How to Pay Off Your Mortgage In 5-7 Years

How To Pay Off Your Mortgage In 5-7 Years WITHOUT making more money or changing your lifestyle! This is the newest and the utmost updated version of our videos! If you want to learn How to Pay off Your Mortgage Faster or How to Pay off Your Mortgage Early, this is it! Enjoy!
Download Our FREE HELOC Calculator and Ebook: Visit acceleratedbanking.com
Check out the SEQUEL Video on how to use this strategy to CREATE Passive Income: • Using HELOC Strategy t...
0:00 - Introduction to Sam Kwak
0:46 - Debt Free Acceleration (Accelerated Banking Strategy) Introduction
2:05 - The problem with your mortgage
7:35 - Refinancing the Mortgage is a Problem
10:35 - Introduction to the HELOC
13:39 - Average Daily Interest
15:40 - Recap of the HELOC
16:13 - HELOC Strategy Overview
21:52 - Average Daily Interest Example
25:15 - 1st Lien HELOC - Replace Your Mortgage
26:00 - HELOC Calculator Giveaway
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Ever wonder how you may be able to pay off your #mortgage within 5-7 years (depending on your situation) without sending double payments to the bank, changing your current level of income or not #refinancing? If you want to learn how to pay off your mortgage early or faster, Sam Kwak is going to show you a strategy in how you can use a different method/instrument to pay off your mortgage quicker! This strategy is called the "Debt Free Acceleration" Strategy. This strategy has many other names such as "Velocity Banking", "Mortgage Acceleration", "Accelerated Debt Reduction", "HELOC Strategy", and more!
We first need to understand how mortgages work. In this strategy, we are using a Home Equity Line of Credit (HELOC) as a leverage to pay off the mortgage quicker and still maintaining our income and expenses as how they are. You can also use other instruments such as Business Line of Credit, Personal Line of Credit, or Credit Cards for the purpose of this strategy. The beautiful thing about this strategy is that it allows us to take an inefficient debt and convert it over to a much efficient debt.
The emphasis on this strategy is mainly on cash flow and principal balance reduction. The adage strategy of taking your hard-earned money you earn and paying extra toward the principle is an old school strategy. While it works, the Debt Free Accelerator Strategy is a much more efficient way of paying off an amortized debt because it takes advantage of the maximum income utilization. This strategy will also work on Student loans, car loans, personal loans and so forth! Don't let the banks trick you with their amortized products!!!
You can expect to pay off your mortgage faster and early with this strategy!
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DISCLAIMER: Sam Kwak is not a licensed mortgage broker, not real estate agent, not a Certified Financial Planner, not a licensed attorney, and not a Certified Public Accountant. Viewers will consult with their professionals prior to engaging in any financial strategies. Not everyone will experience 100% success rate with using this strategy. This strategy does require equity, a good standing with your current mortgage and the patience to use the strategy. The result of paying off your mortgage within 5-7 years is atypical but it represents a likely possible outcome for individuals who use this strategy. We (Novo Elite and DBA The Kwak Brothers) does not warrant a promise or a guarantee any specific outcomes and/or results from the use of this strategy.

[@nvicente84]

This video is 100% accurate. I refinanced my home in 2012 after fixing up a foreclosure and had roughly 215K for a principal balance. It wasn’t until 2014 that I discovered this process through a financial advisor. He showed me how to pay off my house using a HELOC. I just paid off my entire mortgage in just under six years using the same money I already made and I put in about $80,000 in renovations towards my house such as adding on a four season room. For all you haters, you’re the same ones who will never pay off your mortgage and will continue to refinance and be a slave to your boss and your house. With this method you let your house work for you and you become your own bank. The proof is in the numbers, math does not lie.

[@JK_RANBIRSINGH]

Hi Nelson, Would you please guide me, I am going to close my first house this month end. I am really interested to close this in 7 years. This is just my 3 year in Job, in 3 years cleaned all credit card debts used for study, other debts, car loan & made 50K payment for 500K home. It's little large 5 bedrooms, 4 bathrooms & 3 car garages. I am disciplined on spending. Please guide me. Thanks.

[@marthatela8770]

😊

[@tstrenuous10]

How did you pay off the line of credit?

[@mobolanlee2572]

Hi, we just bought our home last year. I will need your assistance in paying the mortgage within 5 - 7 years. How do I contact you?

[@nvicente84]

@@tstrenuous10the only way this process works is if you have positive, cash flow. So basically every week when you and or your spouse get paid you transfer that money right into your HELOC to draw down the amount owed on it. At the end of the month you pay your credit card bill and your mortgage out of the HELOC. every month you do the HELOC money owed gets lower and lower until you get it down to zero and then you take another chunk out of your HELOC (I used 10k at a time) and put it on your mortgage Principal

[@kurtkempen5123]

One step better is to use a credit card for all of your daily/monthly expenses. Credit cards have no interest as long as you pay it off before the billing cycle ends. You pay off your credit card in full out of your HELOC. This would give you up to an additional 30-35 days of interest free money for your monthly expenses.

[@Riggsnic_co]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[@bob.weaver72]

If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.

[@martingiavarini]

Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.

[@hermanramos7092]

I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?

[@martingiavarini]

My advisor is ‘’Catherine Morrison Evans’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market

[@hermanramos7092]

Thank you for this Pointer. It was to find her handler, She seems very proficient and flexible. I booked a call session with her.

[@mikeharris1111]

This absolutely works, however there are some caveats: 1. You MUST be cash-flow positive...and preferably by a decent amount. 2. This works best on a first-lien HELOC, not a second 3. You MUST have stellar credit, otherwise the banks aren't even going to talk to you 4. You MUST be disciplined and not spending your HELOC as a credit card, buying vacations and cars, etc. because you have extra cash. I put all of my paycheck on the HELOC and keep as little as possible in checking. I pull from the HELOC, as necessary, to pay for expenses. Otherwise, I put everything I can on my rewards credit cards and pay those off each month (see point 4, above). I have put my amortization schedule from my old 30-year mortgage against what I have done in 2 years and I have saved 7.5 years of mortgage payments in the 2 years I have used HELOC. I haven't done anything differently. My volume of interest paid is substantially less. I'm really oblivious to the rate. It's not for everyone, clearly. The math doesn't lie. Just wanted to add some perspective.

[@Eyerusalem_]

Mike Harris so do you use a lump sum amount on the HeLoc to pay towards principal? When is the good time / after the mortgage started to get HeLoc?

[@kg811]

Do i understand that when it all comes out on the wash you are paying interest on the Heloc which is less than the mortgage? Is that the message?

[@mikeharris1111]

Shalom, when I move may paycheck over to my HELOC, it splits any payment due out and applies the rest to principal. My bank does like this... 300000 HELOC balance. Interest due for the month is 1000. New HELOC balance is 301000. I pay on the 301000 as quickly as possible and take the balance lower. Hope that helps...

