How to pay off a 30 year home mortgage in 5-7 years (2023)

[@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.

[@usieey]

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.

[@maga_zineng7810]

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.

[@kevinmarten]

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

[@usieey]

There are advisors in cities around you but I needed services of one who can guide me irrespective of location. Catherine Morrison Evans comes highly recommended especially in times like this. I am hedging and haven't lost much to the recession. I found her in 2020 when the market was at an all time low. Look her up and thank me later.

[@kevinmarten]

I am on her site doing my due diligence. She seems proficient. I wrote her an email and scheduled a phone call. Thanks for sharing

[@cw5437]

I paid off my mortgage in 8 years. Was paid off the year before Covid. Best decision I ever made. I have no CC debt either. Everyone talks about inflation and high interest rates but i haven't noticed. I created my own personal economy so I don't need to worry about interest and inflation. 🙂🙂

[@Izzy267NZ]

Did you use this method?

[@cw5437]

@@Izzy267NZ I did huge prepayments (took on extra work for few years) and was lucky enough to lock into a really low interest rate at the time. The big monthly prepayments ($1500+ my regular payment) really made it go down fast. I was super focused on it though. Now I'm focused on retirement savings because I'm not quite where I want to be. I don't want to live on Ramen noodles when I retire, but I also don't want to travel the world or anything either. Lol

[@julget3648]

Why didn’t you put that money in stock market? You would have some profit. During the Covid the rates were super low, people were getting refinancing. It was basically free money with 2.2 - 2.5% interest rate.

[@cw5437]

@@julget3648 It is a far better rate of return to pay off a 25 year amortization with current interest rates rising fast. Plus, the value of my house has now risen to almost 3 times what I paid for it, and I now have no mortgage. Way more profitable than a 2% return on higher risk stocks. I also wanted to semi retire sooner by paying off my mortgage.

[@cw5437]

@@purplenaturellc733 this is incorrect due to the trading fees it would cost per investment transaction as I'm not from the US. I do have some investments in equity growth funds which are doing well. I believe in balance and security so I'm personally more comfortable with a paid off mortgage and investments on the side.

[@russellbateman3293]

Despite the naysayers posting in here, we did this circa 2006 and, while we didn't pay in 5-7 years, we did kill it pretty much in 10 (instead of 30). It does work.

[@TheKwakBrothers]

BOOM!

[@klk538]

Bad ideas to pay off mortgage. How about never pay it off and use equity fir more properties instead and make more money live rent free

[@TheKwakBrothers]

@@klk538 interesting... That's exactly what we teach on our channel. So who are you arguing against here?

[@johnmoss7578]

I can see how this strategy would be incomplete without using your new found equity increase to investment opportunity and therefore pay down your increased debt! Crazy but i think it woukd work. @klk538

[@imdoc7872]

Great video. I’m making my last mortgage payment this month. It took me 7 years to pay off my house after paying off $200k in student loans. Discipline and living within your means was key.

[@Prettycutedrawings]

Your an inspiration 🎉😊

[@ToOpen6seven]

How much was your mortgage and what is your salary? Those numbers matters as well.

[@imdoc7872]

@@ToOpen6seven I make $370k per year and my total mortgage was for $360k. But I pay $70k for my children’s schooling per year while saving $150k in their 529s.

[@aminbalank9962]

@@imdoc7872 what were you doing to be making 370k a year

[@imdoc7872]

@@aminbalank9962 I’m a doctor. That’s my salary.

[@justinsanders195]

How to pay off your mortgage faster: trim unnecessary expenses. Increase principle payments. Simple

[@Rainbowsun1]

Thats what I am doing, after my divorce I refinance at a lower interest rate and did a 15 yr instead of 30yr.

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score

[@albajessicalove]

​@@Rainbowsun1check her out on Google or check her website

[@xterra4hire]

Sure we are going to talk about helix’s in this video but I’ll give it a chance

[@24G-p5r]

​@@Rainbowsun1you still paid mostly interest at first

[@pamelaj25]

I did this two times. The first time was when I got divorced. I paid off a 50k mortgage in 3 years as a single mom. Then, I did it again , mostly .B. As a single Mom. I paidas an extra $600.00 a month. I am thanking God above for leading me in that direction. I should have had a custom built home (expensive home) paid off in 2016. What I couldn't anticipate was my future. I had to have a back surgery that didn't pan out! I became disabled. I thank God everyday that I did this. It made the difference between losing my home or almost paying it off. Listen to this guy. He is right 👍

[@destinyvasquez6849]

Im only paying 200 more on top of my mortgage u think i should pay more

[@torqued6881]

This is the type of stuff that should be taught to us in high school.

[@TheKwakBrothers]

EXACTLY!

[@brettmortenson5181]

Fr Fr! I would have loved to learn in high school that I can get a HELOC against the value of my home. Who needs equity in a home “equity” line of credit? Not me!

[@AnalyticalMenace]

No, it really shouldn't. I can understand why most millennials and zoomers say they'll never own a home or retire.

[@albajessicalove]

​@@brettmortenson5181Maria Brisbane helped me secure HELOC with 650 credit score

[@albajessicalove]

​@@AnalyticalMenacecheck her out on Google or check her website

[@mathebulamkhize876]

Year-over-year inflation stood at 6.5% in December 2022-the lowest that figure has been in more than a year. Inflation was in line with what economists expected and gave many of them a reason to believe that the peak of inflation may be behind us. I have approximately $150k stagnant in my port_folio that needs growth. What is the best way to take advantage of this downturn?

[@sarahtaylor7722]

FINALLY! I've been telling people about the way amortization charts are scheduled ever since I figured it out. It's NOT common knowledge, and the banks don't want you to know about it either. THANK you, sir, for bringing this to light!!

[@debz7682]

Girl I’m glad you got it, I’m so lost

[@albajessicalove]

​@@debz7682Maria Brisbane helped me secure HELOC with 650 credit score

[@albajessicalove]

​@@debz7682check her out on Google or check her website

[@bradkroboth5490]

Great video, my wife and I have been rounding up our payments to pay down the principal balance. It may not be much over our mortgage payments, but it shortened our loan by a few payments earlier. $25 now is $1000 later . We just refinanced and shortened our loan by 3 years and received a lower interest rate, it's going to save us about $50k overall

[@OMERDULI]

You can also call your bank and see if they would allow you to pay your monthly mortgage payment via bi-weekly. You gain one extra payment at the end of the year.

[@brianesbaugh6897]

This seems very fascinating but has it changed because of increasing interest rates but especially increased inflation?

[@kooljc7]

Nice that’s beautiful

[@sooner1125]

@@brianesbaugh6897 my heloc rate has gone up a ton. I’m in year 11 of 3.25% and haven’t paid a dime extra. I’m buying up as much as I can in stocks. Owe $225k on the house and invested $40k last year in the bear market. Hope to do that much or more this year. We make $220k (Dual income) before taxes but live on about $10k a month.

[@yahshua1110]

I have been thinking with current technology of online banking, why couldn't I do DAILY payments and save a ton, especially if I can increase the amount paid over the monthly mortgage amount. I just refinanced and was told I can make extra payments without penalty. Why not just schedule daily payments? Has anyone ever done this? I couldn't find much by Googling it but when I did it with a mortgage calculator it seems to make a big difference, I can pay off a 30 year loan in just over 10 years by adding a few bucks a day.

[@elmo257]

Just want to say that I'm Canadian, so the bank rules might be different in your country. First mortgage was paid off in 5 years with an interest of 9.4% (back in 1994). Saved up and purchased a rental home and paid that off in 3 years (4.3%). There are many ways how to achieve this. Check with your bank and find out the rules on your mortgage. With a fix mortgage, most bank will allow you to make one extra payment per year (either calendar year, or anniversary year). So basically, just save as much as possible and deposit as much as you can (to the limit....some bank will allow you up to 20% of your initial value of the mortgage borrow....so $200K, you would be allow a max of $40K per year at 20%). If you're your income is weekly, you would get 26 pay check per year, and not 24....meaning change your mortgage payment to weekly...by doing so a 25 year mortgage will drop to about 20 years....and you would not even feel any pain. Always remember it's not what you do in the last few years of the mortgage, but the first few. Just use something online and see how much interest you're paying vs the principal. Example, let's say your mortgage ($300k) payment is $1,700/month, about $1200 is in interest, while $500 goes toward principal. I know this will be hard, but for easy math, you were to find a way to save $1K/month, that's $12K you can deposit toward the mortgage. By doing this, your mortgage had just dropped by 20 months....20 months of interest, so about $10k in savings (not to mentioned that you paid off your mortgage faster, meaning more time to save for retirement). IF your mortgage is on calendar year, you got a few months to deposit some money towards your mortgage...even it's just $500 (using the example above)...just that alone will take one month payment off you total mortgage...saving you $1200. Can't stress my method works, the only problem is that everything is on paper....meaning you don't see the vacation, or the brand new flat screen tv....you have to wait, and when your mortgage is paid off....you can sit back and enjoy....retired at the age of 40.

