HELOC to Pay Off Mortgage
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- เผยแพร่เมื่อ 28 ก.ย. 2024
- HELOC to Pay Off Your Mortgage... You may have heard this elsewhere or you heard it from us... You can pay off your mortgage FASTER using a HELOC. Well, it's true! I'm going to breakdown exactly how you can use a HELOC (or just about any line of credit) to pay off your mortgage faster... On average 5-7 years.
Download our FREE HELOC Calculator & Explainer eBook: chopmymortgage.com
HELOC During The Recession VIDEO: • HELOC During Recession...
HELOC To Buy Investment Property VIDEO: • HELOC To Buy Investmen...
We call this strategy & method: Accelerated Banking.
It has many names from different organizations such as Sweep Strategy, Velocity Banking, Mortgage Acceleration, Pill Method, HELOC Strategy, etc.... It has SOOOO many names. But... the REAL name is Accelerated Banking
This strategy hails from Australia. And in Australia, it is reported that 1 out of 4 people use this strategy to pay off their mortgage.
The strategy involves using a Simple Interest HELOC (Home Equity Line of Credit) to pay off your mortgage. It's taking advantage of several things...
1. Lower Average Daily Balance = Less Interest You Gotta Pay.
Using the Open & Revolving nature of the HELOC, we're going to use the HELOC to make a principal payment against the mortgage which further reduces the interest owed as well as the time spent to pay off the mortgage. But now you have a balance on your HELOC. This is where you use your income and savings to knock down the principal balance on the HELOC which allows you to lower the average daily balance YET... Still use the income to cover your expenses out of the HELOC
2. Double Income Utilization
This is a concept where you use ALL of your income to reduce the balance of your HELOC but still being able to use the same income to cover your expenses. In one variation of the strategy, we introduce credit cards to hold all of our expenses while our HELOC is to use to wipe out the balance of the HELOC at the end of each credit card statement period.
3.HELOC is now your new "Savings Account"
By throwing all of our extra savings into the HELOC instead of your savings account, you can actually expect to save 4-7% interest (depending on the HELOC rate), instead of trying to earn 1-2% APY on a savings account. It's a matter of opportunity cost. By decreasing the balance of the HELOC with the savings, you're saving interest by whatever the amount you have "deposited" against the HELOC.
If you're skeptical about this strategy... You should download our FREE Excel Calculator and our FREE ebook that explains deeper as to how this strategy works!
Download our FREE HELOC Calculator & Explainer eBook: chopmymortgage.com
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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)
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#heloc #mortgage #helocstrategy
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--DISCLAIMER-- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and The Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.
Download the FREE HELOC Calculator & the eBook here: debtfreeaccelerator.com
Hey quick question. When using your calculator, i have been putting in different amounts of the heloc. Eg: i tried 20k then 50k then 100k with no change. Does this mean the amount you are asking for deosnt really matter for your strategy?
This might be the most complicated video on how to pay more interest on whatever you decide to borrow from your equity.
I guess im asking the wrong place but does anyone know a method to log back into an Instagram account..?
I somehow lost the account password. I love any tricks you can offer me
@@198746779838I found the same; regardless LOC amount; the results are similar; I use 10k LOC; it resulted I save 328k and only pay $24k for 30 years of loan of 232k. Banks are filing bankruptcy lol
Not to mention using a 0% credit card and maximizing out the interest savings over 12-15mo!
In response to all of the negative comments, if someone doesn't understand something they should not do it. If they do understand the math and the benefit then go for it. What he is talking about takes a financially stable individual with a lot of discipline. For example, I use my credit card for all expenses, pay it off in full before the due date, and reap the rewards of the 2% cash back. That takes discipline and a steady income and is not for everyone.
They haven’t addressed the fact that almost every HELOC has a call. All the discipline in the world can’t overcome the fact that the bank can “call” for the entire balance every 12-24 months.
I'm still yet to see a finance bro pushing this "strategy" actually show how and that you would pay less interest than if you just put your excess $ against the mortgage in the first place.
Losing money same way this doesn’t make sense sorry
@@mr.chalupacabra3587 well maybe don’t use this strategy if you can’t afford to repay the debt in the odd case that it gets recalled.
@@mr.chalupacabra3587 - While there are numerous factors any particular individual can't control, there are also numerous ones they can control, but fail to do so, on many levels. Ignorance, Laziness, Apathy, are all such things, that most of us fail to work on!
This video, if watched, only touches, for a very small part, on the Ignorance aspect of our financial Knowledge!
If a person "Spends" without Any Tracking, or Reviewing Process, that will tally their actions, and organize them, prioritize them, etc, that is a failure in the Apathy aspect!
Failure to be a Fanatic at the Tracking aspect, is evidence of the Laziness aspect!
It's tough to break bad money habits, but not impossible!
