Mortgage Cycling ? Brilliant or Risky -

Home
>
Mortgage Refinance
>
Mortgage Cycling ? Brilliant or Risky

Mortgage Cycling ? Brilliant or Risky

With mortgage rates near 20-year lows, competition in the mortgage industry is fierce. It seems like every day a new mortgage loan strategy comes out that is suppose to be the best thing since sliced bread. Whether it's a mortgage with no closing costs or an interest only mortgage, everyone is claiming they can save you a ton of money. Now someone has come out with something called Mortgage Cycling. Mortgage Cycling could save you thousands of dollars or it could cost you your home.

Mortgage cycling is a program that advertises itself as a method to payoff your mortgage in 10 years or less without making biweekly mortgage payments or changing your current mortgage. Does mortgage cycling work as advertised? The answer is unequivocally yes ? with a few caveats. I'm going to let you in on the secret to mortgage cycling.

Mortgage cycling is based on making huge lump sum principal payments every 6-10 months. What this means is mortgage cycling works well for those who have at least a few hundred dollars in extra cash at the end of each month. The problem is most people don't have that kind of cash available.

Mortgage Cycling relies on using a revolving Home Equity Line of Credit to make huge lump sum payments against their original mortgage principal balance. When you take out a home equity line of credit, you pay for many of the same expenses as when you financed your original mortgage such as an application fee, title search, appraisal, attorney fees, and points. You also may find most loans have large one-time upfront fees, others have closing costs, and some have continuing costs, such as annual fees. You could find yourself paying hundreds of dollars to establish a home equity line of credit. Most home equity lines of credit also carry what is known as interest rate risk.

Home equity line of credit interest rates are typically variable. The Federal Reserve is currently in the process of raising the overnight federal funds rate. As the Fed continues to raise rates, it is all but inevitable that variable interest rates for mortgages will also rise. Your savings may not be as great as anticipated.

While Mortgage Cycling does have some additional costs for most people, that is not what makes this mortgage reduction strategy risky. If you use a Home Equity Line of Credit and money gets tight, you could lose your home and the equity you have built up. Home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. And if you sell your home, most lines of credit require you to pay off your credit line at that time.

Mortgage Cycling requires you to make mortgage payments and Home Equity Line of Credit payments for up to 10 years. For most people mortgage cycling is an extremely risky way to payoff a mortgage. Mortgage cycling should be used only after a careful assessment of the risks and benefits. Prepaying your mortgage is smart. You should explore all of the mortgage reduction alternatives before choosing Mortgage Cycling as a mortgage reduction strategy.

George Burks of http://www.mybiweeklymortgagepayment.com has offered a biweekly mortgage payment plan with no enrollment fee since 1999. His interest in financial topic is varied. Visit http://www.mybiweeklymortgagepayment.com financial library for more information about a revolving Home Equity Line of Credit.

In The News:

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.chicagotribune.com/chi-sun-crisis-what-now-oct12,0,639299.storycid=1257678762ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNExLQTabkRJ2OUzryctPlsjXT4ySA6 ways to stop economy#39;s fall/abrfont size=-1font color=#6f6f6fChicago Tribune,nbsp;United Statesnbsp;-/font nobrOct 12, 2008/nobr/fontbrfont size=-1Tackle housing prices directly by offering homeowners with troubled mortgages the chance to brefinance/b them with more favorable terms. b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.mondaq.com/article.asp%3Farticleid%3D67736cid=1257678762ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNGbZDpjRqQhz-qzCUD_xZNEASGrrQThe Paulson Proposal: An Update On Economists´ Views/a font size=-1 color=#6f6f6fnobrMondaq News Alerts (subscription)/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://tothecenter.com/news.php%3Freadmore%3D7316cid=1257678762ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNGmZVdUdBaCPV-506BMNXq3FlHAaAThe Bailout Plan in Plain English/a font size=-1 color=#6f6f6fnobrToTheCenter.com/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257678762hl=ennobrall 1,095 news articles/nobr/a/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.killerstartups.com/Web20/freehomerefi-com-mortgage-refinancing-resourcescid=0ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNGXFsb2mBKxxeagtJ1NTK1XaKms5gimg src=http://news.google.com/news?imgefp=zNlM1I2xSEIJimgurl=www.killerstartups.com/graficos/killer-data1.jpg width=80 height=29 alt= border=1brfont size=-2Killer Startups/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.killerstartups.com/Web20/freehomerefi-com-mortgage-refinancing-resourcescid=0ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNGXFsb2mBKxxeagtJ1NTK1XaKms5gFreeHomeRefi.com - bMortgage Refinancing/b Resources/abrfont size=-1font color=#6f6f6fKiller Startups,nbsp;FLnbsp;-/font nobrOct 10, 2008/nobr/fontbrfont size=-1It is a handful resource for people who want to have their bmortgage refinancing/b done in a simple way. â€œFree Home Refi is committed to providing consumers b.../b/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://sify.com/finance/fullstory.php%3Fid%3D14772811cid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNH8zAPrW38jiyEm9QNivcuT8m2cIQimg src=http://news.google.com/news?imgefp=4zc7cQtrRSgJimgurl=im.sify.com/sifycmsimg/oct2008/Finance/14771912_executives_200.jpg width=80 height=62 alt= border=1brfont size=-2Sify/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.theglobeandmail.com/servlet/story/LAC.20081013.RBANKSEXPLAINER13/TPStory/Businesscid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNGQU_0KC1B_UEQiDqlJvpRKLL4yeAFrom subprime to stock swoon/abrfont size=-1font color=#6f6f6fGlobe and Mail,nbsp;Canadanbsp;-/font nobrOct 13, 2008/nobr/fontbrfont size=-1Borrowers were led to believe that they would be able to brefinance/b their homes at this point because the value of the property would have increased. b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.washingtonpost.com/wp-dyn/content/article/2008/10/11/AR2008101100149.htmlcid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNEcAY3d2TKfwUttnp9iG29MVRjFiQARM Holders Would Do Well to Shop Around Now/a font size=-1 color=#6f6f6fnobrWashington Post/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.istockanalyst.com/article/viewiStockNews%2Barticleid_2699695.htmlcid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNHYDTMRARRDLG22MxjXKOpKHskNTAEDITORIAL: Let Bailout Money Trickle Up, Not Down/a font size=-1 color=#6f6f6fnobristockAnalyst.com (press release)/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.zwire.com/site/news.cfm%3Fnewsid%3D20161858%26BRD%3D1675%26PAG%3D461%26dept_id%3D18168%26rfi%3D6cid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNFJIVuK7shRAS-3wBT8I7vp4-UqGQLetter: Economic trauma can#39;t be excused/a font size=-1 color=#6f6f6fnobrThe Delaware County Times/nobr/font/fontbrfont size=-1 class=pa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://vdare.com/roberts/081009_solution.htmcid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNHIk8ZlNZE2f2UYVg0lgDsaqTgQEQnobrVDARE.com/nobr/anbsp;- a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.tallahassee.com/article/20081008/OPINION05/810080303/1006/OPINIONcid=1255977840ei=OLj0SLTEDo_u6gPN9ZycDQusg=AFQjCNFxrwf2t0damG3goS4cIhD4wzuW4gnobrTallahassee Democrat/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1255977840hl=ennobrall 258 news articles/nobr/a/font/div/font/td/tr/table

mortgage refinance - Google News

Mortgage Cycling ? Brilliant or Risky

Mortgage Refinance