HELOC to Pay Off Mortgage

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.

[@TheKwakBrothers]

Download the FREE HELOC Calculator & the eBook here: debtfreeaccelerator.com

[@198746779838]

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?

[@matthewholliman1399]

This might be the most complicated video on how to pay more interest on whatever you decide to borrow from your equity.

[@julianjackson456]

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

[@myhouse-yourhouse]

@@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

[@PlanwithJohn]

Not to mention using a 0% credit card and maximizing out the interest savings over 12-15mo!

[@marybusseau6016]

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.

[@mr.chalupacabra3587]

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.

[@samgray2680]

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.

[@Adrian-ok5gt]

Losing money same way this doesn’t make sense sorry

[@MacLaw3084]

@@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.

[@robertweekley5926]

@@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!

[@SheilaYilmas]

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?

[@ScottRich9]

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.

[@HakimZakzi]

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.

[@MarioRo1]

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?

[@jonathanthainguyen]

Always buy now. You can always refinance later if situations change.

[@ugahenne]

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.

[@ukjw2]

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?

[@ugahenne]

@@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.

[@lesliecummings2598]

@@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.

[@ugahenne]

@@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.

[@TheRealToastman]

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.

[@zhenya2639]

Thank you so much for the good explanation! Love your videos! Thank you for the great work!

[@jjpac2011]

Awesome video. Very generous of you to share this.

[@mn6780]

Awesome thanks I have been wanting this info for a while now

[@StocksDoc]

the BEST of these type of videos . . . explains EVERY detail

[@oliverA4936]

He stopped using numbers at the 13 minute mark. I didn't understand it after that

[@dennyinirio1786]

HELOCS, when used properly is an AWESOME tool!

[@ultimatelife5167]

Wow! This opened my 👀, excellent idea but need lot of planning and discipline, not for everyone for sure, thanks!!

[@Milly-tm8gb]

Great info thank you 👍

[@michaelr8819]

Excellent! I feel like I understand this now! I can do it!

[@marklandgray3841]

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.

[@TyWerks]

that's what I was thinking and you have to make a very good income as well. Really not for the average American

[@krisspinden]

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.

[@boyfromthemountains]

Much more than I ever learned in my school life.

[@yaroslavkrymov9955]

Same here. Went for a business degree and got less value than watching a few KZbin videos.

[@DominicTrujilloRealtor]

Great information 👍🏻

[@aja_6093]

Very informative thank you

[@marvinnichols2819]

Thank you so much Mr. Kwak.

[@alanberry4919]

Forget the math in this case. If you use a HELOC, the bank can call up the loan at any time and you have to pay it. If you can't, they can take your home. DO NOT DO THIS! You add risk to what is essentially a promise not to call up the loan for 15 to 30 years. Better would be to track your cash flow and put all the extra money you have on the house which is what this process is doing anyway. Add to that, you don't pay extra interest.

[@raiden031]

But KZbin pays people money to create videos that promote nonsensical ideas that sound good

[@jordanpreston9147]

This is a great strategy! I use it on all my properties. Only thing to be careful on is knowing your current mortgage details inside and out. One of my mortgages only allows a 15% principle pay down each year. If you pay down more then 15% you would be breaking the contract and pay penalties. Play within the rules and this strategy is fantastic!

[@wfgdaniel]

Good information

[@Beam729]

Great information. That pay down penalty is extremely important to know.

[@MyLady22]

That’s BS!

[@myfinancialsuccess2704]

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.

[@marvinnichols2819]

Thank you so much Mr Kwak

[@sanluis8]

Very helpful. Thanks much. More power guys!

[@baljitbanking1509]

Kwak, You Rock Man !!

[@ericdavid8282]

I’m recommending Andrewhacks247 on IG he deals on sale of credit repair softwares that can be used for credit clean up like charge offs,collections,hard inquiries,Fix mortgages E.t.c You can also reach him @ [phone]..I got my tradelines from him also...

[@LSUtiger607]

And when COVID comes, you can default on three debt payments instead of one.