Keep in mind lenders can freeze a HELOC anytime (hello 2007-2010) ....a lot of lenders backed waaaaay off on HELOC business with covid as well and only a few brought them back with restricted terms as well.. in theory this is ok advice and it DOES save you money if managed pristinely.
that's what I was thinking and you have to make a very good income as well. Really not for the average American
One large risk seems to be that a lender can freeze a HELOC if the they deem the LTV is not in their favor. So, you can no longer use this process, and perhaps any savings you were hoping to use on other things such as a car or college for kids also gets locked in. I wonder if you could address this issue.
I just ran the numbers for myself and calculated this would save me $8/mo in interest. I want my 16 minutes back.
Shows u r an idiot. Work with professionals dude.
You sound very professional yourself. Show me the numbers.
I'm in the same camp. It makes better sense to be a very disciplined payer and pat extra against the principle.
The HELOC isn't enormously cost effective, if at all.
I did the math - yes it generally checks out, but there is a much much simpler way to do this if you have the extra positive cash flow. Just dump all your extra cash flow into the mortgage principle every month. Get similar results for the same reason (paying principle down EARLY in the amortization curve = biggest saving in interest and time). But with WAY less risk and WAY less need to follow a complex scheme. Just extra payments.
Also avoids all possible risks of a HELOC like the bank closing it, the adjustable rate, and any other hardships. If you are in dire straits and any point, just stop the extra payment, ask for forebearance, etc.
So not saying it's a scam or bad or anything - but extra payments is the way to go for folks that want to keep it simple.
This is what I’m saying. Isn’t the majority of the savings just coming from extra payments? With very little of it coming from the structure and compound vs simple interest?
@@ukjw2 There is a theoretical edge possible if you "use your HELOC as a bank account" b/c they suggest that you time the credit card pay off date and your paycheck date(s) so that you maximize the time your payments are sitting on a credit card (at no interest during the billing period) and then you pay the credit card off near your paycheck date.
It's complicated, and I don't even wanna do the math around it to see how much that actually saves over time, but it's peanuts compared to extra principle payments on your normal mortgage is my gut feel.
@@ugahenne But the idea is that this is for people who don't have the extra $. This is a way to pay off your home mortgage more quickly without extra payments.
@@lesliecummings2598 Not happening - at the end of the day, any way you twist and turn it, you gotta pay EXTRA towards the principle. There is no magic bullet here.
I agree, just use the KISS rule. Pay down the principal of the mortgage so it reduces the amount of interest incur. In my mind the HELOC strategy only works if 1) the rate of the HELOC is less than the interest rate on the mortgage and 2) if you have a rental property you would use the HELOC for the monthly payment. This way you get an income deduction on interest when you file your taxes.
THANKS. Just what I needed to watch. My wife and I got a 400k HELOC from our 780k primary home which we are still paying a mortgage for. I want to only use 200k for this new duplex down payment. I realized that the secret to making millions is making better investments and staying out of debt.
I'm grateful to GOD for the internet space, we were able to join the credit repair program, we payed up our debt and now we are back to being the administrators of our farming business and our own properties, as well as small pensions. I am almost 56, my wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn using Airbnb and retire comfortably.
"Laura Gilbert CFA " is the licensed fiduciary I use. She lead me to join the program, Just research the name you'd find necessary details to work with a correspondence to set up an appointment.
My HELOC went from 2.5% to 8.5%. Service credit union. Using a bunch of 0% credit cards for 18 months so I have time to get a renter and get some paid down!
Much more than I ever learned in my school life.
Same here. Went for a business degree and got less value than watching a few TH-cam videos.
I must be missing something. This is the second Video I've watched on pay off your mortgage sooner with a HELOC but all the conversation is about paying bills with a CC and using the HELOC to pay them off. If you use the HELOC to pay down your mortgage by 50,000, sure you mortgage total is less but now you have a 50,000 debt with HELOC with a huge interest rate. How does this pay off your MTG early? Sounds like you incur even more debt.
I'm with you on using a 2nd position HELOC to pay off your mortgage. I just got rid of my mortgage all together and replaced it with a 1st position HELOC. Much easier for my stupid brain to wrap around. I have my paychecks direct deposited into the HELOC, pay everything I can with my rewards credit card and then pay that off at the end of every month. Anything left over drives down the average daily balance but its also available to me immediately if I need it for an emergency...unlike a mortgage.
Ryan Woodman can those be used for a first time home buyer? I want to start right and get ahead and save a bunch of interest but would I already have to have an existing mortgage to turn it into a 1st position HELOC like you did? Can’t seem to get an answer on this question. Or could a 20% down payment count towards equity to start a HELOC from the start? Almost ready to buy and this looks great but will I as a first time buyer be able to get it. Thanks
Pinball Steve I believe you can qualify using the 20% down to bring the borrowed amount down to the 80% range usually required to qualify for a HELOC. Obviously other factors play into it as well, but I think you’d be off to a good start with 20% to put down.
