Mortgage Killer Accelerator

Strategy 39 of 107

Active duty: the 6% SCRA cap on a pre-service mortgage, at the old payment

Most predictableFrom a lower cost of the same debt

What it is

If you took the mortgage out before entering active duty and its rate is above 6%, send the servicer a written request with a copy of your orders, no later than 180 days after service ends.

Steps

  1. If you took the mortgage out before entering active duty and its rate is above 6%, send the servicer a written request with a copy of your orders, no later than 180 days after service ends.
  2. Interest above 6% is forgiven, not deferred, for the whole service period and one year after.
  3. Keep paying the old amount; the difference goes to principal.

Repeat: Once per period of service; ask again after a new call-up.

Measure: Months to payoff at 6% with the old payment.

Try it in the calculator Enter its amount in "New rate, same payment". Add a payoff goal of 5 years to see what is still needed.

Risks

  • Only loans taken out before active duty qualify.
  • The cap ends one year after service ends; plan for the original rate to return.

Who it fits

Average household, Married couples, Single, Newlyweds, No high school diploma, No college degree, College students

Needs

On active duty, with a mortgage from before service

How predictable

Most predictable: once in place, the payoff date is arithmetic

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (average household). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: if you took the mortgage out before entering active duty and its rate is above 6%, send the servicer a written request with a copy of your orders, no later than 180 days after service ends.

Suppose it brings a new rate of 5.5% while they keep paying the old $1,896 payment. The loan would be paid off in 23 years 7 months instead of 30 years, saving about $147,106 in interest. To finish in five years, they would still need about $3,834 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sequences that use it

  • Military family stack: While on active duty, the 6% cap at the old payment; clear costlier debts; after service, a streamline refinance before the cap ends.

Sources and more information

Where to get help

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