But a new home loan program being offered by CFA Northwest Mortgage Professionals, called the Home Ownership Accelerator, promises to change this dynamic forever.

“It’s a phenomenal mortgage,” said Carolyn Frame, president of CFA Northwest Mortgage Professionals. “It’s a perfect loan to make your money work for you.”

The home accelerator loan, which is available in Kitsap County through CFA, combines elements of a mortgage, a home equity line of credit and a checking account. Homeowners obtain the accelerator loan through the traditional mortgage refinancing process, and may borrow up to 80 percent of the appraised value of their home. The funds are then made available to the homeowner as a line of credit, but a line of credit that incorporates all the same transactional features available with a checking account, including checks, deposits, ATM/check cards and online bill pay.

One of the major differences between the home accelerator loan and a conventional mortgage is that payments to the principal are made first. Each month the homeowner’s paychecks are deposited directly into the loan account, and that money goes to pay down the principal for as long as it’s in the account.

“The longer you keep your money in, the lower the principal is,” said Frame.

The money is still available to the homeowner to pay bills and make purchases, but each day the money sits in the account lowers the daily interest that is accumulating — reducing annual interest up to 6 percent over the course of a year. At the end of each monthly statement period, a “charge” for interest is added to the principal balance on the account.

The loan is interest-only for the first 10 years and then enters a “repayment” period, where the credit line is gradually decreased by 1/240 a month, and interest and principal payments need to be made to ensure payoff in 30 years. But “payments” really means keeping the balance below the slowly reducing credit limit at all times. With this loan program, there are no checks to write, no payment due dates to remember.

Another major difference with the home accelerator loan is that the loan is tied to the London Interbank Offered Rate, or LIBOR, rather than prime. LIBOR is the world’s most widely used benchmark for short-term interest rates, and it’s the rate at which banks and other major lending institutions borrow money. Prime currently sits at 8, compared to LIBOR’s 4.8.

“That is a 3 percent difference,” said Frame.

In addition, Frame continued, changes to LIBOR are significantly more conservative than changes to prime. At its highest point over the last 15 years LIBOR was 6.19; at its lowest, 1.1. Its average is 4.625. Plus, with the accelerator loan, homeowners can pay down the margin as low as .75, further reducing interest payments.

The Home Ownership Accelerator loan program essentially allows homeowners to benefit from money that is normally sits idle in their bank account, and turns the homeowner’s mortgage into their own private bank.

“$5,000 of income a month in 60 months is $300,000,” said Frame. “What if that went to the bank of you? I love that. When I was a banker I never would have thought that way.”

As an example of the potential power of the accelerator loan, consider a homeowner with $5,000 a month in take home pay, a house worth $500,000 and a $200,000 loan — not that unusual in a county where home values increased more than 20 percent each year over the last couple of years. That homeowner could pay off their house in 14.3 years with the accelerator loan and save more than $150,000 in interest compared to a 30-year fixed rate mortgage with a 6.7 percent interest rate.

Frame, who is one of the top 200 loan originators in the United States, is an impassioned advocate for homeowners who want to be smarter about their approaches to money and investing, and is enthusiastic about the possibilities this type of accelerator loan can offer homeowners.

“When I believe in something, I promote it like crazy,” said Frame.

Frame, who has an accelerator loan on her own home, said the key to making the loan work most efficiently is to make some simple changes to spending habits, such as using an airline miles credit card — which is paid in full each month — to make everyday purchases instead of using a debit or check card.

The loan is currently available for primary or secondary homes, but will soon be available for investment properties and new construction. To qualify for the accelerator loan, homeowners need an excellent credit score, in the ballpark of 700 or more. But, Frame said, eligibility determinations are made on a case by case basis.

“Each situation is different,” said Frame.

She encourages homeowners interested in exploring this loan program to call CFA, at (800) 807-9347 for a complimentary consultation or to register to attend one of the free informational seminars on the Home Ownership Accelerator loan offered by CFA throughout Kitsap County. Homeowners can also visit CFA’s Web site, at www.cfahomeloans.com, to watch an informational movie about the loan program.