[@mikeharris1111]

Cats, it's all in the interest calculation. I switched to HELOC a little over a year into my traditional. My interest due each month is substantially lower than the amount of interest paid on the amortization schedule. Just the nature of simple interest vs amortization. Amortization nails you up front.

[@franklintyler4652]

If it’s a first position lien then your house is paid off and you wouldn’t be using this strategy, right?

[@paulnabena48]

I used this strategy to pay off my car last year - my TITLE was sent to me & now it is 100% mine.

[@TheKwakBrothers]

Awesome!!! Congratulations on using the strategy!

[@511graphix]

This stuff needs thought in high school!!!! 41 years old. And just leaned about this! Geez

[@511graphix]

@Boe Jyden you sir are incorrect. And no they are not teaching this at all to the General student population. So keep comments to yourself

[@michaelflagulant]

this video doesn't help anyone actually do what you are talking about....once again the average person get's 💩on!!

[@cookingwithadriannelatrice705]

Exactly 💯

[@Cynsome1]

I agree! I’m in my 50’s and I’ve bought several houses, lost one too in 2011😐and didn’t know this. Might not have lost it if I had!

[@rodrigito78]

The strategy starts at minute 10:00 - but the intro is def well worth it. Thanks Kwak !

[@TheKwakBrothers]

You're welcome :) Thanks for watching!

[@jwalka534]

Thank you!

[@maxinechivers1312]

I began my mortgage in 2010. I was going to pay it over 25 years. In 2012 I decided to pay it off in 10 years so it would end in 2022. Yet, due to overpaying it I paid it off in 7 years. Yes, I paid it off in 2017.

[@paulguillory3860]

Did you apply this method?

[@maxinechivers1312]

@@paulguillory3860 I paid it off in a similar way.

[@shishome668]

Maxine Chivers what was your way

[@julissatrevino7199]

??

[@Eyerusalem_]

Maxine Chivers what method did you use?

[@emmyoregon1983]

Remitting some percentage of my pay monthly to pay for a house then i went thoroughly into investing in anything I could lay my hands on, Stocks, ETFs and other financial commodities. After compounding profits over 5months I was $79k in profits and paid down for my first house. That was 2 years ago, now I own 3 condos. So the truth is to invest not save try generating streams of income so you don’t end up enslaved

[@patiencemartez907]

Wow, great impressive this is a smart age and I’m glad more people are learning ways out of the rat race amazing video

[@Arief351]

How can I also invest, I have some money I’ve saved over a year now intending to start up a business and maybe purchase a bus for grocery deliveries

[@emmyoregon1983]

The first step of profiting in the market is understanding it neither is a game of luck or gamble. Expertism and professionalism is a major key, appealing to work with an expert round the clock for investment. E D D Y B R U K E . I N F O

[@Lilyoregon]

Outstanding and in reference to what you said about saving not necessary, you also have to keep some even still while investing but this is the best strategy I’ve read in the comments. Keep up cheers

[@emmyoregon1983]

@@Lilyoregon thanks and as you can see that strategy worked for me and will also work for anyone willing to apply it. For a chat also [phone] on messenger

[@DougVandegrift]

Word to the wise: 1. Try to get a good rate and put at least 20% down payment at the property to avoid PMI. 2. Don't refinance unless the math calculates you could save with a lower interest rate. 3. Throw extra cash at your payments to pay down principal after all other debts and emergency fund is adequate. 4. Take out a HELOC at your own risk.

[@Groommerr]

Recast if you come into money, improves your cash flow.

[@glendaroberts7191]

As of Sept 2021 average HELOC Rates were at 4.2%. I just refinanced my home that I’ve owned for just 3 years now and cut my rate from 4.8% to 2.3%. I cut my 30 year mortgage and made it a 15 year one and kept my monthly payments the same. From what I see the refinance under these terms was a better option than a HELOC.

[@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?

[@OlgaRusov]

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]

I believe that holding was comparatively simpler in the 1960s, and the landscape has become more complex nowadays. Those who consistently generate gains in the present era are often seasoned pro. This is why, for the past five years, I've enlisted the services of a fiscal guide. Their expertise has been instrumental in consistently building and managing my portfolio, with an eye toward securing my fiscal

[@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?

[@HakimZakzi]

I've enlisted Stacey Lee Decker as my fiscal guide, and her expertise contributes significantly to the fiscal industry. Acknowledged as a reputable authority in the field, she holds a deep understanding of portfolio diversification. I encourage further exploration of her credentials. With her extensive experience, she proves to be an outstanding guide for those aiming to grasp the complexities of the fiscal market.

[@ScottRich9]

Stacey appears to be really knowledgeable. Her resume, educational history, and qualifications were all quite good when I found her internet page. She will act in my best interests because she is a fiduciary. I thus scheduled a session with her.

[@gamaloun4442]

Steve this is the Best video I have ever watched that covers this subject!! I wish I watched that video before I took out my home loan.

[@TheKwakBrothers]

Glad it was helpful!

[@lovereconciled4210]

A HELOC is still debt! It is from mortgage loan to HELOC debt. My husband and I paid off our first home in less than 5-years by changing our mindset, habits, spending with side hustles. We now have two homes completely paid for and debt free. We practice a zero debt lifestyle, no credit, loan, car or mortgages. In times like these it is a blessing, for sure. Unfortunately, debt is debt, no matter who you write the check to, so in my opinion having a mortgage with a HELOC does not equal debt free or freedom.

[@ruthiebabe5007]

Well said!

[@07wrxtr1]

the interest exposure is calculated differently on HELOCS vs. Mortgages. That's like saying "a car is a car". There are different makes/models/options/etc...

[@jafrasar1]

But paying off a mortgage in 5 years is impressive; and cash flowing back to me; is what I want. I need to do this.

[@naturegirlbb100]

Please how did you do it. Thank you

[@lovereconciled4210]

@@naturegirlbb100 We lived on one income, invested the other, rented three rooms, and used that money to pay extra on the mortgage principal. We lived on less than we made, and any extra money that came in went towards the mortgage. Instead of paying our $747 payment, we paid $1,800/month and anything extra until it was paid off early. It worked...Yay!!!

[@cavemanabc]

Thank you! I’m glad you broke this down into daily actions to illustrate this strategy. It helped me to better understand this!

[@MrDarkshadow21]

Excellent explanation for a beginner! Needed this 10 yrs ago😬

[@brettbarnard2563]

Kwak Brothers: We just started this process for our credit cards.. We estimate to pay off over 60k in less that 12 months! Thank you so much for this, you guys are a life saver. Wish I knew about this years ago!

