�Mortgage Accelerator� Needs Thought

The mortgage war is heating up as rates drop and more people are thinking of refinancing. Some homeowners, though, are being approached with a new type of payment method: a mortgage accelerator.

An idea that has snuck up during the mortgage battle zone that is the current market has many homeowners wondering. While some homeowners are looking to pay down their mortgage, or even refinancing and taking advantage of falling rates, other homeowners are being introduced to the idea of a mortgage accelerator. This is usually defined as making a biweekly mortgage payment directly from a paycheck, with the payment exceeding the minimum payment needed, thus paying down the principle of the mortgage faster.

The new idea, however, is to take out a home equity line of credit, or HELOC, and to use that money to pay off a mortgage well before the amortization term. The ins and outs, however, are hazy. Most HELOCs have inflated interest rates, thus making the monthly payment higher. While the proceeds of the HELOC may be used to pay off the first mortgage faster, a homeowner is still making two payments (one for each mortgage) until the first is paid off. In essence, if a mortgage rate is moderate, stick with paying additional to principle in an effort to cut the time of your mortgage.\r\n