 What is a mortgage accelerator payment?
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Editor's note: Dr. Don explored the topic of mortgage accelerator loans more fully in a later article.
 Dear
Dr. Don,
What exactly is a mortgage accelerator payment, using a home equity
loan or HELOC? We are three years into 30-year fixed rate loan at
5.125 percent. We pay an extra $250/month toward the principal.
But a salesman tells me I can forgo the extra payment and use a
flexible line of credit to pay off my mortgage in seven years. I
don't want to pay a $4,000 commission fee for a gimmick.
Thank you,
-- Chris Credit
 Dear
Chris,
I've heard of a mortgage accelerator program but never one tied
to a home equity loan or line of credit. A mortgage accelerator
program is normally defined as a biweekly mortgage. I'm not a fan
of biweekly mortgages, largely because you can accomplish the same
feat on your own by making additional principal payments. An earlier
Dr. Don, column, "Biweekly
mortgage vs. extra yearly payment," explains this in greater
depth.
Assuming there are no contractual provisions against
it, such as a prepayment penalty, you can use the proceeds of a
home equity loan or line to prepay your first mortgage, but why,
especially in the current rate environment, would you want to do
that? You've got an amazing interest rate on your home. You can
afford to make additional principal payments each month, so you
didn't buy too much house. Why do financial handsprings to improve
on perfection?
It's possible, based on your income, age and financial
goals that it may actually make more financial sense for you to
stop making those additional principal payments and invest the money
instead toward those other financial goals. Talking to a fee-based
financial planner can help you decide whether to keep making those
additional principal payments.
To ask a question of Dr. Don, go to the "Ask
the Experts" page, and select one of these topics: "financing
a home," "saving & investing" or "money."
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