[@Viper4ever05]

lmao

[@HappyCleanersWA]

Hahahaha soo true

[@javell182]

Lmaoo

[@rogaineablar5608]

So people who use auto-payment might get hit with a fee when charging the monthly bill to a card (as opposed to a bank EFT) and even with 'manual' online payment, they often get hit with a 2-3% charge when using a card. Additionally, some HELOCs have a $500+ minimum withdrawal (check your loan's terms). It's probably better to use an actual checking account in place of the card if you are looking to avoid interest/fees and can support normal expenses. The HELOC part still makes sense to reimburse the checking account, assuming you direct-deposit your salary.

[@julianawatkins4489]

I just ran the numbers for myself and calculated this would save me $8/mo in interest. I want my 16 minutes back.

[@marshallwise2039]

Shows u r an idiot. Work with professionals dude.

[@julianawatkins4489]

You sound very professional yourself. Show me the numbers.

[@aaronjennings8385]

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.

[@lwt3162]

This is great information! Thank you!

[@TheKwakBrothers]

Thank you!!!

[@christinetiger8326]

I inherited a home from my brother that has a Heloc, we both lived in this home when he passed. Do I just pay that off when I sell the home? I've been making the monthly payments btw.

[@thenecessitarian]

Seems like it should work....however, it seems to me that there's a catch in that your mortgage payment isn't charged based on your mortgage balance, it's based on the money you borrowed. That is to say if you borrowed 100k at the start of your mortgage and your balance today is 5k dollars then you're still paying the full amount on the bill for 100k until you pay off the balance in full. So if you use a heloc to pay down a mortgage balance you're going to get charged two payments instead of one..... So, unless you completely reshuffle your debt by paying off the entire mortgage balance in one swoop using the heloc, then your monthly payments may increase quite significantly depending on how much money you borrowed against the equity and what the interest rate for that heloc account is. Correct me if I'm wrong though.

[@raiden031]

The minimum monthly payment is fixed based on the starting balance, Interest rate, and term. But paying down will lower the balance and change the ratio of principle to interest for all future payments, saving you money. But using a HELOC is not a useful way to accomplish this, just paying down directly from a checking account is

[@MrJimmy3459]

This is a great way to complicate your financial life which people tend to love to do.............

[@MOTIONTOGRAPHY]

Wow! Thank you

[@TheKwakBrothers]

You're welcome!

[@theconquered]

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.

[@Debate_everything]

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.

[@vymadkvymadk2039]

He is just all over the place. There are much better explanations out there by others

[@stockystock4609]

This dude will have y’all in trouble with this strategy! If you’re not gonna wipeout your mortgage don’t do this ! If you’re not wiping out debt or consolidating and making cheaper payments don’t use this . He’s bananas

[@Antonio-os7eh]

Great content like always, thanks!!!

[@TheKwakBrothers]

You're amazing too! Thanks :)

[@robertgarcia5239]

Hey Mr. Kwak, Great video, i have a question and hope that maybe you can answer, i wanted to pay off my current mortgage of 45k @ around 10% interest and my bank is offering a line of credit at 4.75%, but the question is that when i got divorced about 20 years ago then i was awarded by a judge my current house, so just wondering if i pay off my mortgage and get a HELOC but bank wants my current wife to be on the application to show more income then just wanted to know if the HELOC is like a second mortgage and if my current wife will have any interest in my house? reason is because everytime she gets mad then she threatens to take my house like my ex-wife took one of my houses that was paid for, thanks for your time.

[@bannertraveller5879]

rule number one never get married. rule number 1 never get re-married

[@merkules2001]

Get her to sign a quit claim deed. Solves name issues legally. With state, not bank.

[@alexanderpowers1]

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.

[@alexanderpowers1]

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.

[@marshallwise2039]

It's not the stated rate, its the effective rate. The effective rate is much lower than the stated initial rate.

[@mommaoinnh2674]

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!

[@xraypluto5262]

I bought my house for 121k. A year later houses fixed up in my neighborhood same square feet, bedrooms, and bathrooms are going for 250k-275k. I’m def about to get a Heloc to fix it up.

[@SteelC6]

Think and run the numbers first. Me personally, I would never get a HELOC to fix up my home. I would only use it for an asset not a liability.

[@ricot2]

If the mortgage is paid out of the HELOC monthly, how would that be different from the monthly payments you are currently making ?

