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The Next Wave of Actively Managed Debt — The Mortgage.
There should be a mortgage product that automatically takes advantage of rate declines without refinancing while allocating the housing payment savings to debt repayments in a consumer selectable way.
With current technology, this seems doable. Some apps round up a cup of coffee, depositing the difference into a savings account. Apps will show you the best way to pay off debts and how much should go toward each creditor for maximum impact.
Why isn’t there a mortgage that automatically reduces your rate when rates go down without an expensive refinancing and take the difference of the old payment and the new payment to pay off debts or the mortgage itself?
Such a consumer-friendly mortgage would be a market differentiator.
For years, TransUnion studies consumer debt payment hierarchy. In each of these years, consumers prioritize unsecured debt payments over mortgage payments.
While this sounds bad for the mortgage lender since people pay car loans, personal loans, and credit debt first, it makes sense.
People need their car to get to work.
People need their credit cards for emergency spending.
