Ameriprise said the new home financing option combines home equity line of credit and a checking account which together can help a borrower use idle cash to reduce interest costs and pay off the loan balance years early, replacing the traditional mortgage way process.
According to the bank, the Accelerator works by syncing the regular income and largest expense of the homeowners. Homeowners deposit their paychecks into a checking account which is linked to a home equity line of credit. Cash left in the account at the end of each day is swept into the line of credit, driving down the principal balance on their loan and subsequently lowering the amount of interest owed.
Under this service, homeowners can also withdraw money to pay bills and cover everyday expenses, similar to the way they would do with a traditional checking account.
The Ameriprise Home Ownership Accelerator Simulator also offers a side-by-side comparison between the Accelerator and traditional mortgages.
Ameriprise Bank president Jeff Williams said that when evaluating a traditional mortgage, borrowers tend to look at two things-the monthly payment and the interest rate-without considering the overall cost. Many would be astonished by how much money they’ll spend on interest over the life of their home loan. With the Accelerator, the equation changes.
"The homeowner’s idle cash is applied to the principal balance first, lowering the amount of interest they owe. This built-in flexibility puts homeowners in charge so they can pay off loans as quickly and efficiently as possible — all without changing their spending habits," Williams said.