[@sirturdaloter141]

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.

[@someutubchannel69]

Which software/hardware do you use for the whiteboard?

[@Newbenwindowcleaningcom]

Silly me but i remember when heloc on 2008 crash were frozen and essentially alot of people lost their homes.....

[@ronaldpellet854]

Cool!!!!! Very cool!!!

[@murf6023]

Do you have your mortgage in this helix account or only some of it then when paid do you draw down from a floating mortgage account into your heloc account and pay that off using your system then redraw down again from floating mortgage?

[@mlambert1974]

If this has been asked before, I apologize for repeating this question...If you positive monthly cash flow is let's say $2,000, why not apply that money each month to pay down your mortgage principle? Why use a HELOC with high (10+%) interest rate?

[@raiden031]

The only reason anyone has ever given that has any validity is they say you can use the HELOC to cover an emergency. That also means they have zero cash savings and are expecting the HELOC loan will never be called. It's still stupid to do it.

[@terrencemcphail5782]

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

[@bennettlockandkeymattandja9671]

This would take a lot of spending discipline to not eventually max out the HELOC and still owe a huge mortgage.

[@tevinroth1114]

Appreciate the video. Although I think I missed it, how are you avoiding two payments (your mortgage and your HELOC chunk). To me it seems like your still paying two payments but disguising it in the balance of the heloc... .. . ?

[@Stalyen45]

I think your income being direct deposited into your HELOC serves as the payment for the HELOC.

[@GoElimin8Mortgage]

It uses your discretionary income to pay the principal on the HELOC. And it builds from there when you are paying off your credit cards.

[@25alexduro]

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.

[@harlensanchez454]

I have a question I understand of putting in your income into the heloc and paying bills with a credit card but what about the mortgage payment since it could be high that itself can max out a credit card or it can take a huge chunk of your check just for the monthly payment and then the bills the heloc could possibly always have a high balance and would take over 1-2 years to payoff and use again

[@sancochito75]

Can you use a better example to what is the interest for the heloc?

[@deborahdrake5758]

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.

[@tevinroth1114]

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... .. . ?

[@macpheat]

Can you tell us which bank in Canada to use for Heloc Please love your info

[@indrayee]

This is only work if you have tons of cash in your checking/saving accounts. Heloc is usually higher interest rate than mortgage. Lets say 4% on your mortgage and 5% on your heloc. If you open 100k heloc and transfer the whole thing to mortgage, you will need to transfer over $20k from your checking/saving to see the different . Different rate or heloc ballance = different sweet spot. If you are doing this please do your math. Also be careful if you have heloc with variable rate, your rate might go up and down which equal changing that sweet spot constantly. But if you have tons of money sitting in the bank and you dont want to invest in other thing then this might work for you. Then again if you have so much money why dont just pay extra to your principal.

[@covergirlx2i5]

THANK YOU for the confirmation. I am looking to open business and wanted to do Home Eq Installment loan where most banks are trying to convince me to go with HELOC. Of course I became suspicious, watched videos, called everyone I knew because this is all new to me. This video threw me off a bit - he's talking about HELOC and how it can also be used for vacation - and at that moment, I'm like he must be speaking to rich people because that is such a waste. Heloc is too risky for me personally simply because of the inconsistency with rates/monthly payments etc. I am still so stressed as to what is the best bank/rates etc for me. This helped a bunch!

[@outingsforoldladieswhoaren7664]

There was absolutely no explanation as to how this actually allows you to pay down your mortgage in 5 to 7 years

[@MsProverbs31Woman]

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?

[@consumerdebtchitchat]

I've watched multiple videos like this. It sounds like a labyrinth to pay off your mortgage - with many pitfalls. I'll just stick to paying extra on principle. Simple. But the end result is the same.

[@ahikernamedgq]

The end result is almost exactly the same, with almost the exactly same timeline, with far less unnecessary complexity and risk.

[@tbarcrowe]

Agree don’t lesson to this guy. Just try and pay an extra $500 or $1000 each month towards your principal. Much easier less headache’s

[@danieladugaro1551]

This does work , however, I would not borrow against the heloc for other expenses. I used a heloc to payoff my mortgage quickly as the interest rates were less at that time compared to the mortgage. It allowed me to pay off my mortgage sooner than locked in. The variable is to review the best route of interest when borrowing. Today, the mortgage rates are at a all time low in history, which a fixed mortgage would be better. I typically use both for home ownership.