[@blueapple9135]

Per retired at the age of 40, Too bad, i'm 40 and just bought a new home. thanks for your advices, i will follow it as much as possible.

[@miguelbernal1435]

I just turned 25 and I’m buying a house soon. As you said, I did all the calculations on paper and probably won’t be able to get a brand new car or travel every year but it will feel great to cut the debt from 30 years to maybe 10-15 and be debt free in my late 30s/early 40s

[@steveconnor3311]

Good job explaining all this. 👍

[@stephaneplourde5944]

@@miguelbernal1435 way to go! Im 6 year in my journey to pay my house im 14 years. Puttin more than asked to pay principle faster. Still investing moneu eslewhere too cause life made me learn not to put all my eggs in the same basket !

[@AW-kc4zv]

The bank already fix your monthly payments for 360 months. You can pay them off in 30 years or shorter but it won’t change your total interest. You just save your current money to pay your future bills. And always future money is cheaper than current money.

[@muhammetisk7290]

*Creditlord* literally gave me a fresh start. Before, I was stressed out and exhausted from being turned down from lender to lender. As of now, I'm currently in the phase of purchasing a home. I'm more confident and I feel more secure.

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score.....

[@kkakdugiman]

I finally paid off my whole mortgage in 5 1/2 years. This has been quite an achievement for me. Thank goodness I did well in saving money for many years since I was a teen.

[@charlenelynch6505]

Wow 👍👍👍 congratulations!

[@kkakdugiman]

@@charlenelynch6505 Thank you very much!! It was quite an accomplishment!

[@princessmdify]

Congratulations 🎉 👏 🎉 well done

[@kkakdugiman]

@@princessmdify Thank you very much for that!

[@matildalengwati8350]

Well done... I paid up in 7 nd a half... I'm on the second debt, how go for 5years?

[@hugomoves3015]

I have a Heloc from BOFA with a variable rate. When I locked in the rate I was told it can easily convert to a fixed rate after usage. Now that I’m ready “fix the rate” they claim the only way is to get a mortgage and amortize… make sure to pursue the fixed rate option up front. That is what I’m working to resolve now… good luck all.

[@Dbb27]

BOFA is a den of thieves.

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score...

[@albajessicalove]

check her out on Google or check her website.

[@ExxonMobilCompany]

I wasn't financial free until my 40's and I'm still in my 40's, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn't matter if you don't have any of them right now, you can start today regardless your age invest and change your future! Investing in the financial market is a grand choice I made.

[@obodoaghahenry9297]

I understand that tomorrow isn't promised to anyone, but investing today is hard for me now because I have no idea of how and where to invest in. I would be happy if you could advise me based on how you went about yours, as am ready to go the passive income path.

[@marcelrobert9569]

@@obodoaghahenry9297 Even with the right technique and assets some investors would still make more than others, as an investor, you should've known that by now, nothing beats experience and that's final, personally I had to reach out to a stock expert for guidance which is how I was able to grow my account close to a million, withdraw my profit right before the correction and now I'm buying again.

[@marcelrobert9569]

@@Manuelcliford Sure, My advisor I'm in touch with is "Julie Anne Hoover" , she works with Smith incorporated and interviewed on CNBC Television. You can use something else, for me her strategy works hence my result. he provides entry and exit point for the securities I focus on.

[@charlotteflair1043]

@@marcelrobert9569 I just looked up this person out of curiosity on the Google internet; surprisingly, she seems proficient. I thought this was just some overrated BS, appreciate this.

[@russellash8755]

No one cares

[@asyourattorneyiadvise9063]

I have worked in banking for many years and you nailed it. 99% of people do not get it

[@Christorment5]

It’s very simple, so basically this mortgage vs heloc is like life term insurance and whole life insurance. Having whole life is like having a bank account, the money you take out you eventually put back in and the interest you have also goes back into the account so it’s almost like paying yourself and going in debt with yourself. Very simple but also dumb because what happens when you owe yourself and can’t pay yourself back??

[@beernutzbob]

@@Christorment5 The people who benefit most from whole life are the agents who sell it. The commissions are some of the highest of any insurance or investment product.

[@jaspreetbuttar332]

But will the banks let u do it? Wont they charge hefty penalties for paying mortgage early?

[@beernutzbob]

@@jaspreetbuttar332 Most single home mortgages have no prepayment penalty. FHA and VA loans can't include them and if mortgage company does include them they can't last for more than 3 years. Mine is with Rocket and I've paid extra principle for more than a decade. Just $60 extra a month took almost a year off the term of a 10 year refi.

[@debz7682]

I’m 99% of people

[@Major_Pipps]

I'm impressed with how easy you were able to break down and explain this info. Nicely done

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score

[@jf1890]

Huge trouble for big spenders or gamblers. Unlike a checking account, your house and property are gone when your equity balance hits $0 on a HELOC.

[@jcs1492]

Thanks for posting, all I could say has already been said here in different ways. I just called my credit union to open my HELOC. You've made a subscriber out of me.

[@thelmawilliams4500]

Excellent & right on time for me! Just talking to my Loan Officer about a HELOC! And recently made the decision to 'Payoff' my home. Thanks for the education!

[@ManuelHernandez-xt8pr]

You spoke correctly at 17:00 check to mortgage at $200k, but at 19:00, balance should be $194k after applying $6k income to pay down heloc. Concept not lost, but details are important when dealing with finances.

[@tadehaloian5747]

This was a great informational video. Hoever, you forgot to emntion an important fact that you need to have more equity, in fact more 80 to 90 percent of equity than the balance your current mortgage debt to pay off and close your mortgage. Most people may not have built enough equity in 7-10 years to be able to pull a HELOC out and pay the 30 year mortgage balance off. Plus, we are talking 7-10 years into the mortgage and then just starting to pay off the mortgage and start the HELOC with another 5-7 years, whioch will be som ewhere around 20 years. Yes it will reduce 10 years off of 30 yr mortgage, but isn't that also possible by just putting more toward principal in that initial 7-10 years (front loaded period). What's your idea folks?

[@6SpeedsGood]

Right, this entire presentation is bogus. He goes from bemoaning front-loaded interest, which yes, sucks. But then jumps to an example where he borrows 90% of a magical $300K in equity to create a $270K HELOC. Newsflash - there is no $300K equity in almost any mortgage that is still in the year 1-7 age (some coastal & crazy markets excluded). A point to be clear on - a HELOC is borrowed against EQUITY, not against VALUE. Consider a 30 year, 5% mortgage with 10% down on a $300K house. End of year 7, loan principle is $237K. To grab a 90% HELOC to cover that, you would need $263K in EQUITY, which means a home VALUE of $500K. Maybe the home appreciated 67% in 7 years? That's 8% a year, with no corrections, so a very big maybe, but even then you're already 7 years into the front loaded mortgage interest! You've already missed the big payoff he is selling! There is basically zero scenario where this HELOC strategy could possibly work any earlier than year 7, and even then only in a perfect world of ever-increasing home values. And, that leaves out the very real chance the bank could call your HELOC. He downplays that, but it creates a 30 day window where you come up with $237K cash, or you're on the street. Do you really want to run that risk? Misery loves company, so a market downturn + housing downturn + job losses all ride together, so the circumstances in which your loan WOULD be called are all during the worst possible time. Also, the cash swap to credit card strategy requires so much discipline and timing, it's essentially impossible in the real world to repeat month after month for years, and leaves you so illiquid for other emergencies, it's just terrible, terrible advice. Also, many HELOCs are variable rate. Also, many have pre-payment penalties, unlike mortgages. This advice has so many landmines, that the cash-strapped people this advice is targeting are almost guaranteed to get sideways on it. The only good news is that almost no bank is going to engage in it, because you'll never have enough equity early enough in your loan to come anywhere close to the savings he is selling. So this is really just a 20 minute smokescreen. Just pay more towards your principle if you really hate mortgage interest. Or better yet, invest the difference in a Roth IRA wit superior tax advantages or a brokerage index fund that will likely return more than your mortgage rate over time.

