Understanding Mortgage Acceleration
Mortgage Acceleration (MA) is a strategy that allows real estate owners to take possession of the title to their property sooner. In recent years, with the mortgage lending business in turmoil, many real estate owners have sought alternatives to pay off their mortgages early. MA is beneficial for both homeowners and investors, providing a faster route to debt freedom and financial stability.
The Concept Behind Mortgage Acceleration
MA is based on a money management concept that has been successfully used in Australia for the past 20 years. The strategy involves using a Home Equity Line of Credit (HELOC) as the main “checking” account. This reduces interest costs by directing as much money as possible toward the principal, facilitating early mortgage payoff. Companies like UFirst use software called Money Merge Account, which sets up a schedule and automates the entire process for users.
How MA Works
The core idea is simple: by paying into a mortgage in a specific way without reducing living expenses, a different mortgage tool with a unique payment schedule can help pay down debt approximately three times faster. Under normal circumstances, paychecks sit in a bank account earning minimal interest while the mortgage payment incurs 5 to 9% interest. By rethinking the payment strategy, funds can be used more effectively to reduce mortgage principal and overall interest costs.
DIY Mortgage Acceleration Options
While automated systems like Money Merge Account offer convenience, a Do It Yourself (DIY) approach can also be effective. Here are three easy options to consider:
Bi-Weekly Payment Plan: Ask your mortgage lender if you can switch to a bi-weekly payment plan, meaning you make half of your mortgage payment every two weeks. This can significantly reduce the loan term and is often free or available for a nominal fee.
Pay More Than the Minimum: Contributing more than the minimum payment helps pay down the principal faster. Any extra amount you can afford can drastically shorten your loan’s life and reduce interest costs.
Extra Payments: Whenever possible, send in an extra payment. Like paying more than the minimum, this tactic cuts down the principal, thereby reducing the loan term and total interest paid.
Benefits of Mortgage Acceleration
Utilizing an MA technique can save a substantial amount of money and time on your loan. With discipline and a consistent schedule, the DIY approach can be very effective. Alternatively, for those who prefer an automated and structured plan, investing in an MA program might be the better option. Both approaches aim to maximize savings and reduce debt, providing financial freedom sooner.
Success Stories and Financial Freedom
Many investors have successfully paid off their properties in less than 10 years by applying extra money to their principal each month. This strategy not only eliminates debt faster but also allows investors to live off rental income debt-free. The key is consistency and dedication to the chosen MA strategy.
Conclusion: Choose Your Path to Financial Freedom
Whether you opt for a DIY mortgage acceleration schedule or prefer an automated program, adopting an MA technique will help you save a significant amount of money and time on your loan. By understanding and implementing these strategies, you can achieve financial freedom and take full ownership of your property sooner.
For more guidance and personalized advice, consider consulting a property investment mentor or joining a real estate investing mentor program to optimize your financial strategies.
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