Questions and Answers
Question?
1. I have owned my home for 3 years. Can I still accelerate the mortgage loan?
Answer!
YES! Although you have made 3 years payments which are forever lost and cannot be recouped you still may reduce the loan term and save thousands of dollars in interest. It is extremely important to begin the acceleration immediately to forego any further losses. The plan may be implemented immediately and will not cost you any more money each month.
Question?
2. I plan to sell my home. can I transfer the mortgage reduction plan to a new buyer?
NO! The plan is under your direct control through your bank account and thereby should not be accessed by anyone other than you the account holder. You may however instruct a new buyer as to how the accounting technique is applied at your discretion.
Question?
3. My payment includes for taxes and insurance. Can I save on this type of payment.
Answer!
If your payment is PITI, Principle, Interest, Taxes and Insurance you may only reduce the principle and interest as applied to the loan. You may however apply the entire amount (PITI) to the Expense Accumulation Plan which will increase your yearly cash savings as a result.
Question?
4. Should I inform my lender of my intent to implement a mortgage reduction plan?
Answer!
ABSOLUTELY NOT! The lender or bank is aware of the effect of the mortgage reduction process and what it will do to their intended profit and they will therefore attempt to frustrate your efforts. Usually, they will attempt to do this by applying some of your payments to an "escrow". You must be attentive to any such effort since this is usually a violation of the mortgage contract both you and the lender signed at the closing. Under the agreement you signed you were required to make a timely monthly payment in the prescribed amount of principle and interest and under a level term agreement this cannot be changed during the life of the loan. When you employ the mortgage reduction you will continue to make a timely monthly payment in the prescribed amount therefore you are not in any way in violation of the agreement.
Question?
5. I plan to purchase another home. Can I transfer the mortgage reduction to another property?
Answer!
NO! When you have learned the simple accounting technique of the mortgage reduction you need only apply the technique to the new loan. You will also need a new "Amortization Schedule" based on the loan amount of the new loan.
Question?
6. I have assumed a loan when I purchased the home. Can I apply a mortgage reduction?
YES! In order to save interest a the new loan you must formulate a new Amortization Schedule based on the amount of the loan balance at the time of the assumption. All payments previously made cannot be recouped.
Question?
7. Do I need approval form my lender to apply a mortgage reduction?
NO! So long as you make a timely monthly payment in the prescribed amount the lender has absolutely no recourse whatsoever. However, your mortgage contract also provides that you must also pay all taxes, and keep the property adequately insured to protect the lenders interest AND maintain proper maintenance of the premises.
Question?
8. Who contriols the account?
Only you have direct control over the actual account. Your bank however will administer the account provided you setup a bank managed plan. Client managed plans are not insured or guaranteed.
Question?
9. What if I miss a mortgage payment?
DON"T! Most mortgage contracts carry "An Acceleration Clause". This is a provision in the mortgage that if you the borrower becomes delinquent the lender may declare the entire balance due and payable. If the bank exercises the acceleration you must payoff the entire balance and the lender will not accept only the back payments. In addition, since most lenders will not file a foreclosure inside of 3 months your credit may be affected since each months arrears is reported to the credit bureau. Also when a foreclosure is filed after 3 months then you the homeowner cannot usually refinance because the new lender will pull a credit report showing you delinquent on the existing mortgage therefore preventing you from obtaining a new loan. The Mortgage Reduction Plan does not require you to pay any extra money each month.
Question?
10. Are there any fees associated with the bank managed plans.
Usually not! Most banks will administer the plan without charge. However, there may be incidental fees such as an ATM fee which is trivial in comparison to the amount of money you will save on the mortgage.
Question?
11. I have an Adjustable Rate Mortgage. Can I accelerate and save with the mortgage reduction plan?
Answer!!!
NO! Unfortunately, adjustable rate loans may not be accelerated since their interest rates fluctuate. It is impossible to calculate what the interest rate might be on a monthly basis. These are very risky and the best recomendation is to refinance and get a level term mortgage. The parks are full of those who had homes with these types of mortgages.