@@arejaydubya ok, that makes a lot more sense to me, too. speaking about being able to wrap my head around it...yeah, a first position HELOC sounds like the way to go. But, I am kinda living paycheck to paycheck with the Corona Virus situation...does that affect things? I am debt free adn pay everything off every month.
Thank you
It all depends on cash flow after bills. Be sure to have an emergency fund for the unknowns, (water heater, tires, medical). You just put your check in the HELOC every month and depend on cash flow to pay it off.
Absolutely, having an emergency fund is crucial. The strategy focuses on using your cash flow effectively by depositing your paycheck into the HELOC. This way, you reduce your principal and save on interest while still having access to your funds if needed. For a deeper understanding, check out this explainer video: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
There was absolutely no explanation as to how this actually allows you to pay down your mortgage in 5 to 7 years
I understand your concern. The strategy uses flexible financial products to optimize how you pay down your debt, reducing both time and interest. For a clearer explanation, I recommend watching this video: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
Basically you’re making a huge principle payment then offsetting your other expenses to something that has you paying a lower total amount of interest. You can do the same thing by putting all your extra money towards your mortgage anyway.
I wish you could show the difference between paying extra(chunk payments) with out heloc and the heloc payment. Just want to see how much they save.
About $17 per month.
No, really
@@MichaelGamber thanks, i did independent research, these guys are salesman to thier core
@@MichaelGamber It's incredible to me that you'd call them salesmen and give this absurd answer. You can't possibly put a $ value on it without the terms and rates.
There isn't all that much difference in the math. It completely depends on your situation, the terms of your mortgage and HELOC, etc. Use the calculator to get a sense for the financials, but...
The real difference is that the HELOC is what Sam called "open ended." If you make an extra mortgage payment this month, that decision is final. If your situation changes in six months, you can't redeploy that cash. A HELOC is a relatively low-cost way to maintain more liquidity.
@MichaelGamber isn't wrong that they're selling, of course. They're presenting optimistic numbers and assuming a lot of financial discipline. And they're hoping to hook you so you'll buy resources from them. But that doesn't mean their math is wrong -- and they gave you the spreadsheet to test the numbers for yourself.
If you really could put all your income in on the 1st, and pay out on the 31st, the difference would be the interest on the value of your paycheck each month. That is the entire difference. In a perfect scenario, call it $30/mo. for someone with average salary.
-- But nobody gets paid once a month, so cut the $30 in half
-- Credit card payment date likely isn't the 31st, cut it some more
-- HELOCs come with fees...cut it some more
-- If HELOC rate is higher than the mortgage rate, you lose money
-- HELOC has risk....what's the value of the risk?
Or get a high balance CC and pay all the expenses with a 0% APR for 18 months then progressively pay installments divided by the total balance. And repeat..
it is as simple as get set amount in savings take all ur pay put on principal and if emergency come up use heloc not max out heloc, u not saving extra money but u not putting urself in a bind and u have flexibility still
You can use a credit card and do the same thing without so much risk because a helco is like a second mortgage
Credit cards can be handy, but they typically have higher interest rates and lower credit limits compared to financial products we discuss. The flexibility and structure of the banking products we recommend are designed to save more on interest and help pay off your mortgage faster.
Check out this video to see how it works in detail: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
No! Get the longest, lowest interest mortgage you can find on the least expensive house that will suit your lifestyle and never pay it off. Certainly do not pay it off with more expensive money.
Andrew H Yup. When they have to appeal to how paying off a loan early makes you feel (walk in grass you own) rather than asking you to be honest about personal risk tolerance and liquidity preferences and opportunity costs of capital. People need to “feel” less and think rationally more.
It's not the stated rate, its the effective rate. The effective rate is much lower than the stated initial rate.
I get it, so if I pay with a HELCO, the payments made can be used instead of paying a mtg company and u never see ur money again. So money invested in mtg pays goes back to you, so u pay off 20k in a year. You can use that 20k to buy another property.
Once you make the principle payments using the money from the HELOC you still need to make monthly payments on the mortgage, I didn't see that addressed, how is that supposed to be handled? Keeping in mind that other (non mortgage) expenses can be paid using the credit card method. Thanks
Great question! When you use the HELOC to make principal payments on your mortgage, the strategy involves using your paycheck to reduce the HELOC balance. This effectively lowers your overall interest costs. Your monthly mortgage payments continue as usual, while non-mortgage expenses can be managed with other credit tools. This cycle helps optimize cash flow. You can learn more here: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
What do you think about UFF Money Max Account?
Expensive. But it is the same concept.
Awesome video. Very generous of you to share this.
