Mortgage Magic

"New mortgage magic is merely sleight of hand" was a decent enough title to get me to read the following article...

A new kind of mortgage can, as if by magic, make a 30-year mortgage disappear in half the time.

That's what readers are telling me, just before asking if it is "too good to be true."

The new mortgage is from Australia. It's called a "line-of-credit mortgage." Instead of making a monthly payment from your checking account to a mortgage company, the line-of-credit mortgage becomes your checking account. Like your checking account, your paychecks are deposited to the account. The monthly cost of the mortgage, interest-only for some period, is automatically deducted from the account.

The paycheck deposits bring an immediate advantage. The amount of your mortgage is reduced by each deposit. Since your mortgage interest payment is a fraction of your monthly income, you get to save the interest cost on the difference — every month.

You can read the whole article over at the Houston Chronicle website and discover some of the magician tricks.