What is Mortgage Acceleration?

Mortgage acceleration is a term used to describe the practice of paying off a mortgage sooner than it would be paid off if only the minimum monthly payments were made for the duration of the loan. Many people try to do this because they want to avoid paying lots of interest. Some mortgagors also use the term mortgage acceleration when borrowers fall behind on their payments and the loan goes into default. At that point, mortgagors can ask for the entire balance remaining on the loan if the terms of the loan allow for that. There are also mortgage acceleration programs designed to help people pay their loans off faster by using a specific type of software program.

Borrowers can greatly benefit from attempting to accelerate their mortgages. In some cases, paying extra on a mortgage regularly can eliminate more than half of the interest that would otherwise be paid if no extra money were applied to the loan. When people receive mortgages, they are typically offered both 15- and 30-year options. The majority of people do not opt for 15-year mortgages because the payments are usually much higher. Borrowers, particularly those who are locked into 30-year mortgages, could greatly benefit from attempting to make at least one extra mortgage payment each year, either stretched out over the course of the year or paid all at once.

Many borrowers agree to loans that allow for mortgage acceleration initiated by the mortgagor if they fall too far behind on their payments. This action typically precedes foreclosure. When a mortgagor instigates mortgage acceleration, the mortgagor asks for the entire balance of the loan currently in default. The majority of borrowers do not have the funds to cover the entire balance and often lose their homes as a result. Mortgagors cannot do this unless there is a clause within the terms of the loan stating that they can, and the majority of mortgages do contain this clause within the terms.

Mortgage acceleration programs are often used by borrowers to help cut the amount of interest they pay in half. There are various private companies that offer these programs, and these companies normally offer software programs to help borrowers reduce the amount of interest they pay by making two payments per month to their mortgage companies rather than one, which ultimately cuts interest in half. Borrowers could do this on their own without the use of mortgage acceleration programs, but these programs are popular because they are designed to make money management easier as well as making it simpler for borrowers to see exactly how much they are saving in interest. Many people feel that the majority of these programs are fraudulent because they charge a fee for the services when mortgage acceleration is something that anyone could do on her own without the help of a program.