Paying Off Your House Without Changing Spending Habits
I was surprised a couple weeks ago to find a variable loan that could possible pay off your loan faster than a 30yr. fixed and while paying less interest.
Honestly it sounded crazy to me but I'm always looking for new ways to help my clients. I spent an hour in the seminar and learned about off-set accounts which are used in Australia and in Europe to help people pay off their homes faster.
There were some interesting facts like paying an interest rate of 4.5% on a 30yr. fixed costs you an average of 82% of the principal loan amount in interest. Although mortgage interest is helpful during tax time that was quite surprising. What shocked me even more was that 25% of the total interest is paid within the first five years.
This got my attention. I was impressed how they structured financing that allowed a mortgage to be tied to a checking account with an interest rate that matched the mortgage.
But the best part was how a person can make no changes to their spending habits and easily cut 10 years off the loan.
But honestly, the biggest thing for me was that this product made a cashout refi obsolete. It makes the equity readily available at any time and for self-employed borrowers we have seen principal reductions as large as $700,000.00 in four years.
And all he did was run his accounts receivables/payables through his mortgage checking account. Hey it may not be for everybody, but if a person wants to pay off their loan quickly and still have equity to access whenever they want, ask their loan officer about the Home Accelerator program.