Equity Accelerator Home Loan

[DRILLINDK]

I recently purchased a my first home/property. I was speaking to a US Bank mortage representative about everything asking general payment questions. She referred me to "Equity Accelerators" for a loan repayment prgram where you may pay biweekly, weekly, etc.

Is anyone familiar with this company or similar companies? What about the payment programs? Is this a good idea?

Below are some of the program details copied and pasted from their site:






This program gives you the ability create your own customized, electronic payment plan to help you pay core financial obligations such as mortgages.


You can realize significant interest savings, build equity and pay off your mortgage early! Use the Equity Accelerator program to establish an electronic payment schedule to conveniently pre-pay your mortgage. Using your own payday cycle, you can carve years off of the term of your loan and save thousands of dollars in interest payments, protect yourself from late fees and protect your credit!


Withdrawal Cycles
Here are some of the available cycles with an explanation of how payments are credited:


Biweekly
One-half of your monthly mortgage payment would be deducted every other week, on the same day of the week, for a total of 26 withdrawals per year. This results in one additional mortgage payment, applied directly to your principal each year, to accelerate the equity growth in your home.

Semi-monthly

Two withdrawals per month, of half your mortgage payment plus 1/24th of a mortgage payment would be deducted from your account on the same dates every month. This achieves the same accelerated equity growth in your home as realized with the biweekly option.
Weekly

One-fourth of your monthly mortgage payment would be deducted each week, for a total of 52 withdrawals per year. This results in one additional mortgage payment, applied directly to your principal each year, to accelerate the equity growth in your home. Monthly
Do you get paid only once a month? We can arrange a monthly withdrawal for you as well. One withdrawal, equal to a full month’s mortgage payment plus 1/12th of a mortgage payment, would be deducted from your account by the 3rd of every month. This results in one additional mortgage payment, applied directly to your principal each year, to accelerate the equity growth in your home.

[DRILLINDK]

After digging a little deeper, it appears there are fees associated with this type of program. Can anyone elaborate, sorry for being such a noob!

[Petunia 100]

There is no advantage to you to pay an additional fee for the privilege of paying extra on your mortgage. If you want to prepay your mortgage, just do it.

There is nothing magical about their program.

[MonkeyMama]

Agreed with Petunia.

It is infinitely easier, cheaper, and more flexible to just make extra payments, on your own. The only benefit I could see is to force yourself to make the extra payments if you had absolutely no financial discipline otherwise. But, the flip side is not only does it cost money but it adds the complication of a third party in the payment of your mortgage. Something I would absolutley avoid.

[sblatner]

You can divide your monthly mortgage payment by 12 and add that amount to your mortgage payment each month and pretty much do the same thing without paying a fee. You can also pay more than that extra amount if you have extra.

We always paid extra on our mortgage and paid it off 13 years early.

[kv968]

As the others have said, you can easily do this yourself and not be committed to doing it and especially NOT paying a fee to do so.

One other way to do it is to pay your mortgage every 4 weeks instead of a set date of each month and you'll end up paying an extra payment per year.

[greenskeeper]

just make sure the loan you agree to allows for extra payments or early payoff without penalty!

[sandrark]

You can divide your monthly mortgage payment by 12 and add that amount to your mortgage payment each month and pretty much do the same thing without paying a fee. You can also pay more than that extra amount if you have extra.

We always paid extra on our mortgage and paid it off 13 years early.

We've done this too - take the required monthly payment, and add 1/12th of a P&I payment to each check.

This typically chops ~ 10 years off a 30 year mortgage.

Another tactic is to look at an actual amortization chart, and figure out how much you have to pay in order to get it paid off in the time period you want - such as before the kids go to college, before you retire, etc.

I've been using the Hugh Chou's "What's Missing? Calculator" to work out these details for a long time - great tool for "what if?" scenarios:

What's Missing Loan Calculator

[snafu]

Drill, you need to review your mortgage document to determine what pre-payment to principal is allowed. We paid off a 25 yr. mortgage. in slightly over 14 years with the bi weekly payment schedule [26 payments per year] plus at least one 'balloon' payment each year. We've always paid our municipal taxes and insurance ourselves, separate from the mortgage.

[DRILLINDK]

Wow, great advice ALL! Thank you so much for your responses.