[@ahikernamedgq]

@@danieladugaro1551 the problem with using a HELOC is that - other expenses come up and it's easy to use it for whatever. Your washing machine/car/fridge/etc breaks down. It's easy to rationalize things. Using the HELOC doesn't fundamentally support the longterm discipline and focus needed to pay off large consumer debt or a mortgage. And, if your financial situation changes (ie laid off, etc), you're stuck - at least temporarily - with a very high interest debt payment added to your overall budgeted expenses. It's not a wash and this is such a silly "strategy." In watching this video, and about 20 videos like it, you quickly realize all these "financial gurus" are 1. explaining the process exactly the same way - meaning they are just repeating what they heard somewhere else, and, 2. it's clear that they (esp the Kwak Bros) don't even understand how this works - they're just in it for the views they get on their channel, which you can't blame them for. But this "financial strategy" does not seem sustainable over time or anywhere close to worth the risk.

[@BKLNHobo]

An outstanding HELOC loan actually interferes with the ability to refinance the mortgage.

[@adatshhc]

Next week: How To Plan A Bank Heist To Pay Off Your Mortgage

[@ahikernamedgq]

YASSS!!!

[@SilverCSRT4]

LMAO. Love it!

[@jcmolette1613]

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.

[@adatshhc]

@@jcmolette1613 Being that you are of obvious limited intellect, I advise you to resist your desire to message strangers in KZbin comments for attention. Otherwise your sick and demented mental programming will continue to be exposed. 😉

[@ahikernamedgq]

@@jcmolette1613 I think he was just joking?

[@sean2549]

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 ?

[@heavymetalweld805]

Is there way you could break this down in more of a timeline example? From what happens on the 1st through to what happens on the 30th. Because the way it was explained went over my head.

[@sammybully5030]

noo because it works in a perfect throretical world but it won't work on a tight budget. and do not get a heloc for over your yearly salary

[@iptvclub1575]

It should have been noted that this is a POST Budget strategy. You have to be spending less than you make and have your budget in order to optimize how much you can chunk. So it’s not for everyone. To answe your question, let assume you make a 25,000 chunk and your cash flow after all expenses are paid is 2k a month. Let’s assume you make $7000 a month and it’s paid on the first. So when you do the chunk you have a balance of $25 k on HELOC. As soon as you get paid on the first you deposit your entire paycheck into the HELOC, which then brings the balance down to $18k. Since with HELOC you pay interest daily only on the outstanding daily balance (interest rate /365 x outstanding balance). So it’s in your interest to keep your money in the HELOC as long as possible. Now throughout the month you only take out money to pay your expenses, but that happens throughout the month (not all at once) by the end of the month you have you $5,000 spend coming back out of the HELOC, and your balance is now $23,000. The key to this is that even with your HELOC being at say 5% you didn’t really pay 5% on the entire 25k, because you used your income to put the balance to 18k and slowly over the month brought it back up to 23k.

[@raiden031]

​@@sammybully5030it doesn't even work in a theoretical world unless you use sleight of hand tactics to leave out certain details

[@LMac1985]

How often does the calculator move the funds from the HELOC over to the mortgage?

[@narconarco2284]

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

[@marioeid930]

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.

[@MichaelGamber]

About $17 per month. No, really

[@marioeid930]

@@MichaelGamber thanks, i did independent research, these guys are salesman to thier core

[@smarterfinances]

@@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.

[@smarterfinances]

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.

[@MathMajor2pi]

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?

[@marshallwise2039]

Boy, you certainly took a simple concept into a confusing mess. Just take your full monthly checking account deposit and apply it to paying down the principle. Then pay your bills with your heloc. This concept can only work for those you have a surplus checking account balance. If so, your mtg. will be paid off in 6-10 years.

[@kkpsk]

Agree.

[@jimmywallhanger8402]

Don't you then have the heloc debt? I'm so confused.

