Wednesday, October 18, 2006
Creative Mortgage Pay Down Methods
An article in the San Francisco Chronicle offers some interesting ways to pay down your mortgage more quickly, primarily through the use of home equity loans or lines of credit.
One example, tells of a woman who took out a home equity loan at an interest rate less than her mortgage rate, and used the equity loan to reduce her mortgage balance. Thus increasing the amount of each monthly payment that went toward principal reduction. The woman also had sufficient cash flow to pay her regular mortgage plus make payments on the equity loan.
The article also talked about CMG Mortgage which offers a combined equity line of credit and checking account. The home owner pays bills from the equity line using checks or credit card, and deposits paychecks into the account. All cash not currently being used is applied against the equity loan thus reducing the balance, enabling the borrower to pay it off more quickly.
Those with an outstanding equity loan and reserve funds in savings might save money by applying their savings to the equity loan as long as the funds would still be available through another loan if needed.
One example, tells of a woman who took out a home equity loan at an interest rate less than her mortgage rate, and used the equity loan to reduce her mortgage balance. Thus increasing the amount of each monthly payment that went toward principal reduction. The woman also had sufficient cash flow to pay her regular mortgage plus make payments on the equity loan.
The article also talked about CMG Mortgage which offers a combined equity line of credit and checking account. The home owner pays bills from the equity line using checks or credit card, and deposits paychecks into the account. All cash not currently being used is applied against the equity loan thus reducing the balance, enabling the borrower to pay it off more quickly.
Those with an outstanding equity loan and reserve funds in savings might save money by applying their savings to the equity loan as long as the funds would still be available through another loan if needed.