[@battlestar79]

Additional lump sum payments go direct to lowering your principal, which automatically reduces your long term interest costs.

[@bperez8656]

Dark Knight Yea, if this is an option Why go through the hassle of second line of credit?

[@whobeme2u]

Agree. I disagree with this strategy if you don’t have the credit score nor equity in your home like previous commentators. Pay on your principle and watch it go down.

[@warwick170]

I don’t agree either I’d rather pay extra money towards the principal which the banksters hate

[@jasontilli1482]

Licensed Credit Advisor here. Most people are Not disciplined enough for this method and will Never resist using available credit (equity). Pay your monthly payments. At the end of the month send any spare money in check form with subject “principle only”. This won’t be a miracle (unsafe) 5-7 plan but could save you years off the end.

[@byaklangakwasinton8775]

Thats the best explanation mr. Kwak , home equity line of credit, heloc

[@mezo6453]

Here is how you payoff you mortgage quick: 1) pay at least 20% down to avoid PMI. The more down the better on the long run. This automatically reduces you total interest over the life of the loan. 2) Take a 30 years mortgage to keep your payment as low as possible. This takes care of unforeseen live events, economy, etc. you want to be in a position where you can still live in your house and have a roof above your head. 3) Set a goal to pay it off in 10 years. Basically, make extra payments towards your principle. You have flexibility here because life events will always hit you. You may lose your job or become temporarily disabled for whatever reason. 4) Stay focused on paying it off in 10 years. You can look for a better paying job to increase you income and stay within your 10 year goal. I am not a big fan of banks. To me, they are professional thief’s with a license to rip people off and take their hard earned money. Who ever said you pay 3 times what the house is worth? What a ripoff. People live on the edge now a days because the bar was set high and they’re always playing catch up. Good bless

[@TheKwakBrothers]

Hi Mazen! Thanks for sharing your thoughts! God Bless you as well!

[@dhjengr8756]

If you borrowed 250k from me with a contract to pay me back over 30 years.... I would want triple my money back as well. Now, I'm not advocate for banks, but the notion that the bank is a thief for giving you a loan is an ignorant statement. If you dont want to pay interest on money you borrow then don't get the loan. If you borrow you pay period. AT&T just refinanced a ton of debt. 30 years is a very very VERY long time. Maybe you should promote 5yr mortgages if you don't want to pay double your house value. Also have you factored in the value of your home more than doubling over 30 years. Finance is complex don't confuse people if you don't understand all the ins and outs and have performed interest calculations from all angles. Buying a home with a 30yr mortgage is often one of the best investments one will have on there lifetime, especially at only 3.5% interest. Just saying.

[@ggusta1]

@@dhjengr8756 exactly, dhjeng these people hating the banks are the same people overpaying for a brokendown used mercedes or bmw with a 580 fico at 17% apr living in a house that's way more than they can afford and 5 credit cards maxed out who never seem to 'catch a break'. Hard to catch a break when you sabotage yourself at every imaginable opportunity. Settle down, stay within your means and for goodness sake only take on debt that you absolutely have to, usually just your house. Then you'll catch a break when you have gotten out of your own way. I talk to people every day and I look at their situation and I have no idea how they can dig out of the mess they created for themselves. STOP SPENDING ON SO MUCH CRAP. My dad would swat me on the back of the head if he saw me spend like this.

[@Clovistered]

Mazen A I agree, taking another loan on top of the loan you already owe is just bonkers, plus you have to pay interest on that second loan as well and they go up

[@kaykrisusa7350]

@@dhjengr8756 OP forget about inflation, avg inflation in the US is 3.22%. In 30 years that inflation is 2.59x... which means if you make 2.59x of your original money then you're basically make nothing. Assuming lender get 5% fix 30 year mortgage and then reinvest the mortgage payment lender get each month to fix income 3%, total rate of return the lender gets 3.88% per year... inflation 3.22% so he only make net 0.66% per year... who is the thief now lender or borrower?

[@risausa4796]

Good info. Thanks!

[@TheKwakBrothers]

Thanks :)

[@kassiekowal9964]

Thank you for blessing us!!

[@thomas.prater]

Very informative, thank you

[@dontbeinconsideratetoanybo7237]

In Australia, there is a mortgage offset account that functions similarly to your HELOC. Interest is only calculated on the net daily balance (mortgage less offset balances).

[@TheKwakBrothers]

Yes, this Strategy originated from Australia!

[@madabouthair5929]

@@TheKwakBrothers The Australian method of the offset is better as there is no variance in rate from the mortgage rate unlike the HELOC which is at a higher rate.

[@knittingknut]

Hah. I always wondered how my Australian brothers and sisters managed to pay off their houses so quickly. My DH and I just plugged away at our mortgage and paid extra each month. We finally managed to pay it off before retiring but I wish I’d known about this strategy. We even re-financed somewhere in that 30 year loan repayment “to get a better rate” 😒 sigh.

[@eimearquigley1020]

knittingknut if you have $10k in offset your save like $25 a month. It’s not much per annum. $300. $3,000 in 10 years.

[@oliverA4936]

@@TheKwakBrothers Im from Melbourne and this made me so confused. I was thinking I dont have a heloc but i already do this?? xD

[@tfny100]

I think the main point here is that if you pay your mtge off using your HELOC, you are actually paying less interest therefore you’re able to pay into the actual principal and therefore paying faster.

[@TheKwakBrothers]

That's right! Focus on paying off the balance!

[@a22fc]

But you are using your house as a collateral in a Heloc correct? Not sure if I want to risk that on my biggest asset

[@LG-nh4bs]

But you end up pay a variable heloc so that's the risk.

[@guilmarperez4674]

a22fc you are risking if you get any type of loan

[@MushInSkull]

You are making an assumption that the HELOC rate of interest is lower than the mortgage rate of interest. That is the only way you would pay less interest.

[@byaklangakwasinton8775]

Wow! Ur very great lustration made it soo easy to undestand clearly whats the refinancing is not in our favor at all. Thank you so much.

[@RobRosa]

I love the idea of it and interested in understanding how to do this.

[@trevorbrown4915]

Great video. Been doing this for years. Paid off my mortgage a long time ago and now use it as my personal bank...I purchase all high value items like cars and bikes, new roofs, renovations from the equity in my bond....works like a charm....just ensure that you pay all the debt off in one year ..dump, dump, dump all your income, bonuses, windfalls, whatever into your bond

[@teresawallace2686]

1) How exactly do you use the HELOC to pay monthly expense? (ei. mortgage, utilities, etc.) 2) Once the house is paid off, how do you use the HELOC to purchase big ticket items? (ei. car, renovation etc.)

