Does anyone hold a Home Ownership Accelerator Program mortgage?
If you have one, are you glad you have it instead of a traditional mortgage? What are the pros/cons? Hidden fine print?
Answers:
I don't enjoy one but I have researched the concept thoroughly. It is based on have a traditional mortgage PLUS a home equity line of credit (HELOC). The idea is that you deposit your income into the HELOC commentary, then use that as your regular checking account to pay envelope bills including your traditional mortgage, and for cash. In theory, this is supposed to put aside you money on your overall mortgage costs, because while your deposits sit in the HELOC, your mortgage balance is lower, hence you owe less interest. The traditional mortgage only credits your payments once a month (on the first of respectively month) and your balance does not go down if you reward a few days early.
However, it turns out this concept only works if your HELOC interest rate is lower than your traditional mortgage, which is not the baggage in today's market. It especially is not worth paying any extra fees to set up such an arrangement.
You might observe that people who push this arrangement will not clearly explain the math and lay it out for you step by step. That's because the math does not work out for most people! Source(s): If you want to read a long discussion in the order of these programs, where some very smart ethnic group explain why it doesn't work the way people claim it does, check out http://www.fatwallet.com/forums/messagev…
Related Questions:
Is my mortgage worth re-financing? I purchased my home a year ago next to a fixed 30yr rate of 5.875.?
What fees would I have to pay? What should I be aware of within dealing with both banks involved? How would re-financing at a fixed rate surrounded by the 4's% effect payment amount and...
Answers:
I don't enjoy one but I have researched the concept thoroughly. It is based on have a traditional mortgage PLUS a home equity line of credit (HELOC). The idea is that you deposit your income into the HELOC commentary, then use that as your regular checking account to pay envelope bills including your traditional mortgage, and for cash. In theory, this is supposed to put aside you money on your overall mortgage costs, because while your deposits sit in the HELOC, your mortgage balance is lower, hence you owe less interest. The traditional mortgage only credits your payments once a month (on the first of respectively month) and your balance does not go down if you reward a few days early.
However, it turns out this concept only works if your HELOC interest rate is lower than your traditional mortgage, which is not the baggage in today's market. It especially is not worth paying any extra fees to set up such an arrangement.
You might observe that people who push this arrangement will not clearly explain the math and lay it out for you step by step. That's because the math does not work out for most people! Source(s): If you want to read a long discussion in the order of these programs, where some very smart ethnic group explain why it doesn't work the way people claim it does, check out http://www.fatwallet.com/forums/messagev…
Related Questions:
Is my mortgage worth re-financing? I purchased my home a year ago next to a fixed 30yr rate of 5.875.?
What fees would I have to pay? What should I be aware of within dealing with both banks involved? How would re-financing at a fixed rate surrounded by the 4's% effect payment amount and...