Mortgage Accelerator: Paying Off Your Mortgage in Half the Time
Given the present economical conditions, we have to find creative and proved ways to maximize how we use our money. In order to do so, we need to change how we look at money, and how we can shift our habits to use every dollar we make to our advantage.
For example, most people are happy with having most of their money in a checking or saving account where they get little return. In this case, the bank is the one taking advantage of the use of your money.
Another common example is a mortgage. With a traditional 30 year mortgage, it takes 20 years and 2 months to come to the point where the portion that we pay toward the principal equals the portion we pay toward the interest.
Since the average American only stays in their home for 5-7 years, they barely make a dent in the principal of their mortgage. In other words, the structure of the mortgage heavily favors banks because almost all of your monthly payments go toward the interest portion.
For over two decades, homeowners in countries such as the U.K., Australia and Canada have been using mortgage accelerator programs to pay off their mortgages in 10-15 years saving over $150,000 on payments. The good news is that this type of program is now available in the U.S.
A mortgage accelerator program works without making additional payments toward the mortgage. It works in 4 simple steps:
1. At the beginning of each month, a software program tells you the right amount to pay toward your first mortgage to make sure you are paying as little interest as possible. The funds for this payment come from an advance line of credit (HELOC). By doing so, the debt in your mortgage is reduced and you move further down the amortization schedule.
2. You deposit your income in the HELOC reducing the balance on the HELOC. By doing so, you have your money working against your debt in the HELOC.
3. You charge your daily expenses on one credit card to allow your money to sit in the HELOC for as long as possible.
4. At the end of the month, you pay the credit card off before incurring any interest charges from the credit card company.
By doing a few changes in your financial habits, you can start making the bank’s money work for you and no the other way around. Using other people’s money (the bank’s money) is one of the surest and fastest ways to become financially independent.
Although it make take a while to get use to the changes, you can think of the other alternative; After all, how much effort and time would it take you to make the money you would save if you could pay off your home mortgage in 10 years?