[@piercechoi3657]

@@jimmywallhanger8402 You are pretty much moving balance of amortization to HELOC and taking advantage of interest. But like OP said, I don't think it's good idea for most of American who live daily life from paycheck to paycheck

[@andreagoodwin4967]

It wasn’t confusing. And you shouldn’t be putting your money into your checking account! You put it all on the HELOC. You pay your bills on a reward-bearing credit card and pay that off with the HELOC. What’s confusing?

[@andreagoodwin4967]

@@jimmywallhanger8402 Your paycheck is applied to the HELOC like you would use your checking account. The longer it sits there, your balance is being paid down.

[@Khotsa]

What about the mortgage payment? How do you handle that?

[@she-ro8561]

I am a bit confused on the second strategy. Am I paying extra to my mortgage or what ever is left over in the HELOC goes to principal of mortgage?

[@jeroldstokes6065]

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.

[@d.i.yinvesting7678]

This is exactly how I wish to get my finances coordinated ahead of retirement.

[@d.i.yinvesting7678]

You talked about a "credit repair program" how do I join? I took out a 200k heloc from my primary home 2 years ago which I'm still paying.....I find it challenging to invest elsewhere because I'm still paying the mortgage and I got bills. to pay.

[@jeroldstokes6065]

"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.

[@d.i.yinvesting7678]

I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.

[@aj_aka_alan]

I think you're missing a component here where you have to keep on making payments out of that HELOC towards your mortgage (at least what you normally would have spent). BTW, not all HELOCs allow this kind of behavior such as the one with my CU

[@jonnyboy4774]

Great point didn't even think of that. That kind of makes this pointless for me because to pay the heloc down while paying a monthly payment seems difficult

[@bigbusiness6067]

@@jonnyboy4774 did you try it? If you did how’d that work out for you

[@raiden031]

​@@jonnyboy4774using a HELOC will most certainly cost more than just paying directly from checking account to mortgagr

[@R27tisdale]

Ive watch most Of your videos although not so explained how You would not half to pay the Heloc Payment and Mortgage payment each month?

[@brentglittle]

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.

[@arejaydubya]

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.

[@pinballsteve1192]

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

[@arejaydubya]

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.

[@liloapapa7329]

@@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.

[@TheDoodleZone]

Thank you

[@rockywiley9547]

Does one continue to make the mortgage pmnt which includes interest, escrows for taxes and insurance?...Do you just make principal pmnt?...otherwise your HELOC interest is added to your mortgage interest....

[@BigBlockEntertainment]

ROCKY WILEY this is my thoughts as well? The Heloc will only go down by the amount of cash flow you have. You still have to make your mortgage payment every month so if your living paycheck to paycheck your heloc will never go down.

[@jaylmw08]

You make a reg monthly mortgage payment (prin & int) from the HELOC. Obviously this strategy isn't recommended for people who have no positive cash flow (living paycheck to paycheck.)

[@shirleytarver772]

My understanding is; add your income to heloc to continue paying bills which include mortgage.

[@thefireman2854]

NO. There will be no mortgage payment. You are replacing the mortgage with a HELOC (refinancing mtg balance into the HELOC) As youearn money deposit it on the HELOC balance. Pay all your oyther bills from the HELOC as they come due.

[@thefireman2854]

@nb Android It is a refinance of the MTG into a HELOC. The total balance of the mtg is placed on the new mtg...the HELOC. So the 200k still exists, it just gets paid down so much quicker because it is simple interest under a HELOC and amortized under the old mtg. Its like having a Credit card with a limit of 200k, as soon as you pay down some principle that amount is available to charge back up.

[@cesartabanao4125]

How are you paying the mortgage when you put all income in heloc I think you forgot to mention that but really good money thinking

[@dustinbarnett9402]

Lump sum from HELOC goes to mortgage. Pay HELOC back down with income, rinse and repeat.

[@jaylmw08]

Ceasar, other examples don't use the entire HELOC amount like he did. Even he advised against it. So say you pay only 25k towards the mortgage, now you still have the remaining half to pay bills (this is where your regular monthly mortgage payment comes from.) Another reason not to use the entire HELOC is in case of emergencies.

[@billyjeung4739]

Dustin Barnett lum sum goes to the mortgage and then ? Will the mortgage payment goes down ?

