You’ve just bought your new home, if you can afford one in this economy and all of a sudden you start getting the offers in the mail.  A few years ago the rage was refinancing to a lower interest rate and since you’re refinancing why not take some extra cash to pay off some bills in the process.  Well there is a new player in the game and that is the mortgage accelerator, I mean who wouldn’t want to accelerate their mortgage payments and pay off their home faster.  Well when it comes to financial products I have yet to see the product that doesn’t first benefit the primary lender.  It may be of value to the user but know for sure the lender is benefitting from it.  Mortgage Accelerators are no different. 

For those who are unaware a mortgage accelerator is a loan that combines the qualities of a home equity line of credit and a checking account.  Each month you would deposit your regular income checks into this account.  By doing this you are reducing the overall balance of your mortgage.  You will then pay your monthly expenses out of this account and at the end of the month whatever is left over will go towards the principal of the loan. The objective here is that you would accumulate interest slower over the time of the loan and be able to pay off the debt much faster.  I won’t go into great details of the intricacies of these programs, you can read a great article here on that topic.  What I want to comment on is why you don’t need to do this.  Here are 2 other articles on that subject:

Mortgage Accelerator Programs
Avoid Mortgage Accelerator Programs

The underlying philosophy of any mortgage acceleration program is that if you can lower the principal, you will pay less interest and pay off your mortgage faster.  Let me ask you something, would you pay someone to give you that piece of advice I just gave you?  Well when you use a mortgage accelerator program that is basically what you are doing.  You have all of the wherewithal within you to do this very thing without having to pay someone to do it for you.  There are many ways to pay down your principal if that is your goal, here are a few.  Two of the simplest are adding more money to your mortgage payment each month or by sending in an extra payment or payments each year.  Those two simple things alone will lower your principal.  By the way if you want to pay me for that please feel free to do so. 

If you have trouble saving enough money to come up with an extra payment then here is a simple suggestion.  Open a savings account, and set up an automatic deposit into that account each week.  Let’s say your mortgage payment is $1500 per month.  You can have $30 per week automatically deposited into your checking account.  At the end of 1 year you will have saved $1560 and you can make your mortgage payment.  It will take some discipline, but you can do it so save your money and go pay off that mortgage.