[@trevorbrown4915]

@@teresawallace2686 Easy. It's better if you can delay your expenses by 15 days... I m lucky in that I get my salary on the ,15th.... Everything goes into the mortgage,. I get the 15 day's additional interest and then transfer the money (- mortgage payment) into my cheque account again. Bills gets paid

[@jaspersimonds343]

I just started this, but with out seeing this video... It seems like it is working, but I do something a little different. I use a credit card for all my bills because it is no interest if you pay in full every month, and I am paying less daily interest (and giving me 2% cash back). I also used the HELOC to buy a small business that is also going into the HELOC.

[@babzrockz]

I was thinking the same, why transfer the daily expenses to the HELOC if you pay it off on the credit cards at the end of the month, and don't get charged interest for it. The ultimate idea is to put the remaining savings (Income minus Expenses) to the HELOC to bring the balance back to 0. How it the strategy working for you thus far?

[@NGF-Life]

Great video, thank you Sam, can you share which bank do you use for the checking and HELOC combined account? Or which bank do you use for the HELOC? Thank you

[@SawabAhmed]

Awesome explanation of HELOC 👍🏻👍🏻

[@hsubuzz6948]

Two alternative strategies: 1. Pay all the paycheck toward mortgage principal, then live on credit card for the 1st month, then from the next month on, pay off the credit card, pay the remaining paycheck to mortgage, and live on credit card. 2. Pay mortgage according to schedule. Invest what every remainder of the paycheck in something with return rate higher than mortgage loan. Investment, not speculation.

[@TheKwakBrothers]

Thank you for your comment! God Bless!

[@twincherry4958]

CC with no fees for 18 or 21 months

[@kaykrisusa7350]

As of today (10/01/2019) Avg. HELOC rate is 6.88% and avg 30 year mortgage is 3.87% (based on bankrate.com). With loan $100K, your monthly payment for 30 year mortgage is $469.95 and for HELOC $657.26 (both for 30 year). You can say HELOC is a disaster. Total int. for the mortgage after 30 year is $69,182.41 (69.18% of the loan) and for HELOC $136,614.66 (136.61% of the loan) which is almost double the cost of traditional 30 year mortgage. With apple to apple comparison. Also with the case Author used @06:17 (30 year mortgage at 5% and then after 10 years refinance it into 4.75% 30 years mortgage) he's saying the bank kind of fool you - because your interest cost will go back to the beginning phase again...it's only half true (it's correct that it goes back to the beginning phase BUT with lower loan balance and lower int. rate). Actually if you did not refinance it, your interest cost at 121th month (1 month after 10 year) is $849.37 and if you refinanced it into 30 year @4.75% your 1st month interest cost is $804.95; It’s clearly cheaper to refinance it. Granted the total interest cost will be higher than original mortgage if you serve the loan for 30 years but it's due to you have another extra 10 years longer (10 year from your old mortgage + 30 year from refinanced mortgage - 30 year original mortgage) but it brings down your monthly payment from $1,342.05 to $1,060.80 (21% down). IF you keep the monthly payment the same at $1,342.05 after refinance it you will knock down the loan at 232th month (19.33 year instead of 30 years) and still save total interest cost $10,993.76 (original mortgage total interest cost $233.139.46; 10 year original mortgage int. cost $114,401.65; Total new mortgage cost $107,744.05 for 19.33 years). Conclusion: I disagree with the author way of thinking which is lack of detail and vague. Also, Under the new law, you'll only be able to deduct interest on loans used to purchase, build or substantially renovate your home. The only way to saved you on mortgage interest cost are: - Pay down the principal faster (pay extra money on your monthly mortgage payment) - The best way is if your bank accept biweekly payment - it's the best way to reduced interest cost without putting more money in it (time value money affect) BUT not all bank accepts it. - Refinance your mortgage to lower interest rate if you still save interest cost after deduct all the refinancing cost. Hopefully this helps to better understand how mortgage interest works and Please better ask your accountant or financial planner before you decided to use his strategy. Thanks and good luck every ones.

[@landanwoodard7569]

How I did it. Fat down payment 30 year conventional. It enables you to pay more towards the principal every month and gives you some wiggle room. The mortgage is new so your money has a lot of leverage the first 3 years. No vacations, drove a old car paid for and no expensive restaurants. I spent zero on new furniture. So work hard live cheap and put it all on principal when the mortgage is new.

[@lilymarcelle6521]

I have calculated a savings of 4K in interest from original mortgage after paying 36k in principal borrowing from HELOC and paid total of $300.00 interest in HELOC and our 15 year mortgage loan is now going to be paid in 10 years as of today. If we continue doing the same it will even be shorter. Thank you very much for the education in mortgage loan and payment.

[@streetpilot775]

After I watched your video I realized that we already have a dormant but still viable Heloc from my wifes business. We are 4 months into a 30 year mtg on our retirement home so I'm totally for paying it off early. My hesitation was that once I hand that extra payment over to the mortgage company out of my pocket, its locked up forever. I cant get it back if disaster strikes and I need quick cash. So this heloc thing makes total sense. thanks

[@dekklinmcbride8797]

This man is a genius my friends

[@darlenehuson9160]

Thank you Sam!

[@ladyshorty6989]

Greetings from Chicago. 💜💜💜New subscriber here. Ty sooo much.

[@qiyanchen9546]

According to Chase Bank as of Oct 07, 2020: "Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new home equity lines of credit (HELOC). This will protect both you and the bank."

[@TheKwakBrothers]

That"s one out of thousands of banks... It also has nothing to do with Covid-19... It has to do with less investors buying the underlying MBS and notes from the banks. They don't want to create supply of notes to sell without demand on the market.

[@dustykinley446]

Can this work with a business line of credit or does it have to be a HELOC? I would like to pay off a business loan with a line of credit if it would work the same way.

[@namhamada7553]

Great information same and thanks!

[@robertastaller4705]

Valuable information for sure

[@jdp0359]

Just so everybody understands, your outgoing cash will increase when you do this! Your monthly mortgage payment will remain the same (it is not reduced), plus you will have to pay down your Heloc at the same time. This is rarely discussed in these videos but you will still have your normal mortgage payment plus your Heloc Payment. Where you really save is in the total number of mortgage payments. Of course the earlier in the mortgage life you make principal payments the more you save over time. Also when you make a lump sum payment on your loan, MAKE SURE the bank knows your payment is for PRINCIPAL ONLY!

[@Eyerusalem_]

John so is it better to just try to save a lump sum and apply it to the mortgage principal, rather than getting HeLoc? Did not realize I will be paying two different payments one for the HeLoc and the mortgage?

[@Eyerusalem_]

John so the HeLoc amount depends on the equity of your home right? So how much will they give you, if it’s not 100%

[@jdp0359]

@@Eyerusalem_ They will give you up to 80% of your equity but you might find a better interest rate if you borrow 70% or less. At least that is what my bank told me.