[@jaylmw08]

@@billyjeung4739 mortgage payment monthly amount stays the same but your saving interest and reducing the loan term cause your paying down the principal faster.

[@theairforce1877]

Dustin Barnett He actually didn’t explain the rinse and repeat part correctly. He didn’t mention really anything about how you pay the mortgage down after the initial 50k he put on the home from the HELOC. He then started talking about the credit card. He left out that you probably want to but 40-45k on the house but not max the HELOC out. Then you put 5k per month on your HELOC acting as your checking account and pay your bills monthly using 3k of your 5k while paying back your HELOC monthly with the other 2k. Once you do this for say 6 months or however long you want to do it you have paid back 12k back to your HELOC. You now take the 12k from the HELOC and pay it on your house, doing this over and over rinsing and repeating. He skipped all of that!

[@mohammadmustafa5349]

Hello Everyone, To anyone who has used the HELOC Strategy/Velocity Banking. I have a MAJOR question: Once you paid down any given the debt, such as a Credit Card, do you allow that money to continue to attack the HELOC meaning: just let it do it’s thing while recycling through the HELOC in turn paying down the HELOC faster, allowing you to perform another pull of whatever amount you usually pull for the big chunk payment. OR do you take that extra amount that you have and use it in a Snowball effect? Thanks All.

[@GoElimin8Mortgage]

You are correct on both. Good listening and observation skills. This strategy is a Snowball + Avalanche effect on steroids if you understand the technique.

[@yotube1ful]

In applying for a HELOC is it advisable to apply with current lender for the mortgage? pros and cons?

[@vallang4832]

I have been using the bank I have my mortgage with.

[@ks031988]

Are we supposed to make the mortgage payment each month with the heloc as well?

[@user-sz8ur9cd3p]

So I understand the scenario with the credit card and using the heloc as your checking account but I don’t understand how the mortgage is paid off early ? How is the principal payments accelerated?

[@GoElimin8Mortgage]

This strategy uses the discretionary income to pay extra on the mortgage while giving you access to pull from the HELOC. Then it builds from there adding paying off smaller debts with high interest rates and make a snowball effect.

[@patricklancaster8684]

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?

[@FrancoGomez-bq6mw]

Is this in Canada or the US? I find rules differ drastically between the two countries and banking.

[@joshharris7193]

It’s not just a 30 day interest free period from the purchase of your pen. You have till the statement closing date. A lot of people don’t know that. Probably should mention it.

[@seemavarghese8374]

Hello- I am new to this. So if we do a $20,000 to $50,000 so called "down payment" to the mortgage from the HELOC , Do we have to still do the minimum monthly payment on the traditional 30 year mortgage. If so, how will we pay the minimum monthly payment. How will we manage that kind of payment and other payments that cannot be done with credit card. And the way I understand is, we are putting our entire monthly income into the Heloc payment, monthly. I know it is not wise to do mortgage monthly payment with a credit card. Let me know. Thanks for the good work.

[@GoElimin8Mortgage]

It uses your discretionary income to pay the principal on the HELOC. And it builds from there when you are paying off your credit cards. Remember that you have to pay off the credit cards you used for that month so you don't incur any interest.

[@arifali6762]

Hi just a quick question I’ve 30 years fix mortgage. According to this video if I pay part of it monthly payments will be lower. Is that correct even if it’s a fixed mortgage? Please tell.

[@mdh.3421]

arif ali not a cheaper payment, the math works because that lump sum payment you make with the heloc is money that doesn’t incur interest for 25-30years. But it doesn’t not lower your payment, if you refinance your home loan and start over the 30 years then yes your payment goes down because your loan is for less money. Only a larger down payment when getting your mortgage will lower your payment

[@jordanbird9270]

Freaking cool strategy. I’m doing this now on an all in one loan

[@marshallwise2039]

AIO set it forget. Turn key system. Congrats

[@Prizelife]

What if they freeze your account , why would you put your income in your heloc when bank has the option to freeze HELOC?

[@AK47HEAVYMETAL83]

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 😨😨

[@stockbroke]

Hey Sam! I used this method(using a PLOC) to pay off debts and raise a downpayment for a house. I have a question tho. I’m putting down 10% on an 800k house. How soon can one be able to open a HELOC after closing?

