration strategy. Once you begin to visualize the various ways in which you can apply this to your situation, you will begin to understand the true power of this system. Just a few ideas and suggestions have been listed here for your review and benefit. Once you decide to reorganize your mindset around the mortgage acceleration strategy, every extra $1 added to your HELOC is applied to accelerating your mortgage debt.

Imagine for a moment living free and clear from having a mortgage payment and retiring on your terms no matter your age. And the best part is that all your retirement funds are used to live your life to the fullest and not used to pay for debt. For me, this is my retirement dream. What is yours?