[@07wrxtr1]

Wrong. Interest is calculated DAILY on a heloc. Then the bank will take the number of days and sum them. Example: Day 1 = $4.00 Day 2 = $3 Day 3 = $5 and so on... so 4+3+5 = $12; You're utilizing days 1-27 at one balance/cost per day, then days 28-31 at a slightly higher cost. Wrong again - You're REPLACING your mortgage with a heloc, just like if you traded in your prius for a corvette ;-) Don't setup barriers to your own success. I have been in banking/finance for 20 years. It works. I have WALKED out on companies doing wrong things to good people.

[@jdp0359]

@@07wrxtr1 Yes I see the point you are making now. A heloc and a fixed mortgage are calculated quite differently. The heloc is based on average daily balance since it can go up or down just like a revolving line of credit. A mortgage is based on monthly interest since it is always paid down. Thank you for that important lesson.

[@heim2k440]

My dad paid his and 4 years he has about two more payments left some of the things u said is stuff he told me nice

[@dianaxolocotzi1438]

THANK YOU SOOOOO MUCH !!! I WAS ABOUT TO REFINANCE BUT WAS SCARED TO RESTART A LOAN !! I JUST WANTED TO GET RID OF SOME CC DEBT BUT WITH LIFESAVING STRAGEDY .....THANK YOU

[@henrymalec823]

great advice!! HELOC is the easiest way!! Great video

[@flouisbailey]

I paid off a 30 year in about the same window, I looked at the amortization table and found in the first year with $5.00 a month going to principal making two monthly on regular the other separate check made out to loan principal only. Simple math that was about 5 years in one payment. The more you throw at it the faster it will be, beans and rice then rice and beans=paid for a house. Also, any windfall, a tax refund, inheritance is not fun money its principal only money. Look at your pay off schedule yes it makes you but do something about it. Happy payoffs to all. PS there is no danger if in one month you can't do two next month do three.

[@Eyerusalem_]

Louis In Name Only I like your analogy

[@philsipad]

But what if you invest that extra money in the stock market and what will you have in 30 years with the 7% historical annual return in the stock market? I decided to take out a mortgage 3 years ago even though I could buy my house with cash. That cash stayed in my investment which has doubled since then. My aunt sold Amazon twenty years ago to put money on her house. Still complains to me to this day.

[@flouisbailey]

@@philsipad I did that to, don’t sell stock to pay off a house or buy a car. Have balance in life and investments, my point was and remains pay on a mortgage in the early years to get the most bang for your buck. Why didn’t I buy bitcoin when it was $50.00 a coin as it approaches $16,000+ a coin. Why did I buy so little Amazon, Apple, and a lot of things I don’t know what they do other than pay dividends. PS with Joe driving good luck on that 7% gain for the next few years, we all want it to grow. Happy investing.

[@justarob0x]

One important thing, to get a heloc in the first place, you generally need an LTV ratio that is about 20% down to get approved for a small amount, nothing enough to pay the house in full right? and it takes maybe 5 yrs to even get that far...

[@guillermotyrese4920]

Wow, I needed to watch this

[@jun369young]

Great video! Do you also do this for multifamily investment properties or just for homes?

[@localguy6547]

Thanks for the video! Although banks are there to fulfill a need, I don't trust banks so much. I send extra payments on my mortgage and I keep getting those calls to refinance. I have a low interest rate right now. They hate it when I tell them no thanks and behave like car salesman. It's also amazing how some people just sign the dotted line and don't read and look at all the money they're are paying to the banks. Be informed consumer, Be informed. Also, with rents as high as $1,900 a month in my area for the same home I have. I'm winning because my mortgage is affordable where if there was another recession, I'll survive.

[@DLITINTHEHOUSE]

How about you just give the calculator away without using an email? I’m not trying to sign up for more spam.

[@viterature]

The problem with this strategy is that 1. Ur just maxed out a revolving credit which will drastically reduce your credit score and consequently put your HELIC at risk because banks typically will reduce your credit limit or close the line of credit if they see u as high risk of default. 2. U just created a second debt with additional interest, which, even though u get a lower interest, doesn't offset the risk in point 1 3. You will need to have enough equity in your home to qualify for the HELOC. Most people need at least 10 years in their home to build that kind of equity. Most banks will lend up to 85% of the equity. 4. U will need to be hyper disciplined with money to achieve this. In case of emergency, u will be screwed. Especially if the bank shuts down your credit line due to high risk

[@TheKwakBrothers]

Thanks for "ur" comment! God bless!

[@DarinMarquardt]

How did you come up with the amount “20k” to pay the into the 30 year? Did you times the GMI by 4? Or divid the 30 year mortgage by 60 months? Thanks

[@johnkesinger2191]

This strategy seems to be great for people who don't have the cash or cash flow, but it makes more sense (to me) to just pay additional principal every month. You will save the interest you would pay on getting a HELOC and you don't "tie up" money in a loan. Plus, if things get tight one month, I can just skip making the additional payment. No penalty for a missed loan payment.

[@TheKwakBrothers]

Why not take the extra money and park it in the HELOC for additional savings of 5-8% all while you can draw the money out for emergency? Once you throw your money into the mortgage, you can't get it back, right?

[@TheKwakBrothers]

@@00_ELECTRICWIZARD_00 Staying in bed til 11am and not going to work is simple too... Why not we continue on with our life living simple like this???

[@PapaMarioNZ]

I agree with you John Kesinger , you can't borrow your way out of debt

[@Eyerusalem_]

The Kwak Brothers wait you make it look like you are getting the HeLoc for free. Money in saving account is basically money sitting and doing nothing, rather apply it towards principal with out “ borrowing” that is the idea here

[@Eyerusalem_]

The Kwak Brothers 5-8% saving by putting it on the HeLoc if you have a cash flow what in the world you get HeLoc?

[@spcurrie]

Thank you for this video Sam! I have been contemplating this HELOC strategy for quite a while, and now with this new consideration I've learned about recently by putting my HELOC in the 1st position, I'm having a hard time deciding whether I should do a 1st position HELOC or a 2nd position HELOC. Many people have told me don't do a 1st position to expose your ENTIRE mortgage to the variable rate HELOC. However, the first position HELOC seems a bit more attractive for monthly cash flow since it completely replaces the mortgage payment every month. What do you think? Thank you so much. Keep up the great content!

[@Eyerusalem_]

Sean Currie you will still have a payment for the HeLoc and the mortgage, so how does that eliminate the mortgage?

[@deannlampe313]

incredible best one

[@chrisc7566]

Only problem with amortization loans is regardless if you pay off early your intrest is already calculated into total and payments unlike a car loan where interest is calculated on monthly balance of loan. When I worked with Primerica and did mortgages Citibank had a "smartloan debt consolidation" that was your mortgage and other debt turned into a car loan.

