What is a Mortgage and What is Accelerated Payment?
A mortgage is a financial instrument that allows an individual to borrow money from a lending institution in order to purchase a house. In return, the borrower makes regular payments over a certain period. In general, mortgage payments are made out of income and not out of assets or investments. Mortgages have been around for centuries, dating back to ancient Rome.
A mortgage is a financial contract between the buyer and the lender for the purchase of a piece of property. The main purpose of a mortgage is to provide for the owner to pay back his debt with interest.
The average monthly mortgage payment for a home in the United States is $1,487. This costs the average American family about 17% of their monthly income. Many Americans have been able to afford this expense with a little extra effort, but others find themselves struggling and resorting to alternative methods of affordability such as taking on credit card debt.
A mortgage with Accelerated Payment is not just for people who want to pay off their mortgage early, but also for those who want to save money by paying more than the monthly payment.
Some homeowners find that they can pay off their home in 15-25 years by considering accelerated payment, instead of paying it over 30 years. Additionally, savings are achieved with accelerated payments because of the lower interest rate associated with this loan type.
An accelerated payment option typically approximates to one extra payment each year. However, this payment is typically broken down into little extra payments monthly, bi-weekly, or weekly and would help save you thousands of dollars in interest and allow you to pay off your mortgage sooner.