Using 7% HELOC to Pay off a 3% Mortgage?
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- เผยแพร่เมื่อ 29 มิ.ย. 2024
- Calculator link: chopmymortgage.com
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Intrigued by the idea of leveraging a 7% Home Equity Line of Credit (HELOC) to pay off a 3% mortgage? In our latest video we delve into the unconventional strategy of utilizing a higher-interest HELOC to eliminate a lower-interest mortgage. Join us as we unravel the complexities of this approach and explore whether it's a savvy financial move or a risky gamble.
Throughout the video, we'll examine the potential benefits and drawbacks of this strategy, shedding light on factors such as interest rates, repayment terms, and overall financial impact. Whether you're a homeowner weighing your debt repayment options or a curious observer seeking to expand your financial knowledge, this discussion promises to offer valuable insights and empower you to make informed decisions about your mortgage strategy. Don't miss out on this thought-provoking exploration that could reshape your approach to debt management and homeownership. #HELOCvsMortgage #DebtManagement #FinancialStrategy #MortgagePayoff #InterestRates #HomeEquityLoan
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*DISCLAIMER* The suggestions, advice, and/or opinions that are given by Sam Kwak and Daniel 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 The Kwak Brothers and its 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 on experience. - แนวปฏิบัติและการใช้ชีวิต
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I’ve been debating this concept, and this video is literally my exact thought. Thanks for addressing this topic. 😅
This video is interesting . Listened to your video in its entirety. Sounds just moving debt around. I have paid down 60% of my 3% mortgage by paying additional principal payments working two jobs and watching my spending.
Hello! It's great to hear that you've been dedicated to paying down your mortgage by making additional principal payments. It sounds like you've been putting in a lot of hard work to reduce your debt.
Our strategy might seem like it's just moving debt around, but it's really about optimizing your cash flow to reduce interest payments and payoff time significantly, without needing to increase your income or cut expenses drastically. This approach uses a banking product to accelerate the mortgage payoff by leveraging the flow of your money.
While it's true that you're managing different debts, the strategic movement and management of your money with our method can potentially save much more in interest and time compared to traditional methods.
If you’d like to explore how this could work for you potentially even more efficiently, considering you've already paid down a significant amount of your mortgage, you might find our detailed webinar insightful. Check it out at acceleratedbanking.com/webinar-registration?sl=youtube for a comprehensive explanation on how all of this comes together.
Thank you Kwack brothers. I have been using this method for 3 years now. Works like a charm.
Great to hear!
I paid off my home in 10 years 2 months.. Threw in any extra money I got, OT from work, tax refund, etc.. But of course I got my home for $154,000 in 2011.
which state?
Where’s the video Heloc vs stock investments ?
Wow can't believe I didn't know about this. Learning so much from you guys, thank you. Can you just help clarify 1 thing?
Which strategy would save more in interest and by how much?
1) pay an extra $1000 each month into the mortgage for 12 months?
Or
2) borrow 12k from my heloc, dump it into my mortgage, dump my pay into heloc biweekly, take out money from heloc to pay my bills. Reduce my balance by 1k a month (cash flow). Rinse and repeat yntil 12k heloc is paid off.
I did some calculations and the difference in the interest saved is negligible. Maybe I am doing something wrong? Any help would be appreciated.
It's great to hear that you're finding value in learning about these strategies! To clarify your question on which option might save more in interest:
Option 2, which involves utilizing a banking product like a HELOC, may potentially save you more in interest compared to just making an extra $1000 payment into your mortgage each month. This difference comes from the flexibility offered by the banking product, allowing you to use your income to reduce the balance quickly and repeat the process as you mentioned.
This strategy takes advantage of the fact that interest on such banking products is calculated daily on the outstanding balance, which can be reduced faster if you deposit your paycheck into the HELOC and only withdraw what you need for expenses. This can lead to substantial interest savings over time compared to simply making extra payments on a mortgage which typically calculates interest monthly.
There may be nuances in your calculations, and getting them right can be tricky. It’s advisable to use specific tools designed for this purpose or seek a detailed walkthrough in one of our webinars, where we can provide more targeted advice based on actual figures.
