'Mortgage accelerator' loans come to U.S.
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Another argument for this approach to financing is that your idle cash is saving you the mortgage interest rate versus earning a low passbook savings rate. While short-term investing alternatives that pay higher rates do exist, the savings are automatic with the mortgage accelerator program.

A HELOC is a variable rate and the interest rate will fluctuate with changes in the underlying pricing index. Lifetime caps limit the homeowner's exposure to higher interest rates with the Home Ownership Accelerator limiting that risk to 5 percent over the start rate as a lifetime interest rate cap. The Macquarie Asset Manager loan program has a lifetime interest cap of 21 percent.

These loan programs aren't available in all 50 states. As of September 2007, CMG's Home Ownership Accelerator program is currently available in 25 states and Macquarie's Asset Manager program is available in 27 states with availability in a half-dozen more states on a correspondent lending arrangement.

Brooke Barnett, "mortgage accelerator specialist" at Rancho Funding, a San Ysidro, Calif., mortgage broker that offers the CMG loan program, sees this loan program as ideal for financially savvy homeowners who are spending less than they make each month.

The savvy part, being able to earn the mortgage interest rate on idle cash instead of the low rates paid on checking and savings accounts, attracts customers that take a big-picture view of their finances. Money that isn't going toward expenses is reducing the balance on the mortgage, and by doing that, reducing the interest expense.

Barnett suggests that a Home Ownership Accelerator loan could also be used in lieu of taking out a reverse mortgage on a home. With enough equity in the property the homeowner could avoid minimum payments over time using negative amortization up to the amount of the HELOC.

While these loans are HELOCs, they are also first mortgages on the property, so the closing costs are about equal to the closing costs on a conventional 30-year fixed-rate mortgage. Like any refinancing decision, closing costs are a factor, and the longer you plan to be in the house the easier it is to justify refinancing your mortgage loan.

The lenders expect homeowners to be less rate sensitive about these accelerator mortgages because of the interest savings available by using the program. The product is new enough in the U.S. market that it will take some time to validate that expectation.

Interest savings are still available the old-fashioned way by making additional principal payments on a conventional fixed-rate mortgage. Bankrate's mortgage payment calculator allows you to make additional principal payment assumptions on your mortgage and you can then compare the interest savings with the results of the simulation calculators offered by Macquarie and CMG, although the CMG simulator will allow the homeowner to input a prepayment assumption on the existing mortgage in comparing it to the equity accelerator mortgage.

Don Taylor, Ph.D., CFA, CFP, holds a doctorate degree in finance, is an associate professor of finance at The American College and writes the "Ask Dr. Don" column for Bankrate.