A notice of intent to accelerate is a legal document that outlines the lender's intention to accelerate the loan payments. This means that the borrower is required to pay the entire loan balance, including interest and fees, within a set period of time.
Home mortgage acceleration clauses are designed to trigger in situations where the mortgagee might want to foreclose on the mortgage. This allows the mortgagee to attempt to recover the entire unpaid value of the mortgage, not just the value of a few missed payments.
The borrower would immediately be contacted by the lender to pay the remaining balance in full. If the borrower pays then they receive the title to the home and takes full ownership of the property.
Accelerated payment occurs when a borrower speeds up the repayment of a loan. This can be done by: Shortening the amortization period, which increases the amount of each regular payment. Making payments more frequently—for example, weekly or bi-weekly instead of once a month.
But if you're unable to repay your loan by a set date, usually 30 days after receiving an acceleration letter, your lender might begin the foreclosure process.
An accelerated payment option lets you make weekly or biweekly payments. With this option, you're putting more money toward your mortgage than with a monthly payment. Accelerated payments can save you money on interest charges.
A lender accepting partial payments from the borrower may be viewed as valid revocation of acceleration. This is as long as the lender made it clear that acceptance would mean that the acceleration was revoked.
Accelerated amortization does have drawbacks: It can deprive the borrower of a tax deduction, and some lenders charge prepayment penalties.
Prepaying your mortgage means doing just that. Basically, it means sending extra mortgage payments to your lender to pay down your loan principal faster. Not only does it get you out of debt quicker, but it'll also help you save money by reducing interest charges and the total amount of interest you'll pay.
Pro 1: Pay Off Your Mortgage Faster
But if you make biweekly mortgage payments, you will be making what equates to 13 monthly payments each year. Assuming a 6.5% interest rate and biweekly payments of $252, you would pay off your mortgage in a little over 24 years, or about six years early.
What does the Notice of Intent to Accelerate mean? In short, the Notice means you are running out of time before your mortgage lender forecloses. Most mortgages contain acceleration clauses. “Acceleration” means that your mortgage company can demand the entire balance of the mortgage, not just the amount past due.
Remember that velocity is a measure that includes both speed and direction. Because of this, a change in velocity can be either a change in how fast something is moving or a change in the direction it is moving. Acceleration means that an object changes it speed, its direction, or both.
The good news is, borrowers are generally able to avoid acceleration by working out a loan modification or repayment plan with their lender to make up delinquent payments. This is called a mortgage reinstatement.
Exercise of an acceleration clause is for the benefit of the lender (beneficiary) and is at their option and discretion. The lender can waive the default, deciding not to accelerate, though a waiver of one default does not waive others.
Options to pay off your mortgage faster include:
Pay extra each month. Bi-weekly payments instead of monthly payments. Making one additional monthly payment each year. Refinance with a shorter-term mortgage.
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
Making additional principal payments reduces the amount of money you'll pay interest on – before it can accrue. This can knock years off your mortgage term and save you thousands of dollars.
Making extra payments of $500/month could save you $60,798 in interest over the life of the loan. You could own your house 13 years sooner than under your current payment. These calculations are tools for learning more about the mortgage process and are for educational/estimation purposes only.
When you pay an extra $100 on your monthly mortgage payment, that entire amount goes to principal. You'll reduce your total balance much more quickly when you make an extra payment that goes directly to repaying your balance. You could cut around four years off your repayment time with just an extra $100 per month.
Refinance into a shorter term
When you refinance your home, you can pay off your home faster by replacing your 30-year mortgage with one that's a shorter term. With a mortgage refinance, you can shorten your loan term by selecting a 20, 15, or even a 10-year loan.
A mortgage acceleration clause is triggered when a borrower breaches the mortgage agreement, and it allows the lender to demand repayment in full. If the borrower can't repay the loan, then the home may go into foreclosure.
If the default isn't cleared, the lender can invoke accelerated payments by sending an acceleration letter. The borrower is required to pay the entire balance in full, agree to a short sale or home transfer, or enter the foreclosure process. The borrower may also have options to reinstate the loan after acceleration.
If the demand feature is checked "yes," the lender can require that you immediately pay the entire loan balance (principal and interest) at any time. The lender can make this demand on you for any reason or for no reason. Be sure to check your. Think carefully about whether you want to agree to a demand feature.