If you're interested to explore and understand these calculations in more depth, consider registering for our webinar: acceleratedbanking.com/webinar-registration?sl=youtube
This could provide further clarity and ensure you're maximizing your interest savings using the correct strategies tailored to your financial situation.
We paid $64,900 for our 1632 sq ft 3 bedroom 2 bath home in 21, I'm doing just fine overpaying the principal every month starting with $30 a month, then by by $40 a month, Already knocked almost 7 years off the life of the mortgage in 3 years. Next COLA it goes up another $10 a month To $50. My principal on my mortgage is only $125 a month. Already paying way more into principal than interest which is at 2.875%. And it's free, doesn't threaten my house. Wouldn't make sense taking out a HELOC that's double what my current mortgage rate is.
why are you here?
@@emojidinosaur7300 Why would anyone jeopardize their home
@@winniethepoohandeeyore2 65k wow.
for those who know no explaination is needed.
for those who dont no proof will ever be enough.
Hi. We plan to buy a new build with 20% down conventional loan. How soon can we get this loan?
I’m not sure about the specifics of acquiring a new loan for a new build. However, our strategies can be applied once your conventional loan is set up. For more insights on how to optimize your finances, you might find our webinar helpful: acceleratedbanking.com/webinar-registration-515174331635781964831sl=.
I downloaded the excel sheet but I don’t see the other daily and amortization schedule tabs in it? Is there an updated version…
Is there also a toggle to switch it to bi weekly payments as well?
It sounds like there might be an issue with the download. For bi-weekly payments or other advanced features, it's best to reach out for an updated version or consult the support team. Meanwhile, you can use our online calculator here: acceleratedbanking.com/home.
Great video, However I have a question, wouldn't the mortgage need to be paid off whilst the HELOC is being handled? Or is the mortgage interest factored into the HELOC? If someone could clarify this for me that would be amazing
Great question! In the strategy we discuss, the mortgage is indeed being paid off while managing the financial products such as a HELOC. The idea is not that the mortgage interest is directly factored into the HELOC, but rather that you use the HELOC to make lump-sum payments towards your mortgage principal. This reduces the total mortgage balance, which in turn decreases the amount of interest you’ll pay over the life of your mortgage.
The process involves carefully managing your income and expenses through the HELOC to both pay down the mortgage faster and handle the HELOC payments. The key lies in how effectively you can shift your cash flow to prioritize debt reduction.
For a clearer understanding, you might find this video helpful where it explains how managing a higher interest product like a HELOC can still result in overall savings on your mortgage interest: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
@@TheKwakBrothers Ah I think I have a better understanding, so your mortgage expense is going to be paid through the HELOC but these lump-sums allow you to make more towards the prinicipal payment, than the average mortgage would allow you to. Thus allowing you to pay it off earlier and with lower intrest?
You've got it! By using the HELOC to make lump-sum payments on the principal, you're essentially reducing the mortgage balance faster than making standard monthly payments. This leads to paying off the mortgage earlier and saving on overall interest. For a more detailed explanation, check out our video here: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
I'm trying to fully understand. So on the above example, just by using $20,000 from the heloc, it will reduce the mtg to 8.5 years? It just has to be done once? Is $20,000 the first 7 years of interest on the loan ? So for higher loans more Heloc is needed? I need to watch the previous video again. 🧐🤔
Not quite! The $20,000 from the HELOC is used to make a lump sum payment on the mortgage. This isn't a one-time thing but a process you can repeat to keep reducing your mortgage balance faster.
So, for higher loans, yes, more from the HELOC might be needed. You should check out the video for a more detailed breakdown: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html. It'll help clarify the strategy!
Just pay your mortgage and pay down the principal.
When will it not make sense to do velocity banking?
Velocity banking might not make sense if your financial situation changes in a way that significantly impacts your income or cash flow, like job loss or a major life event. It also might not work well if the banking products you’re using don’t align with the strategy. If you want to learn more about when this strategy could work best, check out our explainer video: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
It sounds like this will increase the amount of your monthly payment. Why not just pay that extra money directly to your mortgage and not get a heloc, it should save you more money.
