HELOC Vs Extra Payments To Mortgage

So what is the distinction between utilizing our HELOC Strategy (Accelerated Banking Strategy) Versus simply making Extra Principal Payments towards the Mortgage? Well… there is a MASSIVE distinction. Don’t get us improper right here… You CAN save time and money by making further funds to the mortgage however this has severe drawbacks to our modern-day monetary modifications… So right here it’s… HELOC vs Extra Payments… ENJOY!

How to Pay Off Your Mortgage in 5-7 Years (on Average):

If you watched our video on easy methods to use a HELOC to repay your mortgage, effectively… that is for you… ALL of YOU HATERS! JK… 🙂

But in all seriousness, I wish to tackle this as a result of this appears to be the #1 objection towards our Accelerated Banking Strategy. Now, this technique has many names relying on who’s educating it… Some name it the Velocity Banking, Mortgage Acceleration, Replace Your Mortgage, Pill Method, Debt Free Acceleration, Sweep Strategy, HELOC Strategy, and many others…

So this is why I consider that the HELOC is a FAR superior technique to paying off your mortgage than simply making further funds into the mortgage.

1. Liquidity Lock-up

Whenever you make an additional fee into the mortgage as principal fee, sure… you’re saving time and money by decreasing the principal steadiness within the back-end moderately than the entrance finish. BUT! if you do that, you lose liquidity. Liquidity principally means entry to money and free entry to cash. So sooner or later, for those who completely want to make use of this extra cash, you’ll be able to’t get the cash again out from a mortgage until you refinance. Now, a few of you guys are saying that you’ve got 6 months of financial savings… So that leads my rebuttal to….

2. Savings Vs. HELOC
My argument towards 6 months of financial savings could be… Why not take the financial savings you’ve gotten and dump it into the HELOC to cut back the day by day steadiness WHILE nonetheless having the ability to entry the money if you want it. But whereas the money is parked in your HELOC, you are primarily saving time and money… Think about it… You’re in all probability incomes 1-2% APY in your financial savings account… Which is VERY little… If you dump the identical sum of money into the HELOC, you’ll be able to probably save 4-7% in curiosity that you just’re not having to pay since you’re decreasing the day by day steadiness.

3. Access to Future Funds For Investments

With the HELOC, you now have accessible money for future funding alternatives similar to funding properties. My rule of thumb with debt is… Use it when you realize with certainty that you can earn cash. Especially an asset that creates a constant move of revenue each month. I do NOT condone utilizing debt to purchase a brand new boat or a trip home that does not contribute to including extra revenue again into your life.

4. Double Income Utilization!

Double Income Utilization is an easy idea the place you need to use your complete quantity of your revenue to cut back the steadiness of your HELOC… all of the when you can entry the identical revenue to cowl your bills down the street!

Be positive to obtain our FREE HELOC Calculator to see for your self… How a lot cash you’ll be able to probably save utilizing this technique!

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The Kwak Brothers are millennial actual property buyers who’ve acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for his or her actual property offers. They are based mostly out of the Chicago-land space and they’re devoted to serving to hard-working folks turn into financially free actual property investor! They specialise in proprietor financing acquisition and elevating 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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—DISCLAIMER— The solutions, recommendation, and/or opinions which are given by Sam Kwak (The Kwak Brothers) are merely opinions. There aren’t any ensures of set outcomes. Listeners, visitors, and attendees are suggested to all the time seek the advice of with attorneys, accountants, and different licensed professionals when doing an actual property funding transaction. Listeners, visitors, and attendees are to carry Sam Kwak, Novo Elite, Inc. and the Kwak Brothers model innocent from any liabilities and claims. Not all offers will assure any revenue or advantages. Listeners, visitors, and attendees are to view and take heed to all supplies and contents furnished by the Kwak Brothers as a perspective based mostly upon expertise.