[@darkmanx2g]

You need at least 80% loan to value to open a Heloc. You only put 10% down so youre at 90% loan to value ratio. There is other variables too. You qualifed for the loan but with the new loan and new bills you're going to accrue to maintain house payments your debt to income ratio will go up as well.

[@stockbroke]

@@darkmanx2g does it make a difference if the market value of the house increased by 20% since this comment? Lol.

[@tridoshic1688]

Are there fees when you make HELOC payment to the principal?

[@hansoncollin]

@Lewis Hanson: My mortgage payment is $870/month at 2.5 percent with $161,000 balance. Can you do an example of how this would work with Ascend’s HELOC rates at 10.5%

[@Stylevloggers215]

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.

[@fulim226]

So technically we can only make 1 big payment every so often. Then we just pay our month to month mortgage amount until we pretty much get the balance of the HELOC to $0 and then make a big payment again? I can imagine it in my head and its wonderful but for some reason something doesn't make sense... SUBSCRIBED and you got that like. More videos going into moreeee details please.

[@ladyema8836]

Check out Laura Pitko's explanation, she does it with a credit card. She has 2 videos on this, the second one is very detailed with an excel spreadsheet. "How to pay off a 30 year home mortgage in 5-7 years"

[@fulim226]

@@ladyema8836 I watched her explanation already, but my question is how is one suppose to pay for the HELOC and the regular monthly mortgage with just one cash flow source?

[@ladyema8836]

@@fulim226 I had a hard time grasping this at first too. It works if you have money left over after your bills and expenses. 1 - Put all your income in a month as a "Payment" towards your credit card or HELOC. EXCEPT any money that you will need for any bills or expenses that will not take these forms of payments. 2 - Make your bill payments, buy things you need (groceries, gas, oil change, etc) with the credit card or HELOC. 3 - Because the credit card charges you interest rate based on a daily average. It will charge you less interest based on your balance, which you have reduced significantly by putting your income in there. 4 - Any money you have left over after your bills and expenses gets left in the card or HELOC. So lets say you have $300 left over every month, it will reduce you balance every month by that amount minus interest paid. Better if you have a cash back, that payment also can be put into the balance. Note: From the beginning to somewhere in the middle of your mortgage payment years, you will be paying mostly interest. Mortgage payment is: Principal + Interest + Insurance + Property taxes. So your $1000 payment every month is only reducing your house debt amount by only $200-$300 a month. Your giving away your money. Laura has a spreadsheet that can tell you up to when it is a good idea to do this, and when to stop. Hope this helps.

[@ladyema8836]

@@fulim226 Also I was supposed to put this in my list, you are paying your mortgage with your credit card or HELOC, unless your bank like mine doesn't allow you to pay with these methods.

[@rodneybeliso3242]

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?

[@stbam1965]

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.

[@chicotata]

I wish you could’ve used examples with the calculator and mortgage payments.

[@lindabloomfield2262]

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.

[@Ethernet480]

Are there HELOCs that are lower than current interest rates on mortgages??

[@ladyema8836]

What if your bank doesn't allow credit payments? Mine only gives me option of checking, savings, and money market.

[@JibriTV]

This video is decent at explaining the benefits of a HELOC, but he NEVER addresses inflation and the cost of paying down a 4% loan early. If you can make an average annual return of 10% in the stock market that money is better spent investing than paying down a loan. Use your money to make money, not to make the bank money. Inflation averages 2%/year, so the value of your mortgage payment decreases slightly every year. $1,000/month ain't what it was 20 years ago, and won't be what it is now in 20 years time.

[@doofyhere]

what day should I change my credit card due date if my HELOC is due on the first??

[@albertogarcia1050]

This is hilarious🤣🤣! You pretty much just transferring money. Great idea.

[@rahatchowdhury7608]

I still don’t get this concept. 😢 . How do I get. First position Heloc from the bank with two years fixed rate? Any good banks out there? Thanks

[@TheKwakBrothers]

Hey Rahat, watch our free webinar and let's chat afterwards: acceleratedbanking.com/webinar