[@COOL_DAD]

That's what I was thinking, thanks for the explanation

[@eliasr.s.7473]

Agree, that’s what I was thinking too. I’m like did I miss something here, where did this guy get 270k from? Just like 💨 out of nowhere says his home gained a value of 270k. Shady stuff

[@immelting9834]

@6SpeedsGood What about putting the smallest amount down then on the 1st mortgage payment; give as much as you possibly can ?

[@maheshmahadeva8222]

@@6SpeedsGood if you have not paid extra payments, even theoretically it's not possible to pay down a 30-year mortgage in 7 years

[@TheKwakBrothers]

⭐️⭐️⭐️COMMONLY ASKED QUESTIONS / ARGUMENTS ANSWERED HERE⭐️⭐️⭐️ 👉 1. Why is this Better than Paying Extra into the Mortgage? We call these people, "Extra Payment Pagans"... We have a special video that explains why our strategy is BETTER than extra payments: kzbin.info/www/bejne/eJ3UiIJnZbWGa8U 👉 2. Where Can I get More information On This? You can watch our followup webinar here that answers more questions and you can schedule a free consultation with us afterwards: acceleratedbanking.com/webinar?sl=chopmymortgage We'll answer more quesitons such as "I don't have enough equity", "I have inconsistent income", etc. 👉 3. Where Can I Get the Calculator? Right here: chopmymortgage.com 👉 4. How is it possible to Pay Off the entire Mortgage with a HELOC? With a 2nd lien HELOC, it's hard to pay off the existing mortgage balance in full unless you have more than 50% equity. However, with a 1st lien HELOC.. you can completely replace the mortgage in full. It's technically a refinance to do so but you're going from a 30 year mortgage to a 1st lien HELOC instead of refinancing into another 30 year mortgage which resets your amortization clock. 👉 5. I still Don't Get This... How do I learn more? You can watch our FULL 60 Minute Explanation Seminar here: acceleratedbanking.com/free-virtual-class?sl=chopmymortgage 👉 6. Doesn't this require a TON OF DISCIPLINE? Actually, no! My team has created a complete system to either automate the entire process OR minimize the effort down to 30 minutes a month at most. There is an initial set up process but after that, there is little to no on-going maintenance. We do have software programs that can track results and progress for you. 👉7. What if the Bank SHUTS DOWN MY HELOC or FREEZE it? So this happened quite a bit back in 2008-2012 market crash. It's first important to understand WHY banks close/freeze them. Back in 2008-2012, banks closed them on homeowners who were either underwater OR had TOO much debt with no asset. The other common reason why is that the homeowner either abandons the home, does something illegal with the property, or defrauds the bank with false information. Ever since 2012 Dodd-Frank Act, there are MORE protections for the consumers/borrowers of HELOCs. Plus, out of the 1000s of clients we have for the past 5 years, we had yet to have a client lose their HELOC due to shut downs or freezing. So it's VERY rare! 👉8. Why SHOULD You pay off your mortgage in the first place with really low rates? Please watch 2:00 to 8:00 again because you definitely missed it... 👉9. Can I see an actual calculation and math behind this strategy? Like an excel sheet and exactly how the money is being saved? Yes, we have our partner, David Bruce, give you a COMPLETE mathematical breakdown of this on an Excel Spreadsheet. He made a video for you here: kzbin.info/www/bejne/f6HZf6Jnrc9-aqs 👉10. Where can I see some results and testimonials? Here you go: acceleratedbanking.com/results1646941792157 We are also an A+ Accredited Organization through the Better Business Bureau (BBB) - www.bbb.org/us/il/warrenville/profile/real-estate-consultant/the-kwak-brothers-0654-1000017204 AND we currently hold the EXCELLENT status on TrustPilot: www.trustpilot.com/review/thekwakbrothers.com SO EVEN AFTER ALL THIS, IF YOU STILL DON'T BELIEVE... WE TRIED OUR BEST TO REPRESENT THIS AMAZING CONCEPT AND A HOPE FOR A FUTURE WITHOUT A MORTGAGE. WE APOLOGIZE THAT OUR LACK OF ARTICULATION HAS STOPPED YOU FROM BEING ABLE TO UNDERSTAND.

[@twincherry4958]

Apply to single family homes ONLY

[@samgray2680]

I'm an "Extra Payment Pagan" and an accountant, watched that video as well as about 5 of your other videos.. still yet to see any explanation / comparison. I want to believe this is real, but so far yet to see any proof at all.

[@yangeric100]

@@samgray2680 seems like the basis of this strategy is to keep the heloc balance on any given day as low as possible with automated, frequent payments as often and as quick as possible to keep ADI low. 1- using a more frequent payment (paychecks are usually more than once per month. Can be done with the standard mortgage as well, your probably familiar with the semi-monthly/weekly payment method to save on interest. Similar idea, this takes it a step further with whatever frequency your paycheck initiates. 2- going direct from paycheck to loan. Takes our checking account with any balance out of the equation (keeps loan amount lower if you have no checking account) and takes the extra step of us initiating a payment out. This would help save on interest on those days between payday and initiating the payment. This strategy is based on paying as much as possible as often and as quickly as possible, and having no checking account balance. Whether the interest rate is low enough in comparison to see savings versus being a very disciplined person following the same guidelines with a standard 30 year mortgage is another question. Hope that helps and that's my takeaway from the video

[@wchill1337]

@@samgray2680 somewhere else in the comments this guy replied to a question about refinancing which makes me think he doesn't know what he's talking about. The question was something like, if I refinance to a lower but make the same payments, doesn't that mean my mortgage gets paid down faster? And this guy said no, it just resets the amortization. Wtf? You can plug the numbers into a calculator, refinancing at the same interest rate and principal and paying the same payment literally results in the same end date for payments. Check these numbers in an amortization calculator that handles extra payments. 100k at 5% is $536.82. Let's say you start the mortgage, pay 60 payments (5 years) then refi at 5%. Remaining balance is $91828.73. At 5%, new payment is $492.96. If I add $43.86 in extra payments per month, then I'm paying the same as before. And the calculator indeed tells me that I will pay off the new mortgage in 25 years! So if I refi to lower my rate and keep the same payments, obviously I'll pay it off faster! This is so basic it makes this guy's advice sound very suspect. EDIT: Adding in some extra calculations... I wrote a program in Python to calculate the total interest and time spent for mortgage vs HELOC. (Let me know if you want the code) The short story is that over the course of 30 years, you might save a few months if the mortgage and HELOC is at the same rate. These are the numbers I used to calculate (note that the final numbers might be off by a bit due to rounding): 30 year mortgage @ 5% HELOC @ 5% 400k loan amount 60k aftertax income, with all extra income going towards payments. $800/mo expenses all put on a credit card. (Assuming car is paid off, since you can't pay for the payments with a card.) Minimum monthly payment is $2147.29. With minimum payments on the mortgage, the total interest paid is $373,021.33 over 360 months. With minimum payments on the HELOC while floating expenses, the interest paid is $364,990.43 over 355 months. With all extra income going towards the loan, payments are $4200. On the 30y mortgage, you pay $110,656.08 interest over 122 months. On the HELOC, you pay $107,664.83 interest over 120 months. Basically, the HELOC strategy is only good for saving a few months off the total term, but overall it's a terrible strategy. It's better if either (a) interest rates are very high (15% interest rate with minimum payments and $800 expenses saves 47 months over 30 years) (b) you have very high expenses (5% interest rate with $10000/mo expenses on a credit card saves you 21 months over 30 years). (c) you somehow get a ridiculously good HELOC rate compared to current mortgage rates It becomes worse if (a) interest rates are low (at 2%, you only save 2 months over 30 years) (b) you make extra payments (in the above example, you only save 2 months over 30 years by doubling the payment) (c) your expenses are low ($400/mo expenses saves you only 2 months even with minimum payments) (d) HELOC rates are high compared to current mortgage rates For me personally, the math doesn't scan. I have a 370k mortgage @ 15y 1.99%, my aftertax income is 210k and expenses max out at 3k/mo. HELOC rates are around 6% right now. By following the HELOC strategy, if I roll all my money into the loan, it takes the same amount of time but amusingly I have to pay 16k more! And this is the danger you face with this strategy: variable interest rates. I would much rather take a few extra months and ensure that I have stability over this garbage method.