Awesome thanks I have been wanting this info for a while now
Isn't the interest rate on the heloc higher than the mortgage, also does this drive your credit score low
telwin edathil because heloc uses simple interest, for the earlier years of the mortgage, you are actually paying less interest vs a conventional mortgage which uses amortization interest.
kitty chu it would be better with a refinance
kitty cat so just borrow more money lol
Drives score down:
New credit : HELOC and credit card
Length of credit history: will lower average time on existing accounts.
Maxing out available credit: Example. 50000 line and you take 50000...this is a no no
Drives score back up: (over time)
Payment history: More on time payments!!
Credit mix: Long term (mortgage) and short term credit (HELOC & Credit Card)
Debt eliminated: nuff said
No matter. Interest is charged on the Balance! Because the HELOC balance never grows because you are constantly paying it off.
Freaking cool strategy. I’m doing this now on an all in one loan
AIO set it forget. Turn key system. Congrats
Interesting yet somewhat ridiculously risky strategy. You are essentially using the HELOC to pay down your mortgage balance. The HELOC in essence is trying to be a low interest way to borrow money to pay down the mortgage (assuming you dump income into it to keep the balance as low as possible most of the time). The problem is see is how do you get your HELOC balance low? If you are disciplined enough to budget and pay down your HELOC just freaking use that money to pay down your mortgage without the risks of a HELOC
Only a heloc is open ended all other loans r closed ended, if u don't understand this concept, I wish u luck.
Every penny you have should be parked somewhere to either reduce or gain interest on a daily basis--I don't know why this is difficult for people to grasp. Example: If I got paid at the start of the month, had a big $5000 trip planned for the end of the month, I'd put my money in a high, daily interest saving account for the 30 days while I wait. If I repeat that every time, I come out way ahead. This HELOC strategy is the same, but with debt. In the whole equation, compounding time is more important than the interest rate.
You've got it spot on! Just like parking money in a high-interest savings account to earn interest, using a HELOC strategically reduces daily interest on debt. It’s all about maximizing how and where your money is working for you. If you’d like to learn more about this approach, our free webinar breaks it down in detail: acceleratedbanking.com/free-virtual-class?sl=youtube
Sometimes it’s an adjustable rate up to a certain amount, but in this economy it will be many years before rate go up so it can work for some;the bank reserves the right to block the home equity line of credit at any time that’s the trouble
This comment aged like cow milk.
You CAN'T borrow more money at a higher interest rate, to pay down lower interest rate debt quicker.
The only argument here is that you are front loading that monthly mortgage payment and some HELOCs use daily or weekly compound interest. We are talking about *possible* pennies not counting the numerous fees, problems, and headaches these loans bring.
Then you would need to have cashflows so significant to save whatever your positive cash flow average balance is that month. If you have 50k in expenses and 50k in cash flow each month, you wouldn't (I hope) take out a HELOC. If you had such large positive cash flows, you should stick them towards your loan balance and avoid the HELOC all together.
The argument comes in because simple interest is amortized over the life of the loan. That means you pay a percentage on the balance due that month in interest expense and the rest goes towards the principal of the loan (for example, 3.5%/12 = .29%, or 1/3 of a percent of the total principal due). This means that on a $1,000 house payment towards a $150,000 balance loan, 44% of your ***payment*** is going towards interest.
This doesn't mean you are paying 44% today, that's just silly!
In a HELOC, the interest is calculated with compound interest, at a (horrible adjustable) rate greater than that of your mortgage. The interest expense realized each month is the same as that of the mortgage (or more because the interest rate is more). And you pay this interest IMMEDIATELY. Generally you only pay interest in a HELOC for a few years, however I have a video where my example also shared what would happen if you made extra payments to get the HELOC paid off in 3.5 years. You end up paying MORE for the HELOC + Home loan than if you just put those extra payments towards your home loan instead to get it paid off faster.
When you put it into an amortization schedule and calculate the actual interest expense for each option (which is what is the only difference), the HELOC is more because it has a higher interest rate. I walk through all of these details in my video.
Walk with me while we get out of debt together. The ups & downs. Financial advice and insight.
Never connected the dots. Looks like I’m supposed to pull down the mortgage once and then use the HELOC to pay my cards? Ya, no dots.
So what I wanna do say I own two houses one is paid off in full and what I owe about $50,000 on, but I have an adjustable rate I wanted to borrow money on the paid house and then pay the other house off and then have a lower overall payment That makes sense?
Which banks offer direct deposit into a HELOC? I just talked to my credit union and to BofA, and neither one does it.
Yes, this is the challenge. I learned about the strategy a few years ago, but so far I haven't met anyone who can tell me where to find a bank that does this.
In the second method at what point do you pay on the mortgage?
