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): https://www.youtube.com/watch?v=3f-ebCjeH8o
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.