Tuesday, January 6, 2009

Beware of Mortgage Leopards Trying to Hide Their Spots

No that's not a typo.

It appears that a number of prominent sub-prime mortgage lenders are now offering their customers a product known as "Equity Accelerator".

The "Equity Accelerator" program promises homeowners that they can pay off their mortgage years in advance and save thousands of dollars in interest payments simply by signing up for automatic electronic fund transfers and paying their mortgage every other week instead of once a month. Sounds terrific right?

Maybe, maybe not.

Most of these programs have a one time enrollment fee that is collected from your first extra principle payment, a monthly participation fee, variable rates based on the payment dates and of course, lots of fine print on the agreement.

I recently reviewed one of these agreements and had to laugh when I saw that the terms of the program which the lender suggests that customers "read carefully and retain for your records", is printed on the opposite side of the section that you are supposed to detach and mail back to the company.

So if you're considering enrolling in an "Equity Accelerator" program, you may want to visit the Kiplinger.com Community Forum thread and learn more before you sign on the dotted line.

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