World's Most Honest Mortgage Accelerator Review
Mortgage Acceleration basically is an interest arbitrage between different types of your loans. You need two loans, one traditional mortgage, or primary mortgage, another one is HELOC. Both loans are secured by your property. It also takes advantage of how different loans calculate interest differently. If you do it carefully and strictly follow software, you can save a few bucks. But like any arbitrage, your saving is very minimum.
|How interest calculated in a MORTGAGE?|
A mortgage loan is normally amortized in monthly bases. Amortization simply means that the interest charge is the front loaded. One important thing about this kind of loan is you pay 20 days before it s monthly due date or 2 days before monthly due date, the end result is the same. This is generally true about mortgage.
How interest calculated in a HELOC?
HELOC is charged based on the unpaid balance. There is no consistency in calculating the unpaid daily balance across banks offering HELOC. However, if you pay $1,000 in the beginning of month, as contrast to paying $1,000 in the end of month, the daily balance will come out differently, and hence the interest charge will be quite different. No matter how lenders calculate the interest, this generally holds true.
Interest Arbitrage explained in detail:|
Arbitrage means buying an asset at a low price then immediately selling it on a different market for a higher price. How this applies to mortgage? In mortgage means borrowing from one lender and simultaneously paying off another lender.
In Mortgage Acceleration, you always borrow from HELOC to pay mortgage. There are two basic kinds of arbitrages. First kind is interest itself. Suppose HELOC interest is lower than primary mortgage, you borrow from HELCO to pay off primary mortgage and save you money. Second kind of arbitrage takes advantage of the fact that these two loans calculate interest differently. This is not so obvious; let me explain in by an extreme example. Suppose both your HELOC and mortgage due at the end of month and you carrying balance in both loans, you already have $3,000 in hand at the beginning of month. In stead of paying the primary mortgage right away, you paying HELOC at the beginning of month, wait until the end of month, you pay mortgage from HELOC. This way, in the mortgage side, the result is the same. But, in HELOC side, you are saving interest on $3,000 for a portion of month.
In real world situation, what you do is to deposit all your monthly income into HELOC, then pay your bills, including primary mortgage as late as possible (make sure before due date, late charge will be greater than your profit from arbitrage). You also need software directing you how much to withdraw from HELOC and pay into mortgage to get the most gain out of it.
All arbitrages only make significant gain when doing in a large scale. The greater the amount of your mortgage, the more you save. The higher your monthly income is, the more you save. In reality, saving from this is quite trivial.
How you save 15 years from mortgage payment (if you can):
Mortgage Acceleration is base on positive monthly money flow. Your extra money is applied into HELOC, and then, in turn, into your primary mortgage. Even you can save 15 years off your payment period, mostly (over 95%) because of your extra money applied. You can do this in 15 years without following Mortgage Acceleration software; just pay extra money each month. The result is the almost the same. We will break the numbers down in the case studies. You can see it for yourself.
It is somewhat disturbing fact that in some Mortgage Acceleration advertising. They claim Mortgage Acceleration is taking all the credits.
The advantages and disadvantages of Mortgage Acceleration:
All being said, I still think Mortgage Acceleration has its own merits. I consider the software is a piece of art, since it tries to maximize the gain from arbitrage when the margin is quite small. If you do it right, you do save about hundred dollars a month if all conditions are in places. If you execute it wrong, it will cost you as well.
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