I just got a heloc. Gonna consolidate all my debt. And with my good high paying job I’ll put money back into my heloc each check. With my bank/heloc I don’t have to pay interest on the heloc for 10 years. Draw period is 10 years. So I can transfer money from my heloc to my checking or saving account anytime I want. I can do anything I want with it. Heloc is a money hack DEPENDING on where you get your heloc from. Local banks are the best at this
Can you do this w investment property
yes
Banks are hip to this.. this is why bank make u pay interest only for the first 5 yrs of a helock
is there fraud protection on heloc accounts? using the heloc to pay gas, groceries etc... I am dubious of having my card information stolen
Why not open a HELOC for an emergency and put 100% of extra income after expenses into the market that typically makes a higher return than paying down the mortgage?
I appreciate your video I really want to use this method to pay off my mortgage faster. However, maybe I missed it, but it is still a little unclear how we got one payment instead of two. To me it seems like we still have two payments just one is disguised in the HELOC... .. . ?
Tried downloading the free tool didn’t work
So, rather than keep a large sum of money in a savings account, doesnt it make sense to pay down the heloc principal? Especially since you can still use that money any time you want. In other words, unless you have a worthwhile investment (which a savings account is NOT) then cant you just use your heloc as a money holding instrument?
Oooops. He just answered that question. Sorry. Answer is yes
I like the HELOC strategy. How can I get a HELOC loan if my credit is low. I have a 620 and some debts in my credit. So how can I qualify for a HELOC loan.
What are my options.
What if your bank doesn't allow credit payments? Mine only gives me option of checking, savings, and money market.
I like the idea of this, I feel it could use some more thought into how to explain it. Just trying to be helpful guys
Theoretically it sounds great but in reality it sounds like a lot of extra maintenance.
Anyone know if I could pay off my mortgage with a heloc/is that better.. would that lower interest? My bank does not allow me to pay half of the mortgage 2 times a month.
If you pay off your mortgage with the HELOC can you just keep paying monthly on the HELOC without using credit cards? In other words, can you just make monthly payments to the HELOC in any amount that you want to bring down the ADI? I'm assuming you will then have to pay your insurance and taxes on your own.
What you missed was refinancing the first mortgage (went from $250k to $200k) as the P&I payment on $200k is less than the P&I payment on 250k. That’s more money in savings that could be applied to the P balance thus paying of the balance faster.
None the less, great content that I also preach to my clients.
But dont you pay closimg costs and fees to refinance?
@@blvckm0ney270 the price of everthing, the value of nothing.
can you tell me how to use the HELOC method to pay off my car. $14,500 left to pay, 14% interest. Dont Hate! :/
tina pacheco If you have equity in a home to use for a heloc you could yes. I would suggest you find a good credit union and try to refi your car loan at a lower rate. 14% is robbery
What I don’t get is the 30 days 0% grace period on the credit card is only there when you first sign up for the credit card. It’s a one time, one month opportunity. But the video seems to suggest you do this every month. What would be the benefit in doing this after you were no longer getting the grace period?
The grace period will not go away after the 30 day. You have that every month. It’s feature of all credit card. Call your credit card company, they will explain to you.
HELOC company won’t let you use the HELOC like a checking account to pay bills
Some HELOCs can function similarly to a checking account, allowing you to pay bills directly. It depends on the specific lender and product. For more details, check out this video: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
Interesting concept for sure. However, my reality is 1) my mortgage lender requires payment from a checking account; cannot not use a credit card and 2) same goes with my electric and gas utility company suppliers--must use a checking account...no credit card payment. So all income cannot be put into the HELOC at the first of the month...must keep enough money in my checking to make these payments. These three expenses represent 25-35% of my monthly expenses to operate my home. Thoughts?
There's a way of making a HELOC behave like a checking account :)
Transfer
Sounds like you need to leave that bank
It’s a great idea and it will work. However, most Americans will just run in to more and more debt due to self control. Most people are lazy and won’t have the discipline to manage their finances in this way.
How do you fake the money out of a credit card...by writing ourselves a check from that credit card(to make the mortgage payment)? I'm so new to CC and have no idea.
How often does the calculator move the funds from the HELOC over to the mortgage?
So the first strategy is to use the HELOC like an offset account.
This strategy does not work. If you run an online mortgage calculator for mortgage and loan, monthly mortgage payment is slightly lower and overall lower total interest cost. The difference is greater if the HELOC interest rate is higher than the mortgage and it is higher.
The bottom line is to make a lump sump payment on mortgage when you can. I guess only benefit using HELOC is flexibility to withdraw (to become more poorer). You pay more interest to just have that flexibility.
I understand your viewpoint. While it's true that using a HELOC can introduce higher rates, the strategy focuses on using your cash flow to reduce principal daily, which can still lead to savings. This method provides flexibility that standard lump sum payments don't offer.
