Wednesday, July 15, 2009

What do they mean by that ?

Well we're almost half way through July already ... can you believe it ?

I think its about time we dedicated a few posts to answering some common questions we get here at the Your Mortgage Matters Blog. Late spring and summer are the busiest times of the year for mortgages going on the books whether people are buying or renewing/refinancing.

With that busy time come a lot more questions so its time to review our mortgage jargon and explain it in layman's terms.

We'll sprinkle in some definitions between our usual posts on other matters affecting homeowners so we hope you'll enjoy them as we pass through the lazy, hazy days of summer.

Here's out first entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

you can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

By contacting a licensed mortgage broker, you're taking the first step to finding the right mortgage solution for you. They are invaluable resources due to their unbiased approach and experience in the industry.

Look for another jargon-busting post coming soon - have a great day.

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