Posted by MonicaFL on 8/3/06 8:23am
Msg #136780

A new kind of Mortgage

Just thought I wouldsharethis information. Last night I did what is called an "Accelerated Mortgage". I have never seen nore heard about one of these. Seems like the couple I did the closing for is only the second couple to get an "accelerated mortgage" in the state of Florida. The company is out of California and has been producing "accelerated mortgages" for about a year. Some things that were different - the first page of the Note is completely different. In fact, you would think it was an "Itemized" summary instead of a note. There was no TIL in the package, the mortgage papers were the same. It seems like an accelerated mortgage is tied to a checking account and it is actually a line of credit with a 30 year pay date. I don't know if there is a link for it or not, but it is something that I think might be interesting to look up - especially since it really looked appealling. The lady also told me that in six years when they want to go with a reverse mortgage, everything is in place. Couldn't understand that part of it, but she really seemed like she knew what she was talking about and she had done a lot of research about it. Just information here, no opinion. Thought someone might be interested.

Reply by Ernest__CT on 8/3/06 8:31am
Msg #136785

Hmmm. Sounds like a Home Equity Line of Credit (HELOC) ...

... OR A SCAM. No TIL? Oh, oh. Was there a Right To Cancel (RTC)?

Not an official opinion, of course, but ....

Reply by NCLisa on 8/3/06 8:59am
Msg #136792

Accelerated Mortgages have been around for awhile. They normally consist of a 3rd party company, collecting bi-weekly payments from the borrower to be paid to the lender. The accelerated payment schedule allows for the mortgage to be paid off quicker. The rates a generally a bit higher because the 3rd party gets paid for collecting the payments.

If someone truly wants to payoff their home quickly, then they need to get a normal 15 to 30 year fixed rate mortgage, and make the extra payments themselves. It is cheaper that way, and they aren't locked into something that could potentially harm them if a financial disaster were to strike.

Reply by Ernest__CT on 8/3/06 9:09am
Msg #136796

Oh, THAT kind of acceleration!

Sure, the borrower can make additional payments toward the principal. Some people save dollars++ that way. Didn't think that there was anything special about the mortgage, though....

Reply by Becca_FL on 8/3/06 9:26am
Msg #136801

Re: Oh, THAT kind of acceleration!

I had a closing this week where the LO sold the loan on the extra payment deal. The brw showed me a print out of a mtg. calculator with a circle around the pay addition $500 per month and hand written "you can retire early!" The LO convinced the couple the their interest rate would be 3.5%. Now this little piece of paper made it clear to me what the brw was saying when he saw the 7.5% on the note. I had to direct the brw to the top of the paper showing him the 7.5% rate and his P&I payment.

Reply by NCLisa on 8/3/06 9:47am
Msg #136808

Re: Oh, THAT kind of acceleration!

These mortgages are never Good Deals. It is so much better to make the payments yourself. The lender always has some fee for these morgtages.

Reply by Michele Estes on 8/3/06 10:53am
Msg #136826

No, what the poster is talking about IS a new mortgage product that is tied to a checking account. The calculation of the payment is done monthly with the account balance offsetting the principal balance of the loan to lower the payment. The lender benefits because the checking account is with the lender as well as the loan. This product is only available to people with a high credit rating, good cash flow and certain other limitations. It is not a bi-weekly plan, 13 payment per year plan, or a scam. While it may not be right for everyone (neither are fixed/adjustables) some people find this very interesting.

Reply by Michele Estes on 8/3/06 10:55am
Msg #136828

also the correct term for this is Mortgage Accelerator - n/m

Reply by Hugh Nations Signing Agents of Austin on 8/3/06 2:06pm
Msg #136835

Michele...

When you say, "The calculation of the payment is done monthly with the account balance offsetting the principal balance of the loan to lower the payment," I'm not sure I understand. Can you explain a little further, please. I don't want to run across one of these for the first time at the borrowers' dining room table.

Thanks.

Reply by MichiganAl on 8/3/06 5:54pm
Msg #136890

I think she just means...

the monthly payment is calculated based on what you owe on the outstanding balance, not the loan amount.

Reply by MichelleE/FL on 8/4/06 3:49pm
Msg #137148

payment calc

As it was explained to me by a LO friend, when the lender calculates the payment each month the amount of money sitting in the checking account at the time of the calculation is used to reduce the principal balance of the loan. For example, if this month when they calculate your payment you have $3000 in your checking account on the day they calculate and your current principal balance for your loan was $100,000, the lender would calculate your payment for the month as if your principal balance was actually $97000. The interest part of your payment would be lower (only paying interest on 97,000 not the full 100K). Each month they recalculate based on what the current principal balance and checking account balance are on the calc day for that month.

This works for the borrower if they are willing to have a checking account where they pay their large bills (so much cash flowing through the account) with the lender. Or if they have "extra" cash to leave sitting in the account. The cash is still available for the borrowers use (it just won't be there tthe next month for the calc day if they use it for something else) Also, this is a HELOC so the borrower can draw more at any time if necessary.

I use a credit union for my checking/bill paying, so it is probably not so much of a good option for me... but it is interesting.

Reply by MelissaCT on 8/3/06 9:43pm
Msg #136965

Make payments yourself

I had a *great* lender that could magically only process extra payments for a monthly fee. If funds were sent in (even marked as principal only or prepayment of principal), they couldn't figure out HOW to apply them correctly.

Reply by AMR SERVICES, INC. Roberts on 8/3/06 4:07pm
Msg #136864

These are great for the right borrowers!
I like them....
I think we will see more of them in the next 3 to 5 years.