For a deeper dive, you might find our free webinar insightful: acceleratedbanking.com/webinar-registration-515174331635781964831sl=youtube.
Why not just go first lien HELOC? There many Banks that do them. I know of one that will do a 90% purchase HELOC. The second lien strategy I think is more trouble than it is worth
What is better ? a 0 percent interest credit card for 1 year that i put all my bills and food into till its near max or the year runs out then put in my heloc or a credit card with points that i have to reset each month. The yearly one will save me interest on the heloc from almost nothing going into it just my income reducing it or the monthly one with points will give me some points ? I assume the yearly is better but i haven't done numbers, am i missing something ?
Thank you so much Mr Kwak
Can you tell us which bank in Canada to use for Heloc Please love your info
beware of End of Draw date and payback.
. Heloc takes alot of discipline. Be responsible!
Question can you transfer money out of your account for example if I had 10k available in my account could I transfer it into my bank account for 1 day get the interest and put it back in the heloc the next day
I see
Can you withdraw cash out of heloc?
Yes
Are there fees when you make HELOC payment to the principal?
If I have equity of 150k today and I take out a Heloc but don't use it, will I still have the same 150k if my equity goes down 6 months from now or does it go down when equity goes down?
What!!!! :- ) your heloc loan will be the same. 150k heloc loan = 150k heloc loan. It dont change after you get the heloc loan. Home values can go way up or way down through out the years as we all know. But once you get the loan ,it is what it is. 150k heloc is and equals 150k. No matter if your home depreciates in value or not. Even if you have not drawn out any money from the heloc loan and it's just sitting there.
I don’t understand he keeps talking about Heloc credits card line pay bills but what about the mortgage each month. If put all income in heloc then where’s the money pay monthly mortgage
From the Heloc
any suggestion where to apply easy heloc?
When we say we’re using the heloc to pay for groceries, gas and bills, are we saying that the bank will issue a heloc credit card or are we saying we charge gas, groceries etc and pay off our credit card with the heloc?
He's suggesting to use your HELOC (effectively, your new checking account) to pay off your Credit Cards. Think of the HELOC as you new checking account that you direct deposit your income into, which essentially, acts as a payment to your HELOC balance. He also suggests to get a Credit Card with great perks. I personally love Chase Sapphire Preferred because of the points. Remember to use your HELOC ("new checking account") to pay off completely your CC. This most importantly means, dont spend more than you can afford! Hope this helps explain it.
Should I go with interest only heloc?
That's what I want to know as well.
That would not work. You have to pay back the HELOC principle to be able to use it for the next mortgage principle and repeat.
😱 you lost me when you said put your salary money in the HELOC , pay bills with CC but I missed when did you pay the mortgage 😩😩
I wouldn't do this method they're advocating but to answer your question you pay the mortgage whenever the normal monthly time is. The use of heloc is to pay a lump sum upfront then your normal mortgage payments the normal time each month throughout the year. That first lump sum goes to pay off extra principle on the mortgage. So if your normal mortgage is 1k/mo you could take out a 12k heloc and use it all on January plus a normal mortgage payment (so 13k altogether) then each month after that you just pay your normal 1k mortgage each month plus you pay back the 12k heloc throughout the year.
The idea is not that there's magical extra money. In my example, you still need to have 1k extra a month you were going to use to pay extra on the mortgage except you do it in one lump sum the idea being that this cuts down the amortization rate and time to pay off loan. You still need the extra money though it's not magical.
Will this work if you get paid weekly?
Will this work if your income is not consistant? i.e. commission only income
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Hi, Q: Mortgages are compounded monthly vs. Heloc which interest is calculated monthly?
Compound interest vs simple interest. Big difference.
Heloc is simple interest calculated daily
@@vallang4832 No difference.
im even more confused now then ever before
Good video, but the real question is: how to use HELOC to pay my mortgage when they only take checking/saving account?
You make a HELOC withdrawal or transfer back into ur chk or sav acct right before the automatic debit kicks in for the mortgage payment
@@jaylmw08 so you have to do this step for any cash or loan expenses - where this strategy stops at good in theory, but in practice doesn't pass the smell test of the real world
@@mattlewin1525 there's plenty of examples of this accelerated payment strategy under several different names. One thing mentioned is that it will not benefit one who is not disciplined or is living paycheck to paycheck and has no positive cash flow.
I get paid weekly so would I deposit income wkly or set it aside till the 1st and deposit it into the Heloc?
Deposit it to the HELOC as soon as you get paid.
This makes absolutely no sense…this is just transferring from one debt to another debt.
How do you quantify the rate of return for this?
It will depend on your rates, where you are on your amortization schedule, and the balance of all of it. Keep in mind the rate of return earlier on in your mortgage term will be significantly higher than later in the term.
