Mortgage too good to be true?

Hi KSplates!

Welcome to forums!

I haven't heard of such a mortgage. However, before taking out such a mortgage, I will suggest you to go through each an every detail about the loan and it's payment plan. You can even check out as to what will happen in case you're unable to pay off the loan.

Feel free to ask if you've further queries.

Sussane

A number of companies use slick marketing to make it sound like there is a magical way to quickly pay off your mortgage, but this is basically just making extra principal payments against your loan balance.

I have run a number of comparisons crunching the numbers and can assure you there is no major advantage over just making extra principal payments versus these "mortgage accelerator" schemes. Anyone that doubts what I am saying, please post some numbers and I will be more than happy to back up what I am saying.

Hi Ksplates,

Welcome to Mortgage fit,

If you think this is the right type of mortgage loan which will really benefit a consumer, don't you think it would have got popular almost a decade ago...

I agree there are some schemes which may eventually benefit ..but if you analyse it deeply they are taking high monthly installments...so if you are not sure and thinking "how much house can I afford"...it is better advised to stay away from these types of loans..because ultimately you will end up in foreclosure which is not at all what you are seeking....

Feel free to ask any further query if you have....

DIPA

I have seen this loan and it is also offered by ing.com you might want to research with them being they a have a good reputation.

Ryan D

[External linking deleted as per forum rules. Thanks.]

ING offers a bi-weekly mortgage which is not the same as some of the mortgage acceleration programs being promoted.

To accomplish the benefits of a bi-weekly mortgage (reducing how long you will have to make mortgage payments and reducing interest) basically all you need to do is add 1/12 of your scheduled principal and interest each month to your regular payment. Make sure it is noted that the extra amount you send in is to applied towards principal and it will work with any fixed rate mortgage.

jimgilly knows what he's talking about. Any responsible lender will provide a borrower with ways in which to shorten the term, lessen the amount of interest paid, etc. In addition to the traditional biweekly products, a borrower always has the option of prepaying principal, either by adding a sum to the regular payment or by making direct payments to principal periodically.

Obviously, those with prepayment penalties would need to review their documentation to see what the stipulations are concerning their accounts. You don't want to get stuck with a harsh penalty simply because you wish to retire your loan earlier than the stated term.

Everyone here discounts the possibility that there is a different form of mortgage available without even looking it up. I don't know about the poster but I wouldn't take any advice from this board since it is all based on supposition and opinion.

Opinions are like a-holes, everyone has one.

Which of course fits you as well, EOTW.

But of course, if you mistrust those with expertise in the mortgage arena, you're right. You might just as well stay off the forum completely.

I live in the Kansas City area and I have also heard advertisements for this loan. Here is my understanding of how it works. Instead of having a traditional mortgage where you would physically write a check each month to your lender, the Freedom Loan is essentially your checking account and serves as a constant line of credit. This type of loan only works for people who don't spend more than they earn each month and here's why. Let's say you receive your paycheck on the 1st of the month. As soon as that paycheck is deposited, the entire paycheck is immediately applied to principal on the Freedom Loan. However, as you begin to incur daily living expenses such as groceries, gas, food....those essentially become a draw against the line of credit. Therefore, if you are earning more than you spend, then essentially the spread is applied to principal on the Freedom Loan each month. However, if you are not disciplined and you think of the Freedom Loan as an endless supply of cash then you will be facing foreclosure someday as another poster already suggested.

I think I'm accurate on my take but someone please correct me if I'm wrong. As you can see, a loan like this is only a good idea if the the customer is disciplined and has money management skills.

I heard this on the radio in Kansas City yesterday. From KCHard's post, it sounds like something they advertised in St. Louis a few yrs ago called the "Loan Accelerator" or some such.

The loan in tied to a checking acct. The "unused" money, read, money not yet spent, will offset the loan principal and effectively lower the principal the interest is being charged for.

Say you have a net $1000 a month income.
1. You deposit the check in your acct and at that moment the principal is decreased by $1000.
2. As you spend money for food, car, drugs, women, whatever, the principal creeps back up by the amount of your expenditures.
3. Since interest is charged on a daily basis, there are days when the interest charged is based on a lower principal amount (actual principal minus amount left in your checking acct), thereby saving you interest.
4. If the interest charged is lower, more of your pmt goes to principal.
5. This will leave less principal to charge interest against subsequently.
6. Repeat.
The theory being that this adds up over time. And, as previously mentioned, it great if you make more than you spend: you leave the difference in the checking acct where the balance grows month-to-month thereby offsetting more of the principal. Thi the process of paying off the mortgage due to decreased interest charges.

I actually did The Freedom loan almost 4 years ago and my house is almost paid off. Its a type of mortgage accelerator, (Not bi-weekly) that allows you to keep your checking and mortgage seperate but all your funds can funnel through your mortgage each month reducing interest. I was skeptic before I did my research and I can tell you first hand it works. If you're the type that spends every dime you make, this is not the right loan for you.
Here is there website if you want to check out the video on at mya1mortgage

Thanks for sharing this, Michael!! :)

We've been in The Freedom Loan now for about 3 years and have nearly cut our balance in half. This is not a bi-weekly loan. It's actually set up where your checking and your mortgage work as one, meaning everything you make, goes into your checking,funneling into the mortgage reducing the mortgage balance until you're ready to spend it. I was real skeptical at first but its the best financial decision we've ever made.

It works like this: Our balance started out at $187,000. Our take home every month is about $10,000. Every month our mortgage balance reduces $10,000. Now, we do spend 80% by month end but most of the month, the daily interest was based on 10k less. Our balance is now $98,000 and is so low bbecause we literally paid principle before the loan had a chance for the interest to catch up.

This is a little confusing I know and hard to explain. A1 can do a better job explaining.

Welcome Chadtucker,

Thanks... that was a good explanation... It was good to note that you're satisfied by the services of Freedom loan.

I put together a spreadsheet comparing how the Freedom loan would compare to the traditional loan based on our spending...it showed we would be paid off in less than 10 years. In addition, we don't have to do the escrow...so, that money each month is applied against principal until owed. The key is disciplined spending. But the savings on a loan is yeilding better returns than a savings account, so it makes sense. I figure when we are near the end of paying it off, we can take out a draw to bolster a savings account, then finish off the mortgage, so when we close the loan, we will also have a savings balance to go forward.