[@DS-nw4eq]

Uh oh! I smell BS!!!!

[@101448]

Sam I was a Loan Manager for a bank and NEVER saw a fixed HELOC and most of them can cap at 18%. They are priced according to prime plus 0.00% and sometimes there is add on.

[@TheFirstRealChewy]

This doesn't work for me, but it may be fine for someone else. There is a cost to opening a HELOC. Even if you use a HELOC to pay off your mortgage, you still owe that money as a HELOC. Having the interest accrue daily on the HELOC works best for the lender. That limit of 90% value, assuming you can get more than 80% value, is also constrained by what you owe on your mortgage. So in the example, you only have access to $70K calculated as $270K - $200K. Assuming you already have a HELOC, paying off an initial credit card balance with a HELOC is fine. The reason is that you'd be paying off a high interest loan with a low interest loan (essentially a balance transfer). However, once the credit card is paid off, you should be able to pay off any future charges to the card at the end of each month without using the HELOC. If not, you are in for a world of hurt. It doesn't matter if you directly pay your credit card bill with your paycheck, or indirectly pay it using a HELOC. If you can't pay off the credit card and must carry a balance, then it is better to carry the balance on the HELOC than the credit card since the card will have a higher interest rate. However, you need to bring in enough to pay off the credit card and pay back the HELOC. If your credit card is being paid off each month but the amount you borrow from the HELOC keeps increasing, you are still losing. Your goal should be to pay off your debt fast. It doesnt matter if that debt is a mortgage or a HELOC. The HELOC allows you to borrow the equity in your home, but doing so will simply increase your debt. There is also a high probability that the interest rate on your HELOC is worse than the interest rate for your mortgage. The best way to pay down the mortgage faster is to pay more money towards the principal. Replacing a high interest debt with a low interest debt (a reason to refinance) will help, but you still have to pay off the debt.

[@QuanNguyen-og6pq]

exactly. When I look at the title of this video "Paying off mortgage in 5-7 Years", I was like "Woah, it's must be some secret hack, let's see what's going on here". But after spending 25 min listening to this, I realized that the core solution (at least in his case) is to put $6000 into paying off the debt (doesn't matter HELOC or mortgage). If I had $6000 every month to do that, I might as well use $1000 to pay the mortgage and $5000 to pay the principal, then I'd pay off my $200,000 mortgage in just 3 years. If I misunderstood the video, please explain it to me.

[@6SpeedsGood]

@@QuanNguyen-og6pq You didn't misunderstand, the video is garbage. If you owe $200K, that's $5,555/month for 36 months, no interest. There is no magic here, just smoke and mirrors while simultaneously putting folks into a seriously illiquid position in life, while also putting them at the mercy of a bank call on the HELOC, a catastrophic position for almost anyone. Good times! And if your mortgage rate is below 4 or 5, you're even better off putting that extra $5k into a Vanguard fund!

[@QuanNguyen-og6pq]

​@@6SpeedsGood Thanks for clarifying.

[@theopenrepublic]

For those who live in the UK and stumbled upon this video, the HELOC is equivalent to an Offset mortgage. I use the HELOC (Offset)-Credit Card strategy as well, and it really does work.

[@matthewhook3375]

I'm in the UK and just stumbled across this - please could you elaborate on the offset credit card strategy?

[@theopenrepublic]

@@matthewhook3375 Sure. The basic premise is to use your credit card to maximise the length of time you keep the most amount of money in your Offset Mortgage account so as to minimise the amount of interest you pay on your mortgage. So you make all purchases using your credit card and don't use your debit card at all, because if you do, money will go instantly from your account. If you use credit card, you have 1 month before you have to pay, and this keeps more money in your Offset Mortgage account every month. And since interest on your mortgage is calculated daily, the longer you keep the most amount of money in your account, the less interest you're charged. And if you pay off the entire balance on your credit card each month, you will maximise the benefits of this strategy. Another tip is to change all your monthly direct debits / standing orders to a day or two before you get paid your salary. This will keep the balance in your account to the maximum level each month, thereby incurring a reduced interest charge. This is the Offset-Credit card strategy in a nutshell. In fact, you can do this with a regular bank account too. Keep the most amount of money for the longest time to earn the most interest per month.

[@matthewhook3375]

@@theopenrepublic thank you for the explanation, I guess my next question is what is an offset mortgage account? I haven’t come across these. I already use an Amex cash back credit card for my day to day spending and my salary is paid into a current account, where it earns a pathetic amount of interest until it goes out to pay the Amex bill at the end of the month.

[@theopenrepublic]

@@matthewhook3375 With an Offset mortgage, you use your monthly savings to "offset" the amount of interest you're charged each month on your mortgage. So if you have £10,000 in savings and a £100,000 mortgage, you pay interest on £90,000 (£100,000 - £10,000). You can then use the saved interest to (1) reduce the amount you pay monthly for your mortgage, or (2) reduce the term of your mortgage - so you pay if off early. The more money you have in savings, the greater the benefit you derive from offsetting. Another advantage is that when interest rates go up, you get a bigger benefit from the offset. You will also save 1,000s of £ in interest over the lifetime of your mortgage. The big drawback is that you don't earn any interest on your savings - because the interest is being used as the offset. But TBH, the interest rates are so pathetic at the moment that you aren't really missing out. If you want to know more, check out Barclays, Coventry building society, or Clydesdale Bank. They offer offset mortgages and have more information on their websites. There used to be more banks offering offset mortgages, but in recent years, many have stopped offering these. They are well worth thinking about if you are looking to re-mortgage.

[@matthewhook3375]

@@theopenrepublic thanks again for the explanation, I’d never heard of these mortgage products. Unfortunately I’ve recently remortgaged to Lloyds on a 10 year fix at

[@jayblom8671]

Am I missing something? This is incredibly informative but how did you get a $270k HELOC when you still owed $200k on a $300k valued home? How was the HELOC $270k vs. $70k? I get you're using the 90% rule but I thought a HELOC was only for the actual equity amount (i.e. $70k in this instance?).

[@quasimo1412]

You're not missing anything, the math does not work in the video example. HELOC's are usually structured at 85% of the available equity in your house. So if your house is worth $300k and you have a mortgage balance of $250k your max available HELOC would be $42.5k.

[@BMLM49]

Used a 1st LEIN HELOC vs 2nd (traditional) HELOC.

[@albajessicalove]

​@@quasimo1412Maria Brisbane helped me secure HELOC with 650 credit score

[@albajessicalove]

​@@BMLM49check her out on Google or check her website

[@BMLM49]

@@albajessicalove Who?

[@rickharks4515]

When we bought our first home, back in the day when things were cheaper, we were told to put and additional 50 dollars per payment and that goes directly to the principal.. and then after that when we sold and got a little larger home (went from a 725sqft home to a 1200 sqft home) and we only locked in for a year, we decided to double our payments to pay it off in 12 years, well we paid it off in 10 years. If you can afford it, tighten your belts and go double payment for as long as you can. With our first house, we tried that HELOX, and didn't like it, it was to flexible for us. we needed that locked in mortage. Cause with the HELOX you got a credit card to go with it and we over spent without really keeping track of it, till a light went off in our heads, and we buckleted down and went back to a mortage. There was no more stress on that. knowing it was coming down for us. Just our thoughts and experiences.

[@mahsih2007]

easier done if you have a certain income etc. As well depending on the interest rate it may not be better to pay off the mortgage as quick and better to actually invest money in more income producing opportunities that pay far more than what your mortgage costs. Also yes you can put yourself in a 15 year but I prefer 30 and treat it like 15 this way if something happens financially in your life then at least you are not obligated to a higher monthly payment !

