It's A Do-It-Yourself Project

Jason asks the best way to attack a mortgage. Should he use a mortgage accelerator program? Dave says the best way is to just attack it.

QUESTION: Jason on Twitter asks the best way to attack a mortgage. Should he use a mortgage accelerator program? Dave says the best way is to just attack it.

ANSWER: The best way to attack a mortgage is to just attack it. Pay extra on it. Mortgage accelerator programs charge you for some methodology to prepay your mortgage. Why be charged for it? Just prepay it. The biweekly mortgage is an example of an accelerator type program where you pay half a payment every two weeks and it pays a 30-year mortgage off in 22.8 years on average. Why wouldn’t you pay somebody $400 to do that? There are 26 two-week periods in a year. Twenty-six half payments is equivalent to 13 whole payments. Your mortgage is paying off early because you’re paying an extra payment each year. Pay an extra 1/12 of a payment a month on principle, and you’ll be within $.36 a year of what you would get charged $400 to do a biweekly mortgage.

Don’t do that junk. You don’t do those multilevel things where these guys ask you to pay $3,000 or $3,800 for some software, and you get a home equity line of credit loan. You pay your bills out of the home equity line of credit loan, and with the money that’s left you pay your first mortgage. You don’t have to go through all that gyration. You just need to pay extra on your mortgage. You don’t have to pay someone $3,800 for the privilege of paying extra on your mortgage, either. I would avoid mortgage accelerator programs that charge you for that privilege. If there’s one that’s free and you want to do it for free, that’s fine. The principle payment is what makes you more than it costs you—not their little tricks or gimmicks.

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