March 2, 2024

Jocuri

Mad about real estate

Mortgage Accelerators – What’s Wrong With Them

There are several Mortgage Accelerator options available. But how do you know if they are any good? It is a fact that you can eliminate both time and interest on your total house loan, but what are the pitfalls to avoid?

There are essentially four options available.

1. You can simply make an extra payment each month
2. Go on a bi-weekly program
3. Get some financial counseling to learn a couple of beneficial “tricks”
4. Purchase a systematic budget program

Let’s consider each.

1. This first option will not cost you anything more than simply reducing, essentially, your take home pay. The advantage is that you are not losing your money, but putting it into your equity. You can eliminate as much interest and years of paying off your loan as you have extra money available. But a lot of people do not have this option available since they live paycheck to paycheck, and it can end up being more like a carrot in front of a horse if you want to significantly reduce your time and interest.

2. This option is nice because it makes it seem like you are not reducing your take home pay. This is the case because when you make a payment every two-week, instead of once a month, you do not notice the “missing income,” and you are able to invisibly make one extra payment a year.

This method can reduce your mortgage from 30 years down to about 23 years, which is nice. But it’s not the best options either.

You need to be careful, however, because some will try to charge you a fee to do what you are capable of doing on your own without cost.

3. This third option is my least favorite. You can pay someone to learn a couple principles that may enable you to significantly lower your time and interest, but it usually costs a few hundred dollars, and it leaves you needing to pay for more counseling later. You can keep purchasing counsel and never know when the end is, and you might end up spending a lot more than it is worth.

4. To really get a grasp on this last option, however, one thing needs to be understood first. You may be able to handle some of what this method does on your own, if you are completely self-motivated, and you have the time to do it. If not, you have gained nothing.

But to get the full benefit, consider this. Even if you were a well-trained Accountant, or are really good with math, some of the elements would take you literally hours and hours of calculating and managing on your own to achieve. It’s simply not humanly possible for a working individual to manage such a scenario.

However, if you do purchase the program, the rate of exchange is much more substantial than the other options mentioned above, and the onetime cost suddenly becomes more than insignificant.