Mortgage : Home Loans : Refinance : Home Equity Loans

By Richard Pettinger

Mortgage cycling has recently been marketed as a unique way to pay off your mortgage early and build up equity at the same time. The basic premise behind mortgage recycling however, has actually been used before. The main idea is that you make additional payments to reduce the mortgage principal and therefore pay off the loan early. The mortgage principal is the amount you owe, interest payments are calculated according to the amount of this outstanding loan.

Advantages

1. By reducing the amount of your mortgage principal you will significantly reduce the amount of future interest. This is especially significant since if a mortgage was to last 40 years most of the payments in the early years are mainly interest, you do little to reduce the principal.

2. To make it easier to meet the 6 monthly down payments mortgage cycling uses the technique of also taking out a home loan. This is just a standard load guaranteed against the value of your house. The interest rate should be low because it is secured against the value of your house. A careful use of this extra loan enables you to make large lump sums towards paying off your mortgage

Disadvantages

1. It is risky. To take an extra home loan means that if you unexpectedly lose your job and can

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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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This entry was posted on Tuesday, January 9th, 2007 at 3:27 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.