30 Year Fixed Mortgage? Here's a new option.

Mortgage and Lending with All California Lending BRE# 01458390

30 year fixed mortgages have been very popular lately.  With the low rates and the backlash against the adjustable loans, it makes a lot of sense.  There is an interesting product out, though, that has not been getting a lot of press lately, and could be a very good option for many borrowers.

This new program goes by a number of names, most common is the home ownership accelerator program.  It works by applying your income, cash reserves and receivables against your mortgage.  It basically combines your checking account with your home loan, like a line of credit in a manner, but with much better rates and options.

The bare bones overview of this program is simple.  You take out a new loan, just as you would a 30 year fixed mortgage.  This is set up as a revolving line of credit.  You also run your checking account, and your income via direct deposit through this line of credit.  The balance of your checking account offsets the loan amount you are paying interest on, as does the income from your direct deposit.  Even if you direct deposit your paycheck on day one, then write a check on day ten, you are reducing the principal amount you are paying on for those 10 days.

Under this plan, your income lowers your monthly balance.  The lower balance, in turn, saves you interest, and the saved interest becomes an extra principal payment.  This extra principal payment, in turn, further lowers your balance, saving you more interest.  This cycle continues each month, and compounds your interest savings, allowing you to pay down your mortgage more quickly than if you took out a traditional 30 year fixed mortgage.

This is just a quick overview of the program, please feel free to contact me for more details, or to find out if this program is right for you.


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