Does it make sense or not to completely pay off your home?
I first heard about the home accelerator program 3 months ago at a free real estate seminar in Pasadena. My friend, a CPA who I wrote about last year when he bought a rental home in Houston, felt it is a good idea.
My wife and I are applying for a home loan on an investment property out of state and we looked into the accelerator program. I had a discussion with a mortgage representative today as well.
The idea is you can pay off your home in half the time of a conventional mortgage by using your home equity as a line of credit. You deposit your income into the account and the unused cash helps reduce your principal at a much faster rate since interest is calculated at the end of the month on the principal rather than on the interest.
The attractive part for us is you could use your home equity to invest in other properties without having to take out a loan.
The idea, the representative told me, is you can have up to 80% of the equity in your home available to use.
And that started me thinking . . . why would I want to do that?
I kept coming back to a small amount but she reminded me that I could use up to 80% of my equity.
We live near Pasadena, California and even though real estate prices have dropped we nevertheless have owned our home for 14 years. It has more than tripled in value since we first bought it meaning we have lots of equity available . . . maybe too much if we weren't disciplined.
That got me to thinking, do I really need a home accelerator program? Why can't we just make extra payments to principal?
In my next post, I'll share what information I've uncovered.
2 comments:
I agree with you about these. Well someday Ill create a blog to compete you! lolz.
This is a nice blog. I like it!
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