REAL ESTATE Mortgage Checking Account (MCA)

[Nate]

Does anybody know about these? I have only heard of them from one person, but they seemed so good I can't believe I havn't heard about it more.

I guess the idea is you put all your money into this checking account and this money goes against your mortgage on a daily basis, instead of monthly, thus paying off the principle faster. Something to the effect of being able to do 30 year loans in 7 years or something.

I guess the fee to get going is $3k or so.

Seems too good to be true, but as I thought about it, when it comes to a loan, what is the worst that can happen? If a company gives you a loan and they go out of business, not really a problem for you, is it? At worst someone buys them out and you have a new creditor? I don't know though. What say you?

 

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[phlgirl]

I sat in on a conference call, where one of these tools was presented. The one advantage I took from it was the part where the program usese a timing advantage in making the mortgage payments on the HELOC, to save you some minimal interest.

Aside from that, these are just another spin on the 'mortgage payment plans', where they offer to make payments bi-weekly and reduce your mortgage term by years. They charge a fee, when this is something that anyone could easily do themselves.

Excluding the HELOC payment timing (interest savings), there is nothing in these programs, which you cannot do yourself. You would be paying for someone to help you in budgeting your expenses. Depending on your self discipline, this may or may not be something you require.

I did the math on the interest benefits and I forget now exactly what the result was but I think I recall it taking 5-7 years to recover the initial $3500 fee.

 

[Adam]

Go to www.cmgmortgage.com

The loan product is great for those that good credit, equity in their home AND save on a monthly basis. If prepared correctly, it will save you thousands in interest and provide a line of credit with a 30 yr draw. Essentially, your mortgage is a LOC with a checking account tied to it and your paycheck is direct deposited into the account. This lowers your effective interest rate while providing you with increased liquidity not found in traditional mortgages. Not for everyone, but nonetheless a great product for those that can take advantage of it.

You can easily set up this mortgage to function as a ZBA with a sweep freature (Zero Balance Account).

 

[AroundTheWorld]

I think biophase wrote about this and gave some great examples on his blog a while back. Look him up.