[@paulmasonmiller]

I am doing the same and adding as much additional principal payments as I can but I dont see the loan being paid off much faster

[@steffie6510]

@@paulmasonmiller then you're doing something wrong!! If you make one payment extra a year on a 30-year mortgage you will cut off 7 years right off the bat!! You need to call Sam Kwak I know him personally he's awesome and so intelligent with money

[@steffie6510]

You clearly missed the point there are no extra payments being made you're paying the same amount just threw a different Source instead of dropping it into your checking account you're dropping into your HELOC account. You are not understanding what was just demonstrated

[@destinyh9497]

Same!

[@albajessicalove]

​@@paulmasonmillerMaria Brisbane helped me secure HELOC with 650 credit score

[@burieddreamer]

This is crazy, it's like living off a credit card! One has to have nerves of steel to keep track of what's going on.

[@GeneralChangFromDanang]

Not really. Just set an autopay on your credit card so you don't screw up and end up paying interest.

[@EricStrobel09]

Step one. Have or make a ton of money.

[@SerenityChamber]

This is the MOST CLEAR EXPLANATION of a HELOC. Thank you! Subscribed!!

[@TheKwakBrothers]

Awesome!! Thanks for your kind words!

[@paulgugger8987]

I started doing this and at first I would send a $5000 to $7500 check with my HELOC, then one month I sent $15000 and to my surprise my payment had dropped $400 a month, I called the loan company to ask why and I was informed that anytime I send a payment of over $10.000 over the mortgage amount they reamertize the loan.

[@liammclaughlin2881]

Duh, no kidding. I used my mortgage as my saving account. Meaning that I was getting 4 38% interest on every payment I made. I kept a few thousand dollars as an emergency fund and ALL the other money I had went towards my mortgage. I was making 6-7 additional principle payments per month. If I got a bonus from work, it all went to the mortgage payment. All my tax return money went directly towards the mortgage. I found a Heloc at 2% and took that. I paid off the remaining balance in 1 year. I paid everything off in 6 years. I didn't have much in savings then but I sure do now.

[@KarlaJammin]

I did mine in 4 years by hustling 2 full time jobs. Thank God I did it! Now it's time to start a business and increase my investment.

[@godlovesyoumorethanyoucane4239]

Congratulations!!!

[@CarlosReghis]

Brilliant! most borrowers doesn’t understand compounding interest

[@TheKwakBrothers]

Exactly!

[@marshallwise1763]

@@TheKwakBrothers or compound finance charges!

[@jasonbrown7258]

@@TheKwakBrothers my home been refinanced a couple times. I went through divorce and chapter 7 bankruptcy in 2011. At that time owed around 137000. Got a loan modification it's at 3.5% 750 per month i now owe 93000. Also there's a second mortgage that went through bankruptcy also but it put a lean on the place. So I owe 93000. Plus 26000 on the lean. From my understanding I don't have to pay the lean unless I sell which I got no plan's to do. Will this Heloc work for me?also what can I do about that lean. Is there a way to get rid of it. The maturity date on the mortgage is 2050. I'll be 78 years old by then. That means I can't retire until then because there's just not enough money. Any suggestions?

[@nathanielcarreon5634]

Paid off 30 year mortgage in 10 years. Just made double or triple principal monthly prepayments.

[@whytemyke]

I actually love how clever this is. The biggest downsides I can see are 1) Finding a low interest, fixed rate HELOC, and 2) Making sure you have some control over when the lender turns off your draw period on the HELOC. I know you're saying you've got lenders who haven't shut down the draw period during economic downturns but those types of lenders are few and far between. Anyways-- great info and video!

[@TheKwakBrothers]

Thanks for getting it! Lol

[@bigboneill]

@@TheKwakBrothers The math works out, I ran an 84 month model. Exactly what Dan said, without those conditions it's pretty risky potentially having to come up with the balance unless the terms are concrete. Was about a 35% deduction for interest paid even compared to a 15 year.

[@marshallwise1763]

Its not about the interest rate on the HELOC or the 30yr Mgt. Its about time to pay off your Mgt and using lazy money accumulating in one's checking account.

[@keysoteriq2590]

@@marshallwise1763 doesn’t that all compute to having a low interest rate?

[@marshallwise1763]

@@keysoteriq2590 CMG, even during the 2007 crash they kept the HELOC open. Reason, they only work with A paper people.

[@DarkHorseParatrooper]

I'm not understanding this. If I have a 1500 dollar mortgage at 3 percent (which I actually do), why on earth would I pull any equity, let's say 50k, to pay down the principle? The bank, let's say they give me a fixed 5 percent HELOC. Okay, but now I'm paying 1500 plus whatever the repayment is when I spend the 50. Why not just pay more towards principle if I could already afford say a 500 dollar payment on the HELOC?

[@mvparker79]

I’m thoroughly confused. HELOCs don’t have fixed rates until you convert your variable rate into a fixed rate. At which time you’re closing your draw period. What am I missing??

[@nickhull83]

I used the supplied excel file, this does not work for me for a 3.75% fixed 20 year and HELOC over 8% now. It's much easier to pay bi weekly or make one extra payment 100% towards your principle per year to substantially reduce the loan time. Also pay attention to your payment amount each year, my payments drop a few bucks each year that I add back as principle. It all adds up at the end!

[@56awesomethings]

Just a bit of caution...If home values go down the bank could freeze or lower the amount available on the HELOC and then you will be stuck with credit card debt.

[@udaynj]

Don’t get it. You replace a 30 year mortgage with a Heloc where you still have to pay interest on that same principal amount. And Helocs have higher interest rates than a mortgage. You didn’t explain how you went from 30 years to 7 years.

[@danohuynh9302]

You can’t learn this in school. Great stuff. Life experience only has true value.

[@mehardin]

I would hope they wouldn't teach this in school, because it's awful financial advice and bad math.

[@garyK.45ACP]

We paid off our 30 year mortgage in 6 years and 3 months. We worked every hour we could and paid every extra $ we could every month. No HELOC. I do not borrow money to incur debt to pay off debt. We are debt free. No car loan, no credit card debt, no mortgage, so student loans. Any credit cards we use, we pay in full every month. 800+ credit scores for both my wife and I. Now we are both retired. 😁

[@ericclaeyborn3600]

My wife and I bought our home in Dec. 1989, and paid it off in mid 1994. It was only $29,500, but we were only making $23k a year, together. It's just a matter of denying yourself some luxuries for awhile. Our house is worth $110k, now, and we're debt free today. We are far from being rich, so anyone can do it if they really want to.

[@JohnTheManMythAndLegend]

This isn’t the best example. Making $23k a year with a mortgage of $29,500 is like making $312k/yr and having a $400k mortgage.

[@m1r205]

Average mortgage is close to $800,000 now, not a realistic comparison in this economy at all. Have a good think about it and try again 😅

[@gayleleier8115]

CLEAR AS MUD. We have always paid extra on our loan. We pay off all credit cards monthly. So no debt other than house pmt. But the "deposit all income" I will have to read over a few times. Don't know if I can do this because we just refinanced 1st and 2nd into 2.9% loan and 50,000 to remodel. Thought we were doing something fantastic. Now I will download your calculator. Thanks

[@younghoyoo8366]

This is not a calculated financing advise but a lifestyle advice in my opinion. With this method: -you don’t put any money away -your heloc available balance is what you can use for emergency -pay off as much mortgage principal as possible for 5-7 years -get credit card points You can technically achieve the same result by paying extra principle. For example if your mortgage is 200,000 at 30 years at 3% your payment is $843. If you make extra $1800 per month ($2,600) you would pay off that mortgage in 7 years. Your literally saving maybe $4 in interest per month with the extra $1800 balance reduced on the first month (1800 x 3% =54 /12 = $4.5) With the interest rate being so low for a fixed mortgage this makes 0 sense. Get a 30 year fixed mortgage and dedicate yourself to paying extra each month. Your interest/principal for the following month is AUTOMATICALLY ADJUSTED from you paying extra $1800 the first month so your not paying interest on the previous months balance. *coming from a retired loan officer

[@younghoyoo8366]

Correction if your income is about $10,000/month then by putting everything into heloc each month you would save $9,200x3%=$276/12=~$22/month and then following month the difference in interest goes down to YOUR INCOME - EXPENSE - INTEREST. So for example 10,000-6,000 expense - $500 = 3,500 x 3% / 12 = roughly $8 per month. Really penny pinching with all the risk associated

[@ralstondorn7874]

My thoughts exactly

[@bizhanbody735]

if you're watching this in Australia, please disregard this video. he is pretty much explaining a loan offset or redraw account but I guess the US banks don't offer that. FYI - Title is abit misleading, yes this works for sure, but to actually pay down the loan in 5-7 years, you'd need at least 60-70% of the mortgage loan balance in savings already then add it to HELOC (i.e. offset account) or alternatively pay additional voluntary repayments.