I get where you're coming from, but simply paying extra towards your mortgage is like putting money into a one-way street-you can't easily access it again in emergencies. With our strategy, depositing your paycheck into the HELOC reduces your principal and interest, while also allowing you access to those funds if needed. For a more detailed explanation, this video might help: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
But now you have to pay the heloc and the mortgage?
Nope, you actually won’t have two monthly payments. By "depositing" your paycheck into the HELOC, it counts as a payment itself each month. For more details, check out this video: th-cam.com/video/HIvm17hor1s/w-d-xo.html.
I don't seem to be able to access the free mortgage calculator?
We're sorry to hear you're having trouble accessing the free mortgage calculator. You can find it here: acceleratedbanking.com/home. If you continue to experience issues, it might help to clear your browser cache or try accessing the link from a different browser. Let us know if you need further assistance!
@@TheKwakBrothers I'm having the same issue. THe page says a link to the calculator will come in 5-10 min, but it never comes.
I have the same issue. Never receive the link to the calculator/ excel file.
Thanks, Kwak Brothers! I watched your videos 4 years ago & our house will be paid off by September!
7 hrs ago 5-18-24 You really go too fast for me 3%-7% HELOC, please, I am interested in the concept. Do you have beginner video?
Absolutely, it's great to hear that you're interested in understanding more about this concept. We have a beginner-friendly explainer video that should help you grasp the basics of our strategy at a comfortable pace. You can watch it here: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html. This video gives a general overview and might clarify how the strategy can work even with different interest rates. Feel free to take a look and let us know if you have more questions!
Hi If we have a HELOC that has a 50,000 limit with a 49,000 balance ( took it out for repairs etc) want to eventually use the HELOC to accelarate the mortgage pay off. we have a $5000 month income with a $1519.07 mortgage and other bills. I cant figure out exactly how to do this even though I know it will take longer since we need to pay down HELOC first. I think I am missing a step or two. Hoping someone can help! Thank you
you will never get a straight answer. this is not worth the time. just knock of principle every month or even better every 2 weeks.
he was checking excel calculation using a calculator. that was so D*&^. don't waste your time on it. 7% is higher than 3%
You can use this method to quickly pay down your current HELOC balance. Since you already have a HELOC, all you have to do is park your paychecks in there & use your HELOC just like a checking account to pay your monthly expenses. I find it easier to charge everything on our credit cards & use the HELOC to pay them off every month. How fast you pay it off will depend how much cash flow you have👍🏼
If you have $12000 in income and $7000 in expenses where is the calculation comparing just paying $5000 off the mortgage each month vs using the HELOC?? Why not save all the HELOC interest??
Great question! Direct extra mortgage payments are a one-way street; once made, you can’t access that money again. With our strategy, you can put your $5,000 income into the HELOC to reduce the balance, then reuse it for expenses, maintaining flexibility. This method allows for quicker principal reduction and potentially more interest savings.
For a detailed breakdown, check out this video: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
12,000 per month. Interesting
where can I go and talk to a real per son ?
I understand wanting to talk to someone directly. One of the best ways to get started is by attending our webinar, where you can interact and get more detailed information. You can register here: acceleratedbanking.com/webinar-registration-515174331635781964831sl=.
No need to do a HELOC. Just add each month 12-7-1.9 = 3.1 thousand to principal each month. Velocity banking is not worth it.
IKR, wouldn't make sense at ALL for me when we paid $64,900 for our house in 21, overpaying the $125 a month principal knocks years off and its free, not threatening my house.
I get your point, but velocity banking isn't about just adding extra payments. It's about using cash flow management to optimize how you pay down your debt. By using a HELOC strategically, you might save more on interest and time even with the same income. Want to see how? Check out this video: th-cam.com/video/Xi75OPeNwfI/w-d-xo.html.
It's totally worth it if you might need access to that cash again. Making extra payments on a mortgage is great, but they are gone once paid....you will not have the ability to access or leverage that cash for any other purpose unless you do a cash out refi.
This strategy works best at the beginning of the loan, correct? Like once you're say 12 years in, I'm guessing best to just add extra payments to principal at some specific year and beyond?