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1. What makes the loan pay off
sooner?
Direct-deposit of your income into this mortgage. It has an
immediate and dramatic impact on your principal balance. With
this loan, interest is based on your daily balance, so when your
paycheck hits, you start saving interest compared to a
traditional loan. This leaves more of your income available for
principal, accelerating the buildup of equity with no change to
your spending habits. Naturally, the more positive cash flow you
have, the faster your loan pay down will accelerate.
2. If I pay off early, will I lose
my tax deduction?
Yes, and this is good. Because you will no longer have a
mortgage. We believe that "interest is not in your best
interest." Paying $3 in interest to get approximately $1 in tax
deductions is not a good long-term strategy. The Home Ownership
Accelerator can help you get rid of your mortgage faster. And,
of course, while you're still paying down your balance, the
interest you do pay IS deductible (see your tax advisor).
3. The loan is based on the LIBOR
index - why is the margin slightly higher than other loans, and
what if rates go up even higher?
Here is where we're changing the way mortgages are viewed. It's
no longer about the rate. It's about how many dollars of
interest you pay on a given principal balance. And because with
this loan your principal balance is continually forced down by
your direct deposits, this can even offset the effect of higher
rates. Even, depending on your cash flow, if rates double! The
power of your money sitting in your mortgage is amazing. The
best way to observe this is to use the Interactive Simulator.
You'll see why the slightly higher margin on this loan, which is
required due to its highly transactional nature, can have such a
minimal effect on the overall payoff timing.
4.What is the payment?
Again, we're changing the way mortgages work. Every time you
make a direct deposit of your payroll, or add funds from another
account, you're in effect making a payment. Then at the end of
each monthly statement period, interest is charged based on your
daily principal balance. We simply add it to your principal
balance.
5. Who is the ideal customer for
this loan?
The Home Ownership Accelerator is ideally suited for responsible
homeowners with positive cash flow, who understand that parking
their cash against their mortgage balance can earn them a much
higher effective return than in a low-interest checking or
savings account.
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