Question?
12. Can I use the reduction plan with other types of loans?
Answer!!!
YES! The reduction plan and accounting technique works with all types of loans with stable payments. However, short term loans such as auto or others may not experience substantial savings as with a loan of 10 years or more. For this reason starting an acceleration in the first month of the loan is critical.
Question?
13. If I am able to pay extra on my monthly payment how will this save me any additional monies?
YES! The Mortgage Reduction Plan includes instructions how to produce the savings Amortization Schedule. If you are able for instance to pay an additional $25 per month as in the example of a $100,000, 7.0, 30 year loan you would payoff the loan in 20.1 years as opposed to 23.7 years and save 119 payments instead of 73 and save an additional $19,318.00. These extra amounts are not part of the guarantee on the plan. In addition, if you add additional monies you must be diligent each and every month in order to calculate the exact savings. In other words, if you made an additional payment one month and skipped the next then the savings Amortization Schedule is corrupted and must be recalculated. Please note also that most all mortgage contracts contain language governing the application of partial or lump sum payments. You must consult your particular contract for the correct guidelines or consult the Lender or Bank. If you can provide us with a copy of your mortgage agreement we will assist you in determining this feature free of charge.
Question?
14. Can I include variable payments in the Expense Accumulation Plan?
Answer!
YES! The plan gives instructions on how to include variable monthly payments such as utilities, revolving charges, Visa or MasterCharge etc. By adding these you will increase your yearly cash accumulations. When variable payments are added the plan it is not guaranteed since the payments fluctuate monthly.
Question?
15. Do the plans require good credit or a bank account?
NO! We do strongly recommend you open a bank account in order to assure the success of the plan but you may also manage your own plan but the results will not be guaranteed or insured.
Question?
16. I am on a fixed monthly income. Can I use The Expense Accumulation Plan or The Mortgage Reduction Plan?
Answer!
UNFORTUNATELY NO! Both plans require at least 2 pay periods each month and are tied directly to your payroll dates. Do not order a plan if you are on a monthly fixed income!
Question?
17. How can I verify the savings on the Mortgage Reduction Plan?
Answer!
When the Mortgage Reduction Plan is applied the savings can be verified by any Board Certified CPA. Since mathematics is an exact science the difference in totals will not exceed 1%.
Question?
18. Is my money safe?
Answer!
YES! Firstly, only you control your funds through your local bank. Therefore, your money will be insured by the FDIC up to $250,000. We strongly discourage dealing with any agency or company who will collect your payments to pay to the bank or lender.
Question?
19. What is the Agency Guarantee?
Answer!
In the event under a bank managed mortgage plan the savings can be shown to be more or less than 5% in error we will refund the entire amount of the plan purchased. A bank managed plan will require banking records of all transactions pretaining to the plan.
Question?
20. What if my mortgage escrow is increased by the lender?
Answer!
This action will increase your yearly cash accumulation under The Expense Accumulation Plan when you adjust accordingly to the plan technique. This increase will in no way affect your acceleration of the mortgage plan or savings.
Question?
21. When I purchased my home I assumed a mortgage. Can I still accelerate the loan?
YES! First, you will need a new Amortization Schedule based on the balance of the loan you assumed. Remember however, all payments previously made by the original owner are lost AND depending on where in the term you inherited the loan will deterrmine how much savings you may anticipate. In other words, if you assumed the loan in the 15th year of the mortgage when most of the interest has already been paid you will not experience major savings as you would have enjoyed had you assumed in the first 10 years of the term.
Question?
21. When will I see my savings?
Answer!
Each year your lender should remit to you a yearly statement reflecting your current balance. In addition, each month you should receive notification of your current balance owed from the bank or mortgage servicing company. At the end of each year you must compare your new accelerated amortization with the original amortization you should have received at closing. The yearly balances from the lender AND your accelerated balance should agree. If they donot agree within 1% error you must contact the lender. In this case, the bank has probably missapplied funds and in most cases to an escrow to frustrate your acceleration. THIS IS A VIOLATION OF MOST CONTRACTS!
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