To calculate your rate of return, I would just do the calculation of chunking once. Then calculate how far down the amortization schedule it will take you by doing that chunk and add up all the interest that was saved. Then calculate how much interest you would be paying on the HELOC. Take the difference between those two numbers and divide it by the amount of interest you paid on the HELOC to calculate your rate of return. I can provide an example with fictitious numbers if you wish
@@iptvclub1575 yeah that’d be great. I’m trying to see if it greater than the historical return of the s&p 500. It entails taking on quite a bit more risk than investing in the s&p 500 so for me to be interested it would have to greater than that. Thanks!
@@franklintyler4652 keep in mind that paying down the mortgage is a risk free rate of return, comparing it to the “projected” return of the market is apples and oranges.
@@franklintyler4652 how is chunking the mortgage more risky then investing in the market? Quite the opposite actually
@@iptvclub1575 you’re taking out a second mortgage on your home which you do not have to do investing in the stock market. You are opening up just one more avenue to potentially lose your home.
Very helpful. Thanks much. More power guys!
Would you max out the HELOC to pay off the principal?
depends upon the loan to value of your property, and the underwriting standards of the HELOC program you are applying for.
Ok let me get this right. Soo I use the HELOC one time towards my mortgage which will not pay off my mortgage creating a second lien on my home and oweing now 2 "loans" with high balances? Then I try my best to pay off the HELOC by putting all my income into it, then having to get a credit card to help me with my expenses yet again creating debt? So I end up oweing 3 sources money?
Wouldn’t it be 360 days, commercial lending year? (I could be wrong)
Some still use 365. Depends on the bank
The Kwak Brothers oh okay got it. Thank you
This strategy can go very very wrong. Be careful. Read comments where people have done this and ended up in more debt.
Great content like always, thanks!!!
You're amazing too! Thanks :)
Insane the heloc is a higher rate
32 degree is hotter than 1 degrees. Unless, it's 32 degrees Fahrenheit vs. 1 degrees Celsius... Just because interest rate is higher on the HELOC, it doesn't mean that you're paying more interest... HELOC uses simple interest, mortgage does not
@@TheKwakBrothers why didn't mention the different rates? because heloc interest is usually a couple % higher. and just because mortgages are over 15 or 30 years they also use simple interest.
Not of concern. The Heloc balance is always much lower...less interest charge. That's why the WHOLE point!
Still don't understand how you pay the mortgage down....
For more assistance send a message via mail below thanks
thekwakbrothers1
G ~ MAlL
@@thekwakbrother1892 I'm just going to continue to make my extra weekly payments against the principal and keep it simple. I despise lines of credit
It doesn't make sense at all. :(
On mortgage, just pay double
Hello. Question- can thus be done if I am single and do not have a spouse? I owe 200,000.00 on my property.
As long as you have the extra income after expenses it should work. There is another girl on youtube Laura Ptiko who does this with a credit card. She has 2 videos, the most recent one is very detailed and shows how it is accomplished with excel spreadsheets.
Angela braniff
So this is basically Velocity banking
Has many names
You first talked about putting the entire heloc balance into the mortgage. But never explained how to make it so you only have one monthly payment. Then you just talked about using the heloc as a credit card. How does it tie to paying mortgage? What the fuzz is this nonsense?
Kyle Rankin elaborate please. “Some dude is an expert” is not a reasoning. It’s a statement or drunk mumble jumble at best.
Kyle Rankin well I don’t have debt problem. I’m trying to save interest without tapping my investment reserve and this kwak dumass wasted me 15m talking nonsense. I’m pissed
Well indeed more. I gave him the benefit of the doubt and checked his video that required my email. And that’s more nonsense. He’s showing this loan schedule with barely number filled in. Shifting the entire heloc into your mortgage is the best way to pay more interest. Image how much a high interest rate (heloc > mortgage) and simple interest calculation instead of month amortized interest can save you. Yes, if you know simple math and basic finance, that’s gonna cost you instead of save you money.
Kyle Rankin apologize the anger was at you. But this kwak bs is misleading people who doesn’t understand.
I didn't follow
?
I really enjoyed watching this video but I was expecting there to be something that I was missing. Once I saw the end, I realized that my concern still existed and that is that unless you do a RECAST on your mortgage, your amortization schedule's interest doesn't change. If you look at the amortization schedule as two triangles, paying off principle comes directly off of the last row and until that entire month (payment number 360 on a 30 year) of principle is satisfied, the entirety of that month's interest (extremely low since it is the final payment) will be charged. So while you're chomping away at that back end of your principle, you are not in any way adjusting the predetermined amount of interest that goes to each payment (the first ones with the very ugly interest). In other words, the amount of interest you pay per payment on your regular mortgage can NOT be changed without recasting (check this out, btw) or refinancing which means you are signing up for interest on the HELOC just to shave years off the back end of the mortgage. The money spend on that (HELOC) would be better invested if brought back into the mortgage by recasting instead.
