Are you interested in finding a program which allows you to pay off your mortgage fast? Mark Maire of AmeriFirst Home Mortgage answers questions in this interview regarding paying off mortgages early. His company offers the Home Ownership Accelerator Program, which is an innovative program allowing homeowners to deposit their entire paychecks into mortgage accounts and then use equity for everyday expenses.
What do you find is the greatest apprehension from people when they talk to you about this program?
It sounds too good to be true.
It's just math. The best thing for us to do is to walk through the simulator. The simulator is not to be used by somebody doing it on their own, without having gone through it with someone who is certified and licensed to do the mortgage. There are some screens, and there are questions that are being asked, that if you don't know what information that the simulator is looking for-and how that math is actually working-it will give you all kinds of crazy numbers. It's both good and bad. It's the problem people have…going through that simulator and they just don't know where the math is. Once they see it they understand it and they've got that what we're giving is 100% principal reduction. That is such a hard thing for people to get their brain around.
Why is the home accelerator program better than programs where people split their home payment to twice a month to pay it off early?
For the folks who are splitting their payments, what they are effectively doing is making one additional payment toward principal per year. How the math works on that is on a thirty year mortgage they will actually cut seven years off from their thirty year mortgage. The reason why that is a good idea is because that one extra payment is actually going toward principal. So that's the smartest move: getting as much principal reduction as you can and if that's the best way for people to do it then I applaud them for at least doing that.
What more is involved with the initial consultation that just going through the simulator?
What I do is I explain to them what's been going on in the wonderful world of mortgages, how we got to this point…why this is so important for people to understand and how it is important for them to know that what we're looking for out of them is to not change anything about their current spending habits. Instead of depositing their money into First National Bank of Whoever they're going to be depositing their money into GMAC Bank but getting the house paid off, or having the ability to build up equity more quickly, is the priority to them.
Should potential customers bring documents to the consultation, such as bank statements or pay stubs?
Both of those are terrific because what I really want to know is how much is your net income every month - contrary to normal mortgages where we're always talking about your gross monthly income and then we're qualifying you on that - in this case I want to know how much money you're depositing and then the second thing I want to know is how much money you are spending. I need to know what their spending habits are and I need to know what their income is.
How many lenders offer similar programs?
GMAC is the only lender who offers this program. GMAC does not offer this program through themselves. They signed an exclusive agreement with the group that I do this for which is CMG Mortgage, and CMG is a big mortgage bank in Northern California. So anyone who offers this program is a subsidiary or essentially a correspondent or in a broker relationship with CMG.
The reason we use GMAC is because GMAC has both the mortgage side of their business as well as the banking side. They have the power to make something like this work. Their online banking, the checks that you access, being able to use the Visa check card…it's no different than using your normal local bank other than your money is going into a significantly larger bank at a national level. People just need to get used to the fact that they don't have a local branch unless they are in Philadelphia or areas in California where they do have local banks.
How likely is someone to be able to go into their regular mortgage lender and find a similar program?
Not very likely. It won't be much longer before more and more people are doing it.
What sort of fees are associated with maintaining this type of account?
Origination fees vary depending on what margin people would like to have. And that is based on the person's income, balance, and how much money they spend. We can do this without having any costs whatsoever. I can pay all the title work and fees and everything, so this can be a zero cost out-of-pocket mortgage all the way to having it be substantial in closing costs if they wanted to buy that margin down…like paying points on a normal mortgage.
What happens after the ten years is up on the mortgage?
For the first full ten years - this is a thirty year mortgage - you have access to eighty percent of the value of your home. At the end of ten years they start to reduce how much money you can access by 1/240th.
If you don't live paycheck to paycheck, if you do have money left over then you're getting greater principal reduction at the end of the month.
What about people who do live paycheck to paycheck?
They are not ideal candidates for this program. I wouldn't discuss this program with them other than to tell them that once they get their financial house in order then this is something that we can discuss. If they don't have the equity and they don't have reasonable to good credit scores then they don't qualify.
It's ideal for about ten percent of the population.