Just when you thought getting a mortgage couldn't get more complicated, Ameriprise Bank says that it's launching a first-ever mortgage that's designed to reduce interest costs and pay down your mortgage a lot faster than you would with a typical mortgage.
Here's how the "Homeownership Accelerator" works (hope this makes sense): You get a combination home equity line of credit/checking account that uses extra cash you have in your account to automatically pay down interest charges, and eventually the loan balance. So you deposit your check into an account a checking account that's linked to a home equity line of credit. Cash left in the account at the end of the day is shifted into the line of credit and is used to pay down the principal balance. That lowers interest owed, but you can still make withdrawls to pay for everyday expenses. The key here, is that the EXTRA money you have in your account gets used to pay down the interest, so it's the kind of thing that will only work for people who have positive cash flow and are disciplined savers.
The real beneift comes from the compounding effect over time, which eventually will reduce the average daily balance of the loan.
