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Real Estate


Tom Kelly
Tom Kelly
The Real Estate Adviser
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November 1, 2007

The Real Estate Adviser: Pre-pay model from Australia worth a look

By TOM KELLY
Special to the Journal

A financial planner once told me that people really did not concentrate on saving for retirement until they paid off their home mortgage. The reason was that discretionary income was so precious after all mandatory monthly obligations were satisfied that consumers spent what little was left on some treasure, trip or recommended stock or bond.

As we mentioned in a recent column, solicitations for biweekly payment plans have become common as borrowers look to counter “foreclosure” fears by taking a shot at paying off their homes faster. Instead of the standard one-payment-per-month schedule, some companies specializing in accelerated payoff programs solicit mortgage brokers with a custom option for their loan customers. For example, for a one-time fee of $395, the borrower can have a tailor-made plan written for his loan. The mortgage broker is offered an incentive, typically $300, to “sell” the program to his customers.


 
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