[@healthyandhappy88888]

Thank you for your video, The Kwak Brothers! These videos are so awesome! Wish I watched them years ago! We had Heloc all these years and have been using it only as family emergency fund and the interests of our Heloc is even tax deductible! So much regret that we didn't do long time ago:( but grateful to know it now! Update: In four months, we got four Helocs and bought two rental properties. The extra unexpected bonus is: we save 1k interest each month with the recent Fed interest cut.

[@benzimmerman140]

I'm sorry to burst your bubble, but this technique is a fraud. It uses incorrect math and simply does not work. But the fact that it doesn't work doesn't really matter to Mr. Kwak, because you and 79k other people clicked on the video which generated add revenue for him.

[@healthyandhappy88888]

@@benzimmerman140Thanks but I don't think so. I did lots of research on that and already got answers for the questions I asked early. It does work and I know which mortgage to pay off first now. I'm in action now. I don't just listen to what he said. I do my own math (I'm also Asian, haha) and I know what I'm getting into...

[@ttoronto6956]

@@healthyandhappy88888 Hi Joyce, what was recommended as the best strategy regarding which mortgage to put the most available funds onto?

[@healthyandhappy88888]

@@ttoronto6956 Your primary. With the new tax law, the interest you pay on your primary mortgage has no tax benefit(in most cases), but you can deduct the interest you pay on your rental as costs.

[@ttoronto6956]

@@healthyandhappy88888 thanks for the response! Hoping all is going well with your investments and that your tenants, if they needing covid-19 EI etc are using it for rent!

[@andrewpm2]

Very informative video but can you explain how to obtain a first lien HELOC so that a home buyer can avoid closing costs and a bunch of the bogus fees that accompany a traditional mortgage? I would still like to have a title search/ins and what not to ensure the property title is clean and of course there are realtor fees but I'm mainly referring to the bank's fees which are approx $5K

[@MushInSkull]

LOL... You can only get a HELOC (Home Equity Line of Credit) once you have bought the home and have equity in the property. The only way you can get the HELOC as a "first lien" is to pay off the mortgage (and/or 2nd mortgage) on the property. Once that is done, you have 100% equity in the property and can get a HELOC that would then be a 1st position lien.

[@marieclairekuradusenge6627]

​@@MushInSkull thank so much this video help full

[@notsure7874]

I am just shy of 2 years in my house - and interest rates have gone down a LOT - in addition to my house being worth more than I paid for it, and this area has been exploding with growth - so I went from 3.5 down on an FHA loan - where HALF of that "down payment" is actutally a down payment on the PMI, not your principal ... to where I can show 20% down on paper, I can lose PMI, and drop about 1.25% in interest. THAT is a good refi - but you're right - they do want you to refi after 15 years because then you'll never EVER pay off your house.

[@SukhyDhillon]

yes, Canada--- wow.. a life lessons u r teaching..

[@samcotuna4293]

I have a 15yr 480k loan at 2.75...I’m paying 106k for the LIFE OF THE LOAN! I’ll gladly pay it off in exactly 15 years and invest the rest!

[@joejuneman1460]

That rate! 🥳

[@Eyerusalem_]

How did you get that rate? Is that a common rate for 15 years mortgage?

[@tfny100]

Wow I just did the calculation and I would save $200 of interest monthly, and bring down the Mtge balance down faster. Wow! Thank you! I think I will start with increments of 5K. Even 1K, will bring the balance down, faster than waiting till the end of one year to only see that the mortgage balance have gone down by 5K for the entire one year.

[@TheKwakBrothers]

You're definitely getting it! Thanks for your comment!

[@tfny100]

But I am not sure how I am saving money if I am paying more interest.

[@TheKwakBrothers]

@@tfny100 you're not... It sounds like you may have incorrectly calculated for how our strategy works. I highly recommend you schedule a call with my team for a full explanation

[@Seabreeze24]

One major point saying you did this. Heloc Home Equity Line of Credit. You have to have equity in your home and most banks are only willing to lend 75-80 % of that equity.

[@tonyhale9626]

I think some lenders are introducing a fee (3% ish) for every lump sum paid off early from the principle balance... Still worth it to get that mortgage paid off early. Great information.

[@gvpminc]

Very clever of savings mortgage payments.

[@TheKwakBrothers]

Thanks!

[@carlchestnut1080]

I would suggest you redo this video. In several instances your math is wrong or you have not planned out your examples. Not sold.

[@sophiecox5570]

Good information thank you

[@TheKwakBrothers]

Glad it was helpful!

[@alkadeshmukh2404]

Sam, with HELOC excel spreadsheet. My question is, difference between income - expense, is this amount applied to the mortgage or I have access to money when mortgage is paid off. For example If difference is $6k mortgage is paid-off in 4.1 years, if $4K than 6.5 years, if 2K than 16 years. In other words savings =$6k is used to reduce principal. Please clarify. Thanks for your video.

[@Shaunchiprue]

Where'd the equity come from to leverage a heloc? Would a CLOC or BCLOC work the same way?

[@TheKwakBrothers]

Yes, you can use a PLOC or a BLOC for the strategy

[@Robertjsmithforhire]

That is my concern too. The sooner you put the lump sum to the principal, the better, but it takes some years to build enough equity for this to work. You either have to buy with equity already, or you have to wait until you build the $20k in equity based on his example. This, itself could take 5 years. Not trying to be a troll, just genuinely wondering how that all works out. If you are buying with equity already, you are basically reborrowing your down payment at an interest rate.

[@grannygirlfriend]

Thanks. Been watching several vids on velocity banking. What alternatives are there to a 1st lien HELOC? I’m in the process of getting a CHELOC and plan to pay off my car, credit cards, then mortgage, separately of course.Cant wait to tell all my naysayer friends: I told you so!

[@TheKwakBrothers]

Boom! You can also look into getting an All-In-One Loan! We have an entire video about it :)

[@anonanon7278]

Most banks in Australia offer an Offset Account, which does exactly what a HELOC does, but it's already built into the loan.

[@izaiahkelton9027]

The best content on KZbin

[@taltezy2941]

Thanks for the advice. And I would tell all the haters out there this.. “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it." Albert Einstein!!

[@TheKwakBrothers]

I agree!

[@slavaboichenko1811]

Einstein had never said that this is a famous internet fake

[@taltezy2941]

@@slavaboichenko1811 He was asked a question of "what is man's most powerful invention" and he replied "compound interest". I believe he said the whole 8th wonder thing during some time, as Einstein was known to respond with very intellectual & sarcastic responses.

