Converting mortgage to Equity Accelerator

"Matt" wrote

I had never heard of "Equity Accelerator" before your post; what I found when I looked it up on the internet sounded suspiciously like a scam. Why would someone pay fees to make extra principal payments?

It sounds to me like you would be better of computing the amount of extra principal you can afford to pay each month, and adding that to your regular loan payment and save yourself the fees. (A practice which you can change unilaterally at any time with no hassle ... should you become cash strapped).

In any event, if the formula for computing interest is the same formula used by Quicken, you should be able to modify the loan characteristics to correspond to things like changes in payment frequency, or additional principal payments and have Quicken create a corrected loan payment scheduled. You can make a backup of your file then experiment with those changes, noting the differences in the loan payment schedule ... planning to revert to the backup if your experiments don't yield useful results.

For what it's worth, my sentiments exactly. I think you've been scammed You could have done what the "accelerator" is doing on your own. Just put in an extra amount in your monthly payment so that it comes out to the equiv of making 13 payments in 12 months. What are you being charged for this "accelerator"?

I'd never heard that term before, but I have had people cold-call me offering their service, through which I would pay them twice a month and they would "accelerate" my mortgage payoff. There must have been some kind of charge for their service.If you don't know what the charge is, you should find out quickly.

If I sound harsh and preachy, it's only because it ticks me off that people still pull this scam off. And I also think you should act quickly to get yourself out from under this thing. I suggest you do some internet searching yourself if you don't believe us.

Upon further review:

1) I jumped to the conclusion that you are using a third party to handle your mortgage acceleration. Is that in fact what you are doing? Or is the original mortgage holder doing the acceleration? Or is this something you are doing on your own? The problem comes in when a third party gets involved, because they are charging you for something you could do on your own by simply paying additional principal with each monthly mortgage payment. 2) I may have overstated when I said it was a scam. What I meant was the third party is charging you a fee to do something you could do on your own. You're making uncessary payments to the third party. Scam or not, it's not necessarily a good deal. One accelerator I looked at just now charges $195 up front and it wasn't clear to me how much of the biweekly payment they would be taking as well. Do you know what the fees are on your acceleration program? Also, here's a brief mention of such programs on the Bankrate site:

I agree that I am paying for a service that I could be doing on my own, but I think that as Bankrate states, this is a good budgeting tool, and I am paying for convenience. The fees are negligeable relative to the size of my payments (0.6%). The savings are much greater. The upfront fee was $45.

I did do this manually on a previous mortgage, and when the house was sold I found that the bank had not credited my early payments to principle as I had anticipated. There are hidden tricks that banks have to take advantage of customers, such as debiting an account prior to crediting deposits made the same day in order to charge overdraft penalties, even though funds were deposited to cover. I just don't trust the banks to properly credit my account, but since this was sent to me under the authorization of the bank -- with everything written out, I accepted it.

Thanks for the advice.

If this is something offered by the holder of the mortgage (and that's what it sounds like you're saying), then you're probably on much more solid footing. $45 doesn't sound like a big deal.