Mortgage cycling is a repayment strategy that promises to pay off your entire mortgage in ten years or less. To do this you need to make large payments to your lender twice a year. This means a $5,000 payment approximately every six months. This is all well and good if you have the cash; however, dropping $10,000 a year into your mortgage isn’t easy to swallow for the average homeowner.

There is a way to make the $5,000 easier to manage that involves home equity loans. First, an explanation as to why mortgage cycling works.

Mortgage loans are front-loaded with interest. This means at the beginning of the loan the majority of your monthly payment is applied to interest. The amount of interest paid each month is calculated based on the remaining balance of the loan. As the principal balance shrinks, the amount of your payment going to interest decreases as well.

By making large equity payments you are reducing the amount of principal used to calculate the interest payment. As a result, more of your monthly payment is applied to the principal balance, reducing the interest applied even more. The end result is your mortgage is paid down at a much faster rate.

If coming up with $5,000 is difficult there is an option using home equity. By taking out a home equity loan you will have six months to pay the money back before the next installment is due. This is a more expensive method of making the equity payments; home equity loans cost money to get started and you are paying interest on the loan.

This may seem like robbing Peter to pay Paul; however, by paying off the home equity loan every six months you are making a significant dent in your principal mortgage balance. By paying down the mortgage principal you save yourself money in the long run by paying less in interest for your primary mortgage.

The risk in using a home equity loan to cycle your mortgage is that the home equity loan is secured by your property. If you fall behind on the home equity payments you risk losing the home.

If you’re serious about paying down your mortgage as quickly as possible mortgage cycling could be right for you. Carefully weigh the risks of using home equity to repay your mortgage; if your cash flow cannot support the payments do not attempt this repayment strategy.

Albuquerque Mortgage Refinance

Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of Mortgages Refinance Advisor, a mortgage help site devoted to saving homeowners money with a free guidebook “Mortgage Refinance: What You Need to Know.”

Sign up for your free guide today at: http://www.refiadvisor.com

Article Source: http://EzineArticles.com/?expert=Louie_Latour

• Most any large city has a number of small shops offering payday loans. They’re often found in strip centers; sometimes they double as pawn shops. They have a simple business – they lend you money until your next paycheck. The system is pretty convenient; you write them a postdated check for the amount you’re borrowing plus interest. On your next payday, they cash the check and your loan is paid off. What many people who use payday loan services fail to realize is that the interest rates charged by these firms are substantial, often reaching the equivalent of four hundred percent per year!
  
  
• To get a secured loan it can take time for loan approval, as the property will be inspected and appraised. Unsecured loans such as credit cards are usually faster to acquire, however the loan approval time may include a credit check. A credit check involves a lender getting a copy of your credit report to inspect your credit history.
  
  
• Credit card balance transfers
  
  
• All kind of loan – educational loans, auto loans, secured loans, unsecured loans, personal loans and any kind of loans – can be consolidated under debt consolidation mortgage. It is highly appropriate to adopt debt consolidation mortgage if you have numerous debts. However, a prudent step will be to understand debt consolidation if you actually want to apply for it. Debt consolidation mortgage has the capability to be turned in a way so as to allow maximum monetary benefits. Yet, one little error with debt consolidation mortgage and your situation will be back to square one.