[@JK_RANBIRSINGH]

Love live Albert Einstein !!!! ❤

[@jeffg7310]

Hi Sam, what I can say is the HELOC instead of Mortgage is a good strategy as I have had it since 2007. I was able to use the leverage to invest in a business at one time. It gives far more flexibility.

[@edpagan1]

Thanks for the video. I am lost on one thing. After the initial loan and mortgage payment, if it takes years to pay down the HELOC, how are you paying down the mortgage? I may have missed the point. If you owe $200k and you pay $25k, how is the other $175k being addressed?

[@harikrishnan9713]

@@edpagan1 Once the HELOC is payed out in 6 to 7 months, then you can again take out from the HELOC second loan and bring it to 0 in another 6/7 months ; similarly keep on until the home mortgage is paid in full . The only important thing is to try to pay off the HELOC within 6 or 7 months . This system works as he says, if the borrower ( home owner) has a financial discipline towards his budget & not tempted by unnecessary expenses for the stipulated period ( 6 to 7 yrs.)

[@guitarflash2049]

Nice way to invest,The earlier you start investing the earlier you know the benefits of investing

[@PaulBodyBuilder]

Thank you sir finally simple and to the point I really appreciate it God bless you Wyndmoor PA

[@dustinevans2895]

People would B suprised (and yes I know it's a BIG 'IF' 4 most) if they paid even $400 more monthly, towards their mortgage. I mean, cut out Starbucks & U can find $400, send it separately marked/memo 'For Principal Only' (at least that's the way I was told 2 do it) Wish I had started years sooner!

[@karenyoung4860]

Thank you, also do i need to do a check for morgage and a separate check for principal or can i just do one check and write on the side for principal for the extra amount?

[@scatterbrain4667]

Would you use this to pay off smaller loans first then mortgage? Student loans, car payments then the mortgage?

[@TheKwakBrothers]

You can, in fact, we have a course that teaches which debt to pay off first and how

[@floppybob1121]

Yes you should pay off smaller loans with this strategy because then it increases your cash flow and frees up more money to pay off the initial chunk sooner. Example, if you make 5 grand and your bills are 4 grand, you have 1 grand cash flow monthly which when all is said and done, will pay down the initial chunk payment. If you pay your car and small bills, that may free up another 5 to 6 hundred a month to add to the 1000 cash flow so now youre paying off the initial chunk with 1500 a month instead of 1000. The trick is, to pay off that initial chunk in about 6 months of your cash flow so you can do it all over again. So dont take out a lot to put down on the mortgage that you cant pay off in 6 months or sooner. Im doing 15,000 chunks cause my cash flow is 2500 a month and I can pay that off in 6 months. My trick tho, is im not using a HELOC. im doing credit card transfers to my checking account at 0% interest for 1 year. I just put my cash flow on the credit card to pay it off in 6 months then I do it again and again.

[@joejuneman1460]

Or look up Financial Peace and knock your debt out without the exposure.

[@mhp0810]

Probably not a helpful comment... but don't have student or car loans in the first place. Mortgage a little harder to avoid

[@BePatient888]

For a HELOC to work for you, you have to have a property that is valued more than what you owe on it. So, before you do this, you have to have bought the right property, or have already been hard at work paying down your mortgage. Keep that in mind.

[@TheKwakBrothers]

Not really... We had several clients who had 0% equity who are using this strategy with other forms of line of credit

[@aureliodebellis946]

What a blessing

[@dhjengr8756]

5k reduction in your heloc from your income provides a 5k reduction in your daily balanace. This saves you a little over $192 in interest per year when compared to a 4% mortgage. When you calculate the interest accrued on your remaining HELOC balance and the interest on your Mortgage payment, you may be in the red. RISK with NO reward. Just pay more to your principal if you want, there is no meaningful interest savings here. Its smoke and mirrors.

[@zyilund]

Exactly, the best way is to spend less everyday and accumulate your wealth.

[@lazamwa1]

I agree bro, your monthly mortgage payment and your HELOC or Credit card payment will still rock you down, also what if that HELOC or credit card get restricted in one of the months you are in?? then you are stuck with bills and food shopping to pay. better stick to the original idea of keep on your mortgage as is

[@MrJohnskippy]

SIG and Olives how were you able to pay the mortgage with that 10k? Banks usually don’t take credit cards for payment.

[@MrJohnskippy]

SIG and Olives I wasn’t aware that the credit cards offering balance transfers would transfer the funds directly to your accounts. Thanks for the reply.

[@Don-ev6fw]

@SIG and Olives How do you get a 0 fee 0 apr balance transfer? For all the offers I've received in the past for 0 apr, there's always at least a 3-5% fee.

[@crystalcyrus731]

video starts at 10:26

[@durairanganathan5059]

This Video definitely taught something new (using HELOC as Checking) to save few years off mortgage. I don’t think it can Save 67% overall. It may save some 5-10%, but it’s over advertised. Point about Daily Average balance is very good point.

[@TheKwakBrothers]

Thanks for your comment! I think you'll be surprised that many of our clients CAN save up to 67% of their time and interest.

[@bigkatspoker]

Good video.

[@David-dw2iq]

One thing I didn’t see mentioned, but if you pay PMI and the HELOC principle payment cuts off your PMI that’s a significant savings as well.

[@BLACKHEAT1028]

This is very interesting, on my first house I used bi-weekly payments which the payment amount was the same but the bank got their money sooner so it cut the 30yr mortgage down by 7 years. But this is saying pay off in 7 years. Since the interest is tax deductible if you are disciplined enough you can put that refund check back on the principal and reduce it further. The HELOC might be a way to help you get rid of PMI

[@kjchard]

i used an appraisal to get rid of PMI after 6 months but that's a good point. PMI is BRUTAL!

[@Theeslickness]

Hi Sam Kwak, thank you for this video. You didn't go in depth how to tackle the mortgage interest. I'm assuming you pay large chunks of the mortgage (using the HELOC) once your HELOC balance is low. Like waiting for your income to payback the HELOC, then pay another $20K all at once. Thus quickly reducing the interest paid of the mortgage by knocking it down with a lower interest loan?

[@lisaburris-daniels5923]

Which one is better than the other: Fixed / Variabe on the HELOC? Is the DAB for all your accounts times 365 divided by the AP? Is the HELOC (bank), FDIC insured also?

