To help you assess how a Traditional Mortgage compares to the Home Ownership Accelerator, we have assembled this comparison chart, and broken it into three sections, based on Control, Flexibility, and Security.
| Traditional Mortgage
| Home Ownership Accelerator
|
Control
| Minimum principal reduction in the first few years of the loan.
| Only pay interest on balance owed
|
| Interest is calculated based on the amortization schedule
| Interest is calculated on the average daily balance
|
| To accelerate the reduction of the principal balance, you could make extra payments, but this has drawbacks
|
"Acceleration" is automatic, because every deposit is a payment
|
| Cannot access the money if you ever need it | Access to cash 24/7 up to the credit limit. |
| Payment continues to be required, and does not decrease | No payment required, interest charge is based on average daily balance.
|
| Difficult to consistently make extra payments | Perfect program for inconsistent or sporradic income streams
|
| Because mortgage is closed-end, borrower tends to keep cash in the bank earning little to no interest, meanwhile keeping large amounts of money owed to the bank at higher rates.
| Borrower is encouraged to reduce principal balance, and pays less interest.
|
| Flexibility | Full payment is required
| Interest only is added to the principal balance
|
| Cannot miss payments | No payment required up to credit limit
|
|
| Option to make payments or not
|
| Security | Rate will never change
| Rate changes each month; however rate increasing to the cap generally does not prevent loan from paying off earlier than 30 year fixed.
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| Will make payments for 30 years | Most will payoff in less than 15 years
|
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| Because payment is not required, foreclosure is less likely
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