System and method for paying down debt using an equity loan revolving line of credit

  • US 7,254,556 B2
  • Filed: 07/15/2004
  • Issued: 08/07/2007
  • Est. Priority Date: 07/30/2003
  • Status: Active Grant
First Claim
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1. A method, implemented on a computerized mortgage system for reducing a remaining balance of a mortgage loan still requiring payment on a loan account for a specified principal amount associated with real property, wherein the loan account is configured to accrue loan interest on the remaining balance at a specified interest rate and at a specified interval, the method comprising the steps of:

  • the computerized mortgage system maintaining the loan account at a computer system;

    the mortgage system automatically and electronically charging a pre-determined amount of living expenses per specified interval, for one or more of the specified intervals, onto a linked credit card account, the linked credit card account linked to the loan account for at least the purpose of automated electronic transfers of the linked credit card account balance to the remaining balance of the specified principal amount, the linked credit card account having a credit card account interest accrual interval, the credit card account interest accrual interval indicative of when credit card account interest is charged to the linked credit card account based on the balance of the linked credit card account, the linked credit card account also having a grace period after the interest accrual interval such that payment of the balance of the credit card account during the grace period removes accrued credit card account interest being charged to the credit card account;

    accruing loan interest on the loan account at the specified rate of interest for the one or more specified intervals based on the remaining balance of the loan account;

    the computerized mortgage system automatically and electronically charging the accrued loan interest to the linked credit card account to increase credit card account balance;

    receiving a payment into the loan account;

    applying the payment to the remaining balance of the principal amount to reduce the remaining balance of the principal amount;

    the mortgage system automatically and electronically transferring the credit card account balance to the remaining balance of the principal amount before expiration of the grace period, automatically transferring the credit card account balance causing the credit card account balance to be paid off such that accrued interest charges are avoided and causing the remaining balance of the principal amount to increase by the credit card account balance;

    receiving a second payment into the loan account; and

    applying the second payment to the remaining balance of the principal amount that now includes the automatically and electronically transferred credit card account balance to reduce the remaining balance of the principal amount.

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