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  1. This must be the 8th video I've watched about this method, and I still don't understand it. Not even slightly. It has not clicked for me. I'm not saying it's not legit. Just sharing how clueless I am

  2. I purchased a home this year and don’t have the available equity for a heloc. Do you recommend using a 0% interest credit card in that case or just make extra payments until I build the equity and then refi and do a heloc?

  3. I get the concept but don't understand how to apply it… Watched many of these Heloc videos but still confused..

    The least 2-3 years, I have been paying $200-$250 a month extra into principle… But just this year, fortunate enough to pay $600 extra a month into principle…

  4. I already own a rental with a mortgage. I probably have enough equity in my house to pay off the rental mortgage. I already use the credit card like you suggest. Should I pay off the rental using a heloc or pay off my house.

  5. The velocity banking strategy is currently involved with my 30 year amortization. So far, I have paid down 51% of the existing balance and conversely, would you recommend me to transfer the entire amount to the second position HELOC in the elimination of the first position mortgage as I am in the application process of HELOC? In this case, my central banking corresponds directly to the HELOC in composition of the functionality of incoming deposits, outgoing bills and safety net. A credit card may be linked to the HELOC in fulfillment of monthly recurring expenses.

  6. After the initial use of the heloc to pay down the principal, when can you use the heloc to pay down the principal again? Do you have to wait til heloc is $0 balance before using it again?

  7. So the advice given in this video is:
    1) Use HELOC as your emergency fund. It's certainly fine to rely on a HELOC to enhance your emergency fund, but advising someone to simply not have an emergency fund is terrible advice. Banks have the discretion to cut off access to any revolving credit lines you have open with them at any time, so if you can't access your funds in an emergency then they aren't an emergency fund.
    2) Use your credit card to pay your expenses and then pay the statement balance in full every billing cycle. This is good advice, but there isn't any reason to put a HELOC in the middle. Simply pay the credit card off with your income. The only reason you'd need a HELOC would be if you spent more on your credit card than your income can cover come time to pay the statement. In that instance it would definitely be beneficial to transfer the 20+% APR Credit Card debt to HELOC at ~5%, but of course you shouldn't be spending more money than you make in the first place.

  8. So im going to pay that money up front and then borrow it back with interest if I need it? Nehhhhhh. Don't gamble your most valuable asset.

    I did 30 year loan paid in 7 years by making extra payments. Heloc has a repayment order by bank every year so they have the power to demand for payment in full when they please. It is Unlikely in the near future, but If interest also change/raises you're stuck with the new payment amount as the rate is adjustable. U want the American home ownership dream? U want to pay off your home quickly? Get a 15 year mortgage at no more than 25% of your monthly take home. Otherwise you can't afford it.

    Don't let the home own you.

  9. Sam, correct me if I'm wrong but your heloc can be cancelled and any money in there will be locked in like payment directly to principal right? If so please make another video explaining that. Please give pros and cons.

  10. Paying off a normal mortgage with a HELOC is not very wise advice since the HELOC lender at any time can raise the interest or even demand that you pay back what you owe in full or they will take your house.

  11. Using a HELOC actually does work to pay off your home faster, but it's very RISKY!! Most people don't like to take risks. The saying "No Risk, No reward, Big Risk, Big Reward" applies to this process. The risk is….you could lose your job during the process since there is no job security.

  12. I thought HELOC interest is no longer deductible, so technically leaving it in a regular mortgage gives you a 30% return on any interest paid. Is this right? If so it's not only risky but equal or more expensive to keep a balance at all in HELOC.

    We have a heloc but use it as an extra emergency fund. If you want lower payments I feel it's better to refincnace after paying extra payments for a while. But remember, keep your payment at 25% of your income, preferably 15 year payments to calculate this but still get a 30 year.

  13. Ok so when I used your calculator paying an extra 10k per month it showed me paying 15k in interest. When I used my mortgage websites calculator inputting the same extra payment it said I will pay 9k in interest. Who is giving me false information here?

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