[@julieugo4407]

Thanks. I was starting to get confused thinking I've done the wrong thing 🇦🇺

[@laurelleafr6091]

It is so good to watch this today, after we just paid off our home a couple of days ago after only 5 years instead of 30! We did it! yay!!!

[@AzeemUrRehman]

How you achieve that ? Is it through heloc ? Congratulations

[@laurelleafr6091]

@@AzeemUrRehman No, we had an FHA mortgage and we didn't even put down 20% when we bought it. This gave me even more ambition to pay it off in less than 10 years. What we did was we paid more than requested for the principal every month and also I saved a lot out of my salary every month for this purpose. More than 50%. It took a lot of discipline and focus.

[@EugeneCollins2024]

@@laurelleafr6091 So, how many additional/separate monthly payments did you make towards your principle?

[@laurelleafr6091]

@@EugeneCollins2024 I paid more towards the principal every single month for 5 years with the exception of the very first month. When i got my first mortgage bill back in 2016 i analyzed it and saw that extremely little was going towards the principal Seeing that I decided i will always pay more. towards the principal with each monthly payment. I didn't make additional payments each month . I only made the monthly payment adding more to the principal. Then in March 2019 I finished paying my car. I took that money of $ 250 every month that I now stopped paying and added it to the mortgage principal. Then ... Starting August 2020 I made sure every month my mortgage TOTAL amount was decreasing by 400. So depending on this I calculated how much i had to add to the principal. Finally starting January 2021 i made sure every payment was decreasing my total amount by 500 each month . Thus in May I had enough savings to pay off the remaining 76000 to the bank. I basically Brought the loan down from 91500 to 76000 in 5 years. Then paid the 76000 to the bank. Remember I put 16000 down when I bought it which was less then 20%. After the downpayment the loan started at 91,500.

[@apalmq]

When 15 year APR is near 2%, it's advantageous to just pay extra monthly. Rather than a 4% - 6% HELOC.

[@winniethepoohandeeyore2]

Exactly. All we do is overpay our principle every month by just $20. We closed April 13th. First payment wasn't due until June. We've already knocked 3 1/2 YEARS off the life of our 30 year fixed mortgage

[@brianparks8321]

You have to do the math based on the rates you can get. I have a 2.24% HELOC. The lowest 15 year mortgage I could find is 2.375%.

[@apalmq]

@@brianparks8321 in my case I bought down the rate to 2%, and just closed on my 15 year mortgage.

[@hernansalinas713]

Depending on the balance it will cost a lot more to send extra payments. If you send 10-15k chunk and pay down the heloc it will be much beneficial than to send 416 dollars of extra payment monthly for 2 years. The amount of interest in 2 years for 10k will be 420 at 4%. But those 10k will eat at the principal and reduce your interest greatly

[@Blubbha]

Recognized it as well when I started my payments. So I out the first years as much as possible i to additional payments. 7 years later 1/3 of the mortgage left and will be dept free in three years.

[@Jawnderlust]

You should’ve clarified in the beginning that this is meant for using a 1st position HELOC on one already paid-off property to pay down/pay-off a 2nd property’s mortgage. I’m not sure what mortgage lenders out there would give up 1st position to a HELOC just to get themselves paid off… but they won’t be in business very long.

[@DregGayton777]

Can you clarify this please? I am just a regular home owner and have 1 property not looking to invest in a rental property. Is this strategy not good for folks like me? We just purchased our home with a $700k balance. Thanks.

[@bigpapawolpie3405]

Way to make this understandable. I've been watching videos for a while now, and this is probably the best video to follow along with

[@rentospropertymanagementso4895]

The explanation truly motivates. Thank you for sharing.

[@YankeeStacking]

Pertinent changes since this video was released? HELOCs are tougher to get with higher credit score requirements. Interest paid on HELOCs are no longer federally tax deductible. Interest rates have shot up allowing for greater APY on bank deposits and CDs. And this from someone who used a HELOC as an investment arbitrage for many years.

[@TheKwakBrothers]

Hello there @YankeeStacking, so a few things to note. HELOCs are non-QM meaning that different banks have different underwriting guidelines. Some will offer HELOCs at 660 FICO... and some have a hard limit that starts at 720. As far as the tax dectibility question, they ARE deductible as long as the interest cost is derived of the original principal balance - not draws for non-housing related expenses. In regards to interest rates, one of the things we say over and over for our strategy is that the interest rate is not the enemy - time and balance is. We have clients who have 6,7,8% APR rates on their 2nd or 1st lien HELOC but they still come out on top by saving DECADES and THOUSANDS of dollars of savings even though they might have a low fixed rate mortgage of 3 to 5%. I would encourage and invite you to download our free calculator and see for yourself. Plus, we're HIGHLY rated on Trustpilot and BBB. You'll notice that most of the 5 star reviews are farily recent: www.trustpilot.com/review/thekwakbrothers.com www.bbb.org/us/il/st-charles/profile/real-estate-consultant/the-kwak-brothers-0654-1000017204

[@michaelcrabtree2939]

Jus pay more than you owe ....simple as that and you'll be paying it off in no time.

[@MichaelDavis-uu9zh]

An extra payment a year will pay it off in 22 years.

[@KimFincher]

Yes much simpler

[@KimFincher]

@@MichaelDavis-uu9zh pay more on principle every month

[@MichaelDavis-uu9zh]

@@emmanuelsepulveda2468 how many extra payments a month shots it take for 7 years?

[@GingerHater1231]

@@emmanuelsepulveda2468 we are doing the same, and we’re also halfway - and my name is Emmanuel too ! I had to double take 😂

[@123badman]

I know I'm not disciplined enough to pull this off but I like the concept/strategy

[@geodel1767]

Just found this video Very informative and detailed so I subscribed and gave thumbs up Going to binge watch the others you have Thank you for a great video

[@TheKwakBrothers]

Aw it looks like you unsubscribed.

[@coincollectingfun]

Liked and subscribed! Just bought a house and made my first mortgage payment for $140 over the regular payment

[@gsdlover8967]

Love this strategy but HELOC rate is over 4% and my home loan is 2%?? I have a 10 year loan.

[@calisingh7978]

Yesterday Costco lady said the sheds are moving like crazy for people buying them to live. This is what the 86k irs agents are for, to audit the preppers trading and people renting out their sheds in the back yard

[@Fudgieguys1969]

You never explained how the HELOC is paid off in 5 to 7 years. You are only replacing mortgage for HELOC and you still paying on a loan.

[@stevemellos2658]

He didn't explain that part very well but it's because your mortgage is amertized interest he did explained in the beginning of the video that you pay all the interest upfront. your heloc is not amertized it's a simple interest rate like a credit card accept with a lower interest rate, so your paying more money toward the balance every month and you will pay the heloc off way faster. I know it sounds confusing but once you understand how amertized and simple interest rates work it will make a lot more sense

[@thebolt1806]

Yes something is missing I got lost in between

[@samij1204]

From what I understand, your whole income goes straight into the HELOC, and your expenses all get paid through a points-rewarding credit card, then you draw upon the HELOC at the end of the month to pay off the whole credit card, thus paying no cc interest and gaining lots of points for travel and other rewards purchases. The big payments against the principle mean you pay less interest at the end of the month on the HELOC, and pay it off much faster. I think 🤷🏻‍♂️

[@07wrxtr1]

It's simple; You're paying a few days of interest at the higher amount on the heloc vs. a full billing cycle on the mortgage for that $6000 in the example. It's genius.

[@krss1130]

Yes, and HELOC interest is variable! The bank can just decide at their will to increase your interest rates! It's better to have fixed mortgage rates rather than HELOC variable rates.