There are two reasons based on how things are today that you wouldn't want to do a recast anyways though:
1. Your mortgage is new and you have a good rate. Use your cash for something else, as refinancing 3+ years from now will likely subject you to a much worse rate than you have
2. Your mortgage is not new and you can get a great rate today (by refinancing instead) since rates are likely lower than they were when you got what you have AND because values in many areas are up and you might be paying PMI which you have as a result of your loan being for more than 80% of the property's value at the time.
Recasting needs to be done in intervals of $10,000. I do not know if HELOC can be used for this process but if it can, this video could still be a very good idea. What this video will not help you do is lower your monthly payments or amount of interest you pay in these next 5 years.
Recasting will apply the $10,000(s) to your balance and will reshuffle your monthly payment and interest based on your new balance. You will not be able to change your interest rate or how far along in the schedule you are (this part is actually good news because payment number 1 is always the worst place to be).
You have actually missed the point of this idea. The power in this is that it replaces your existing mortgage (amortized loan) with a HELOC (simple interest loan) the math of this program works out easily in favor of the HELOC for paying off the balance much quicker, even if the interest rate is higher. It's no trick, it is just math.
Maybe I'm missing something - but you're definitely not comping away at the "back end of your principle" if you make prepayments. For example, if after 5 years of regular mortgage payments (payment 59 of 360 payments) I decide to pay the next 12 payment's worth of principle (i.e. the principle scheduled for payments 60-71), then my next regular mortgage payment will be look like payment 72 as far as principle/interest split is concerned.
Prepaying allows you to "shave off" years from your mortgage for that reason. And the earlier you prepay principle, the less interest you pay overall.
Sorry if that's what you meant to say, but for some reason your comment makes it sound like prepaying NOW doesn't immediately save interest overall. It definitely does because you're effectly skipping ahead of your amortization schedule.
@@thefireman2854 That would be true if the mortgage wasn't also simple interest, but it is. The math actually doesn't work so well.
Presently, mortgage rates have reached their highest point since the year 2000, spanning a period of 23 years. Considering inflation trends, there's a possibility that this figure might continue to escalate. To provide context, the 30-year fixed rate was only at 5% around this same time last year. Faced with this scenario, the question arises: should I continue waiting in anticipation of a potential housing market downturn before making a purchase, or is it more prudent to shift my attention towards the equity market?
Similar to any other investment avenue, the stock market requires a substantial level of expertise to sustain profitability. While my approach has predominantly involved buying and holding stocks, my portfolio has been in a state of decline for a considerable period. Achieving substantial gains necessitates consistency and the periodic restructuring of your portfolio to adapt to market dynamics.
The scenario is strikingly alike in cities worldwide-whether it's Shanghai, Hong Kong, Mumbai, Bangalore, NYC, London, or Toronto. Rent is soaring to unprecedented levels, while wages and salaries remain stagnant. It gives the impression that certain property owners are retaliating against tenants due to their hardships during the pandemic.
I fully recognize the significant advantages of collaborating with a pro, but thus far, I haven't identified the right one for myself. Could you provide more details about the fiscal guide who has been guiding you?
Always buy now. You can always refinance later if situations change.
And when COVID comes, you can default on three debt payments instead of one.
lmao
Hahahaha soo true
Lmaoo
So I just want a clarification. Say my mortgage payment is 1900. The only way this helps me in the future is if I pay monthly say 2200 so that additional 300 dollars go into principal only. But because the heloc acts as credit card then it's like I still have more money to spend. So then my question is why use a heloc and not just put the additional principal directly. I dont know if I'm missing something.
Because if you put all your extra cash into the mortgage, you have no extra cash whereas in the line of credit you can still access that cash if needed.
@@Debate_everythingBut if you have a HELOC and not use it, you still have the maximum available amount that you can draw from. Instead of using it to paydown principal, you use 0% interest rate (your own money) to pay down your mortgage.
Next week:
How To Plan A Bank Heist To Pay Off Your Mortgage
YASSS!!!
LMAO. Love it!
As a Black person (at least you look black) you should endeavor to stay away from anything that remotely sounds crime - even if it's a title to evoke clicks...if you don't understand why or think I'm stupid, then never mind.
@@jcmolette1613 Being that you are of obvious limited intellect, I advise you to resist your desire to message strangers in TH-cam comments for attention.
Otherwise your sick and demented mental programming will continue to be exposed. 😉
@@jcmolette1613 I think he was just joking?
What if they freeze your account , why would you put your income in your heloc when bank has the option to freeze HELOC?
If I had access to 50k, I would probably only use 5k to eat at the principal each time, might take me 5 months at a time to pay the HELOC off in full, but at least I’m not tying my entire paycheck into the HELOC…I’m not comfortable with that 😨😨