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 clear example is a home mortgage. In a regular 30 year mortgage, it’s not until the 20 years and 2 months mark that the principal portion of the payment equals the interest portion.

Since most American only lives in their homes between 5 and 7 years, we barely decrease the principal in our mortgage. This is so because the way the mortgage is structured heavily favors the banks since at the beginning most of the money goes to pay the interest portion.

For over 20 years, homeowners in Australia, the U.K. and Canada have used mortgage accelerator programs to pay off their mortgages in less than 15 years saving an average of $150,000 on their home mortgages. The good news is that this type of programs is now available to homeowners 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 the month, a piece of software will tell you the optimal amount to pay to your 1st mortgage to ensure you are paying as little interest as possible. The money for this payment will come from an advance line of credit (HELOC.) This transaction reduces the debt in the 1st mortgage and moves you 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 a credit card to allow your money sit in the HELOC for as long of a time 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?

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