[@rpshark7672]

Big point you are missing is that interest paid is tax deductible. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately)

[@cashkitty3472]

In UK a lot f mortgages are on average daily interest.. I paid my last house of quickly by using an offset mortgage. This takes your savings and mortgage debt into one account. You can access your savings at any time but it offers savings interest of mortgage debt. It's an Australian system

[@scorpiodragon42]

In his example HELOC with a $13.69 daily interest, if you replace your checking account with the HELOC and put $6k into it like he suggests, you are saving 82 cents daily, amounting to $17.26 over 21 days or $24.66 over thirty days. Your time and effort might be better spent getting a cheaper phone plan, canceling a subscription, or buying less Starbucks. The actual advantage I see to this strategy that I don't think he really explained is that you are paying off the loan much more aggressively than with the mortgage approach (higher monthly payments). This can legitimately save you money but is also risky in that you don't have any emergency savings, and would have to borrow money from your HELOC and incur interest on any money borrowed. (His implicit argument is that the HELOC interest rate is higher than your savings account interest rate, so you are saving money anyway by paying off part of your home loan faster.) The other advantage, though the exact terms of this part are really not clear to me, is that you might be able to increase your loan balance during a period of hardship rather lose your house outright. Ultimately you should just compare the interest rate and estimated duration of the loan of a HELOC vs a mortgage for your situation. If inflation is 2% and your mortgage interest rate is also 2%, then you effectively have an interest-free mortgage. If you can only afford a 30-year fixed mortgage rather than a shorter duration, it seems unlikely to me that you would be able to pay off a HELOC in 5-7 years.

[@zinafitzgerald2469]

In the end of the day , it is how much extra money you can pay monthly towards you either mortgage or HELOC. Get normal mortgage, pay extra$200-300 towards the principal every months and you will cut off several years and interest rate. put $500-700 towards the principal and you will pay in 15 years :-) Mortgage interest is always lower than HELOC and it is fixed. Heloc is variable and might go up after a while,

[@henrythomas7112]

A decent enlightening post that you have shared and appreciate your work for sharing the data. I value your endeavors and all the best. Praise your work and continue sharing your data.

[@BarisSenol]

I have HELOC fixed 1.6. Signed 30 yrs back on 2012 as of today I have 5 years left without out lump sum payment

[@entjohns]

In USA can you divide monthly payment into 2 and pay that every 2 weeks - ie same amount? (You also get an extra payment over course of year = 26 payments). It doesn't make a huge difference but better in your pocket than the lenders. Second - double check there's no penalty for paying off early. Third - if your pay goes directly into mortgage account and draw down from that then it means a few more days off principal. Last add any 'windfalls' such as tax refunds, birthday money etc. Every little bit adds up.

[@brianc9036]

Good post, most loans today because of Dodd-Frank don't have any prepayment penalties unless you pay of the loan in less than like 2 years. Even for a 15 year mortgage not that common. I think some of the VA loans and some of the other government backed ones for "special qualifications" have more restrictions.

[@mehardin]

No. Just multiply your monthly payment by 13/12. That extra one twelfth of a payment each month will still pay down an extra payment each year just like paying 26 biweekly payments.

[@mehardin]

And adding "windfalls" to a low interest mortgage when you could be investing that money where it would get a much higher ROI doesn't make sense. Why trim your 4% mortgage when you could earn 7-10% buying an index fund?

[@chainfree]

I had HELOC 1st Position on my old house. I am in a new house and have to wait 12 months before I do it again, will be worth the wait. I dump my entire check on the heloc, then pay bills out of it. What's left over reduces the principle. 35-40K per year. This works.

[@dhruvvyas4317]

For complicated banking reasons, This is only a good idea if you can get a HELOC with lower intrest than mortgage. Which is possible if you compared to a fixed mortgage but unlikely for a variable mortgage. Variables mortgage tend to give you the best intrest rate anyways and HELOC is a type of variable mortgage. I love HELOC, everyone should use it for used car purchases but I don't think this strategy would be better than a variable mortgage. US banks don't offer good variable rates though so it might be better there.

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score......

[@JasminMarsters]

Want to make sure I understand correctly: How long do you pay off the HELOC?

[@michaelpearson9136]

The only part I don't understand is, most of us get paid every 2 weeks or twice a month and I would be paying that daily interest at that higher daily interest until each payday correct? You say in a few short days you add $6,000 more which the average household income is not close to that. I'm just trying to get my mind around it.

[@NguyenForTheWin]

Doesn't make sense that you can borrow $270K when your mortgage principal is still $200K, it's EQUITY in HELOC. If the house appraised at $300K and the outstanding principal is $200K, you can borrow $70K (Appraised Value *0.90 - Outstanding Principal).

[@jeromej3445]

Excellent presentation on how to convert a purchase money mortgage to a HELOC that bears a higher rate of interest. So where in the equation does the house actually get paid off?

[@Fred2-123]

It gets paid off at the Sheriff's sale when it gets repossessed.

[@NicksLocker]

That was so interesting! I bought my first house a few months ago.

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score...

[@holyschnikes007]

I’ve had a helco for years. I suggest a small heloc, 10,000 to 20,000. Use a small amount and put it towards principle on your 30yr mortgage. If you can handle a small amount no problem then next time you can up the amount. DO NOT USE ALL OF THE HELOC! 😂 I made that mistake. Will save you some grey hairs. Use the HELOC like a checking account.

[@guanghua2008]

Thanks for the video, I am in process getting Heloc

[@aliannacone4782]

Just pay off your mortgage. Yes and still in 5-7 years or what ever your timeline is. Get rid of ALL debt and live a better life.

[@dajur1]

So basically you replace your home loan debt(at least some of it) with heloc debt and pay off the heloc debt, then do it all over again. Why not just put all extra money into extra mortgage payments instead? Why bother with the heloc at all?

[@ryanmorrison487]

Because many people don't have $100,000 lying around. The HELOC gives you the lump sum to tackle the front loading of a 1st mortgage.

[@natstar6052]

@@ryanmorrison487 can you explain this to me?

[@unpackingfacts8909]

Isn’t HELOC calculated based on 80-90% of home value - mortgage you still owe? In this case, I think the bank will only allow you to borrow $70,000, not $270,000 in your example.

[@bdrummer7251]

That’s all fine and dandy... but a HELOC is a home EQUITY line of credit, meaning you can only borrow on the equity in your property (assessed value minus what you owe). Usually they will only lend you beyond a certain loan to value (LTV) threshold like 80%. So if you have a $300k house and owe $200k, your LTV ratio is 67% and they will only lend you $40k or roughly 13% of the home value.

[@foxcheck5]

thats what i was thinking??

[@DavidEVogel]

The premise, borrow money to pay down debt, is stupid.

[@gradivitshitoko9941]

Respectfully Mr Taylor he explains this part very clearly! The calculation is based on the Value of the house X 80 or 90 %. What you did was I think subtract the difference of the value from what you owe and something I got lost...

[@hypocriticalnihilist645]

What you talking about is a traditional HELOC, also known as a second lien HELOC, which functions based on a percentage of equity. A first lien HELOC works like he said, and his based on a percentage of home value.

[@hypocriticalnihilist645]

@@gradivitshitoko9941 This commenter is describing is a Second Lien HELOC, a much more common type, which is based on home equity, the difference between the home value and the mortgage principle. This video covers the less common First Lien HELOC.

[@fortgrove3166]

It is wise to use the same lender for your mortgage as your HELOC? And if you get a HELOC from a different lender, how do you make a transfer from HELOC to mortgage company, if they take checks or an automatic debit. Or is the HELOC linked to a checking account?

[@itsreallyrona]

Awesome info and explained so easily! You’re a great teacher.

[@TheKwakBrothers]

Glad you think so!!! We appreciate you!

[@albajessicalove]

Maria Brisbane helped me secure HELOC with 650 credit score

[@NalaMahal]

I noticed this when I started tripling my personal loan payments. I went from accruing about $10/day in interest to $1.90/day. I paid a 37 month loan off in 12 months!

[@jamesearljones5691]

Never comment on KZbin videos, but feel inclined to comment that as an commercial banking underwriter for over 7 years… this might be the dumbest strategy I’ve ever heard.

[@davidkanalos6710]

I'm working two jobs 60 to 80 hours but with Inflation for food and energy is killing me can't get ahead 😩!!

