The new home loan works by combining a first-lien line of credit and a full-service checking account into an all-in-one instrument
CMG Mortgage, a wholesale mortgage lender, is re-introducing a home loan – Home Ownership Accelerator (HOA) – that the company developed and marketed between 2005 and 2008. HOA is modeled on loans popular in Australia and the UK, which have a record of helping borrowers save interest and pay off their home loans years faster.
Reportedly, the new home loan enables a borrower to generate large interest savings and loan payoffs in as little as half the time, without a change to spending habits. Analysts opine that the relaunch is timely as a large group of Americans, especially baby boomers, are realising that they can no longer count on home appreciation to fund retirement and must aggressively reduce their debt if they wish to retire without burdensome mortgage payments.
It has been reported that with HOA, homeowners deposit their paychecks directly into the loan, instead of into a traditional bank account, reducing the loan balance on which interest is computed. The borrower can access their funds to pay expenses via the integrated checking features, which include unlimited checks, an ATM/debit card, and online bill-pay. The key difference is that until funds are needed, the lower principal balance can save a substantial amount of interest – often amounting to thousands of dollars over the life of the loan – compared to a traditional loan. The interest saved essentially allows a borrower to pay off faster without changing their spending habits.
Chris George, president and CEO of CMG Mortgage, said: “This is a huge win for homeowners. In today’s uncertain economy, consumers are keenly aware that paying off debt is essential to securing a healthy financial future. Finally, here’s an opportunity to shift the focus from just minimizing payments to actually paying off — efficiently, quickly, and with no change to lifestyle. And it’s not magic, it’s just math. You’re simply paying interest on a lower principal balance more of the time – thanks to your own money.”
CMG Financial Services is the holding company for CMG Mortgage, a wholesale mortgage bank. CMG offers conventional conforming and jumbo loans, as well as FHA loans, through thousands of mortgage brokers in 40 states, and is the source for the Home Ownership Accelerator.