Mortgage Acceleration

Mortgage Acceleration
by James Robert Deal
Mortgage Broker

There are two mortgage accelerator models or versions. They both work. Each has its advantages and disadvantages. I call them the Lexus model and the Camry model.

The Lexus model uses a new first position line of credit. The Camry models uses your existing fixed-rate first mortgage working in tandem with a new or existing HELOC, home equity line of credit.

The Lexus model is more user friendly because one line of credit loan does it all. It has a low but variable rate. The Camry model has a rate that is partly fixed and partly variable because it involves using a two-loan strategy.

With both the theory is the same: You use your mortgage and/or line of credit as your cash repository. Don't keep money in savings accounts or CDs or in stocks or IRAs that are not performing well. Pay all your spare cash on your mortgage and/or line of credit. Use your mortgage and/or line of credit as your checking/savings account. Deposit all your paychecks and any other income onto your mortgage or mortgages.

You can feel comfortable draining your cash accounts because you can go back to your line of credit when you need to obtain cash.

With both the theory is that if you save your pennies, nickels, and dimes, they will add up to dollars, hundreds of dollars, and thousands of dollars over time. The more money you can pay onto your mortgage or mortgages, the lower is your principal balance. Thus more of each payment will apply to principal and the less will apply to interest. You will accelerate the payoff curve of your mortgage.

The Lexus model has the best jumbo loan rate of any currently on the market. Jumbo loans are those over $417,000, and with the Lexus model the loan amount/line of credit can go up to $2 million. Although the rate is variable, the margin and index are low. You can spend a reasonable amount on points and buy the margin way down. The Lexus model requires good credit, and income must be fully documented. It is most suited for people who have a lot of cash sitting around in savings accounts, CDs, and unproductive stocks, money they can pay onto their mortgage. It is good for business owners who have significant sums coming into and out of their accounts. It is good for investors who will need to pull out large sums and can later redeposit them. The Lexus model has no required monthly minimum payment, provided that you still have available room on your line of credit. Closing costs for the Lexus model are relatively high.

You can use the Camry model as long as you have a first and second mortgage. You can use your existing first mortgage, although if your rate is high, it might make sense to refinance into a lower rate first mortgage. Closing costs can be lower with the Camry model than with the Lexus model.

Again, each method has its advantages and disadvantages. Each works.

Using the Lexus or the Camry model you can pay off your 30-year mortgage in 20 or 15 or even 10 years.

With the Camry model a person can become a vendor and can make money selling the product to others. One does not have to be a licensed loan officer to sell the product.

To learn more about the Lexus model go to the CMG Mortgage website.

To learn more about the Camry model go to the United First Financial website.

I am an authorized representative with both of these companies, and I welcome the opportunity to explain how the two work. Note that the two companies are rivals and tend to criticize each other. My position is that each has its strengths and weaknesses. Neither is perfect. Each is appropriate for different kinds of borrowers.

Call me at 425-774-6611 or 888-999-2022 for further information. Or e-mail me. The fax number is 425-776-8081. Click here to sign up for our e-mail messages, our printed mailings, or to request a call back.

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