[@amirshahna]

This video has some good ideas for tools to use to pay down your mortgage. But what’s presented in the video is not correct. You only have one equity on your house and you can’t double loan it. Meaning on the example in the video where your house is worth $300k and u currently have a $200 k mortgage, you only have $100k equity left on your house. The max the bank would loan on this house would be $270k minus your current $200k mortgage would leave you with a $70k HELOC. And of course u cannot pay off a $200k mortgage with a $70k. What’s shown in the video only would work is if u have 2 properties and borrowing from one paid off house to use on the second house mortgage.

[@aklid2620]

Same question popped in my head.May be he is talking about 7-10 years after purchasing a house.Home equity value will go up due to payment towards the mortgage n price appreciation of the property.Then take a heloc to pay off the o/s mortgage.

[@apolinargomez3120]

Question? So if i have 132k left to pay off my house and the value now is about 230k-250k, will i be able to use heloc to use that money pay off my mortgage and pay back heloc with lower interest rate? Please help

[@tomle2600]

I think the concept is the first lien HELOC will be 80-90% of appraised value. You use the new first lien HELOC to pay off the mortgage, so you no longer have a mortgage, just a HELOC with balance of whatever your previous mortgage was. Now you start paying down the HELOC balance and only incur simple interest, not front-loaded interest. Plus you have the benefit of lowering interest rate further by using the HELOC like a checking account for monthly deposits and expenses (which you would have spent anyways, just lowers your average daily balance by optimizing when you pay your credit cards for normal monthly expenses).

[@alexae1388]

I did the math on a mortgage, at 6% on a HELOC moving 300k over would be a monthly interest of over $1,400 where as the mortgage interest for the month is only 900... soooo what am I missing?

[@intownrentals]

Incredible information! Thanks

[@TheKwakBrothers]

Glad you enjoyed it!

[@vinny3964]

Hard one with a one house income, and my mortgage rate 6.7% and the mortgage I have is over 1/3rd of my monthly pay.

[@johnmatallana8106]

Great video and explanation. in the 1st portion of your explanation where you use the graph with the 30yr loan and the $1,000 a month mortgage, with a fixed rate. Can you make a video or explain taking into account inflation in that same scenario? What would inflation do to that loan? Would in that case be beneficial to payoff that mortgage as fast as you can, or should you just pay the minimal and allow inflation to eat up the loan? Once again, great video and thanks for sharing.

[@unpredictable244]

A 30 year loan is fixed. Meaning it's the same every month. That amount will ONLY change unless your escrow goes up (insurance/property taxes)

[@johnmatallana8106]

@@unpredictable244 I understand that. That really does not answer my question though.

[@micoculumovic76230]

Great question, hopefully someone will give good explanation for it. I’ve been asking myself the same.

[@Adam-ui3ot]

Inflation doesn’t affect the loan. Interest rates affect the loan if the loan is variable and not fixed.

[@6SpeedsGood]

One major benefit of a 30 year fixed is that inflation actually makes the payment feel cheaper over time. Your $1,000 P&I (principle & interest) payment today, at 5% inflation, will "feel" like a $784 payment 5 years from now, even though nominally it is still $1,000. $1,000 in 5 years is just worth less than $1,000 in the hand today (assuming inflation continues). From the other direction, that $1,000 payment in 5 years will have the same feel as a $784 payment would have today. Or look at it this way: Say you make $50K today. $1,000/month is 2% of gross. In 5 years at 5%, you're making $64K, and that $1K payment is now 1.5% of your gross. It's an easier payment to make. Compare that to a renter paying $1,000 today. With a 5% annual increase they will be paying $1,276 nominal dollars in 2028, which will always have the same "feel", it will always have the same sting as your $1,000 has today, that same sting for year, after year, after year. See that $1,276 is still 2% of the new $64K salary. Whereas with a mortgage, the sting gets less, and less, less each year (property tax & insurance increases may add a bit back, but not 5%). Not that a mortgage is for everyone, far from it, but the basic answer is inflation makes a mortgage feel more affordable over time (the unspoken assumption here is that wages are rising nominally with inflation). And a final note, rising inflation is usually COUNTER to paying off a mortgage early, especially when inflation is accompanied by rising interest rates, which has been the style since 1980. Consider...today. My mortgage is 3.89% from 2012. If I can earn more than 3.89% in the market, that is more cost effective than paying off the loan. Heck, right now cash is paying close to 4%. Early payments certainly lessen the total interest paid over time, but the opportunity cost - the value you missed by not instead investing that money - is generally going to be more than the interest you saved, ESPECIALLY if you have a low rate mortgage. People taking out 6% and 7% mortgages today will have a different calculus.

[@DonParlor]

If I want to write off my mortgage with a HELOC, there will be a penalty fee because my bank got us to sign a 5 years agreement for fixed percentage and only allows a yearly 10% cash on capital payment. Very interesting video but there are some limits to take into account.

[@amalibrahim6882]

Where is calculator, please? My original mortgage is at 2.4% interest rate. Why I would pay it off from Heloc and start paying 7% interest even if heloc has a daily interest?

[@brandonbarclow3135]

Really wished this was taught in school...I did this strategy and cleared the remaining $115K of my mortgage in 2 years.

[@scottiZepidemic]

Thats cause the teachers have no skills or experience in finance otherwise they wouldnt be in education

[@mike4962]

1. You owe 200 not 270 after transferring the mortgage to HELOC. 2. You should really mention that people should be leaving at least their mortgage payment amount in the HELOC every month and that the HELOC balance has to go down over time. Without following that it can cost people a lot

[@zennsalvador2570]

270 is the value of the home when you apply for a loan.

[@mike4962]

@@zennsalvador2570 OK and? In his illustration for the HELOC he was saying that 270k was owed, which it wasn't. Only 200k was owed and the interest is calculated off of that. It makes it look worse than it actually is. So the illustration and example starting at 18:40 is incorrect.

[@thegreatbamgino]

Not to mention that the LTV would only be 80-90k....not 270,000.....a lot of misinformation here.

[@derspenc]

@@mike4962 $270K is the limit you are given to spend (similar to a credit card limit), in his example he only used $200K to pay the mortgage and you still have $70K to use if needed. The $200K is what's owed and you have an additional $70K you can use if needed

[@mike4962]

@@derspenc and yet when he continues with the example and pays 6k into the HELOC he does 270-6=264k to calculate the BALANCE. He says balance. It's incorrect. It should be 200-6=194k BALANCE.

[@donniedotzler7387]

I refinanced 4 months ago=$290,000.00 at 4.125% fixed 30 year. Interest is $992.65 for July. If I use the HELOC which is 5.25%, my monthly interest is $1251.00. It does not look like this will benefit me. I can make a few thousand dollars a month principal only payments on the 30 year traditional mortgage. Whatcha think?

[@tomle2600]

The only issue I see with first lien HELOC, assuming bank won't pull the HELOC when the next great recession hit forcing you to sell or get a new mortgage in adverse market conditions, is if the HELOC is tied to variable interest such as prime -0.5%. If we enter hyper inflation, a traditional front-loaded mortgage may fare better longer term if interest rates rise like in the 70's due to all of the money inflation by the government.

[@TheKwakBrothers]

So two things there... we've never seen a 1st lien HELOC get "pulled" personally with our clients. In fact, one bank has never had a borrower foreclose or default on their 1st lien HELOC since 2007. It's got ALOT of safety nets, in my opinion. Second, you're right about the hyper inflation but the problem is that most homeowners stay stuck in the front-loaded mortgage forever since most refinance or sell/buy a new home e very 7-10 years.

[@thinklikemike2]

EXACTLY!!!!! In 2021 the average HELOC rate according to Bankrate was 4.08%. Today, in December 2022 that average is close to 8% which means DOUBLE the interest! So all that savings now just cost you 4% more to keep this strategy going. If inflation and recession continue, that HELOC rate will keep climbing.

[@albajessicalove]

​@@thinklikemike2Maria Brisbane helped me secure HELOC with 650 credit score

[@albajessicalove]

​@@TheKwakBrotherscheck her out on Google or check her website

[@Scotchandfades1145]

THANK YOU SO MUCH. I was expecting some bs nonsense but this strategy blows my mind.

[@micah1754]

Thanks for such an informative video. I'm a bit confused about the difference between the HELOC, revolving credit facility and a redraw account. Are you able to explain the differences and why the HELOC may be better to pay it down faster?

[@Conyay_fresh]

They are both lines of credit. The heloc portion is carrying the remaining principle on your mortgage as the balance with the total value of the home as the credit limit.