[@johnpaulluckfield7305]

This is a very informative video, not the first video I've seen explaining this strategy. One downside to this strategy is that for markets like Hawaii, 3 bedroom, 2 bath houses are $1,200,000 in my area. I don't see how this can work. If we have Monthly income : $6k Mortgage Payment: $5k Add this 25k Credit Line: $1-2k monthly payment How does this even work & apply for this scenario? This is a very common example in Hawaii. I make very decent money, but after taxes, etc I have $3,000- $3500/month

[@tankercrewchief]

No lender would approve you for a 1.2mil home with that income. You could only afford a max loan of 500k roughly. Do you have any other debts like car loan, student loan, credit cards? Cause you could still do this strategy on that but you would need to apply for a PLOC (personal line of credit). I have one at Hawaii State federal credit union 25k limit @7% interest rate

[@TheKwakBrothers]

We have a bank that does up to $1.5mil

[@antonjames8405]

at 11.03 he says use a HELOC to pay off the mortgage ...that's like using one credit card to pay another credit card ..!!! The difference lies in the fact of how the interest is calculated ..in a HELOC it is simple interest calculated daily and charged monthly versus a traditional mortgage where the interest is calculated compounded bi annually . That said , why does he only do 25% Heloc and 75% traditional mortgage ....reason : the lender ( bank financier ) makes those rules and makes more interest in the traditional mortgage ., so they usually don't want to give you a 100% HELOC . also to note is that if you are temporarily disabled /injured or lose your job you are only obligated to pay the INTEREST due on the HELOC with no Principal repayment amount required ....BUT on the traditional mortgage segment if you miss a payment you can be foreclosed upon ...hope this helps

[@TheKwakBrothers]

You got it!

[@dhjengr8756]

LOL What.

[@tobylawrence9172]

A heloc is based on your equity, if you had 100% equity you would not need the heloc or the mortgage

[@antonjames8405]

@@tobylawrence9172 I guess you are correct . ...but with a 100% equity your house is paid for ,,,, BUT YOU CAN RE-FINANCE either as a HELOC or a Traditional mortgage....or a combination of the two ... what am saying is that most lenders will want you to take any form of financing as a traditional mortgage ,,,,for that's where they make the most interest ( ie profit )

[@antonjames8405]

@@dhjengr8756 help me understand what do you mean by " LOL What "

[@melissah170]

This is so good! Thank you!

[@bfelix7468]

What if the heloc you are approved for is less than the amount you owe on your home? House payment doesn't change, but now you've added a heloc payment. What do you suggest in this situation?

[@rickerwill2]

I never heard you add the monthly P&I of the first mortgage to the full payment on the HELOC. Would that not be the absolute bottom line on whether this strategy actually makes mathematical sense? So, am I to understand converting 10% (or any other fraction) of your mortgage balance into a differently formatted and "higher interest rate / shorter amortization" loan secured by the same collateral will enable me to pay off my 30-year mortgage in 5-7 years? I'll crunch the numbers. ...

[@07wrxtr1]

no; You're REPLACING the mortgage with a HELOC. Have you traded in a car before? Do you drive off in BOTH the new car AND the old car?

[@Falkkonstag]

A couple things of note here. Some countries, mine included, the banks do not allow a large mortgage prepayment. In fact, it's often 10% of the mortgage initial principle rate. So, a 200k mortgage will often come with a caveat that says "if you pay more than 20k, you'll have to pay a fee". This prevents people from paying more money than the bank can expect. Remember, banks not only like money, but they like to know how much money's coming their way, and how often, and the more stable they can keep that number and the more often they can keep that number increasing, the better for them. Secondly, in many countries, including my own, it's *illegal* to pay credit with credit. So, paying your credit card bills, student loans, mortgage etc. with a heloc is not allowed by the bank or by law. YOU can do it by making a withdrawal to your bank account (with any associated withdrawal fees) and paying your loans from there, but you cannot go into the bank and say "pay my mortgage monthly payment with my heloc balance", and for good reason. While things are fine and dandy as long as the Prime Rate stays low, there have been instances where the Prime lending rate has skyrocketed and left lenders on the hook. Banks aren't stupid - in my country, for example, banks will only lend you a heloc for 60%-80% of the value of the equity you already have in your home. So, in order to use this method, your house will already have to be either worth far more than the mortgage is worth, or the mortgage to already be paid off a significant amount. So, sorry new homeowners! To demonstrate like the video does, if my house is worth 240K, the mortgage is 200K, you won't get a heloc for the full amount. So? They say do it in smaller chunks. Straight from my bank - if you have a 200k balance on your mortgage, your house is demonstrably worth 250k (through third party assessment and tax assessments), you'll be able to get a heloc loan for *about* 34-40k. You have to have enough income to support both payments, and a good enough credit rating to show it isn't just a recent windfall or increase in income. So, if your 200k mortgage is.... 1200 a month? You'll have to be able to support up to 1500 a month to "use this method". On top of that, you either have had to have made an AWESOME choice in neighborhood to knock a 20% increase in value right out of the park OR have made a significant down payment. Most, if not many heloc loans are variable (yes there are fixed but the rates are often terrible ) and they're usually prime (federal rate set month to month) + 1-2%. Some companies around the world are offering LESS than Prime, but don't expect those to last long. Better strategies to manage mortgage expenditure would be: Switching to bi-weekly payments (52 weeks in a year vs 12 months. You won't notice the payments) until you have enough equity (enough of the mortgage paid off or increase in value of the house) to use a smaller scale of this method. You CAN do this, and this is a very common thing to do in other countries like Australia, but it either requires more overhead initial capital than expressed in this video, or more time. So no, not 5-7 years, more like 12-15 years - WHICH IS STILL GOOD. As a side note, there's kind of a housing crisis in Australia which taps on this problem - many people are buying houses on JUST heloc loans and paying the interest as an investment. So, the idea for many investors and homeowners over there is to pay just the interest, maybe a little on the principle and wait until the equity increases enough to sell and make profit from their investment. This in itself isn't a problem until you get Joe and Sandy buying the biggest house they can afford on JUST the interest payment, the housing market drops or the equity rates just don't rise. Prime goes up, Joe and Sandy can't pay their interest and the investment fails. There's other problems associated with this kind of lending, of course, but this is turning into an essay.

[@TheKwakBrothers]

Hi JP! Thanks for your really long input! I appreciate your concerns as well as your perspective. This video is specifically made for the people in the United States. It can however work in other commonwealth countries such as United Kingdom, Canada, and Australia but may require modification of the strategy as well as the different types of financial tools

[@lisaohlert6403]

So I would prepay 19,999 and stay under that 20k penalty.

[@Falkkonstag]

@@lisaohlert6403 the truth is, there's no quick way to paying down a mortgage without paying lots of money, that's the way they're written.

[@lisaohlert6403]

@@Falkkonstag Yes I did pay chunks of extra money and applied it to principle but I removed years and years off the term of the mortgage by doing so.

[@kuttanr7423]

Informative but what’s your view if someone refinance for a lower interest rate plus lesser term say 10 years instead ? And start from where you left instead of taking out money

[@meinbherpieg4723]

My bills are on autopay through my bank. Do HELOC loans typically allow you to treat your account like a regular checking account with autopay?