Pay Off Any Amortized Loan Quickly! Mortgage Interest is TOO High of a Price to Pay for a Home!

[@TheRuckFarm]

This is the video that finally made velocity banking click for me. I wasn’t getting it until this. THANK YOU!

[@craign3062]

The advantage of getting a LOC rather than just paying some extra monthly is the ability to pay the amortized mortgage interest down with a large payment, then paying the LOC which is simple interest over time savings thousands. That is how I did this. Look at your amortization table. You pay hefty interest early in the loan and it takes roughly 15 years of payments just to get to a break even point between principal and interest. The quicker you can pay down the mortgage principal, the more interest you save. If you borrow $20k at simple interest and pay that against your mortgage you are saving thousands immediately and over time paying hundreds to the LOC. Interest rates when I did this were about 4.5% on the LOC. So, the first year I used $20k of the LOC and it took me about a year to pay it back. As I recall, the interest was about $700-$800 vs. thousands saved on the mortgage. The following years I did the same. The key is to have the extra income with the ability to service both loans.

[@da-vido]

​@thomasxxxxxx2345 hi so it only works if the mortgage rate is higher than the LOC rate?

[@burlyn88]

@@thomasxxxxxx2345 I don't understand how people don't get this. That same extra money can be put to the mortgage and will save even more. It's killing me to see how many people don't get this...unless I'm missing something?!?

[@VanntasticFinances]

No. It depends on mortgage rate and cash flow.

[@VanntasticFinances]

I’m sorry, you’re wrong. And throwing all my extra cash into a mortgage? No thanks… I’ll keep my cash flow. Thanks for watching!

[@burlyn88]

@@VanntasticFinances OK...maybe I'm wrong...but your answer doesn't explain why. I'm truly TRYING to understand and just don't see it. So what if I had a LOC big enough to payoff the entire amount...so 7.35% to 12%...are you saying I should put the entire mortgage on a LOC and it would be less interest?

[@cdogg1787]

10:40 this is the key to the whole strategy. people saying it doesn't work aren't understanding this part

[@michaelwright1602]

Pure GENIUS! And who is to say that in the 5 to 7 years your income will not go up? Then you can pay it off even quicker! Interest, it is all about the interest folks!

[@VanntasticFinances]

Thanks Michael!

[@Hannahbenowitz]

Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market

[@JosephineKenney]

The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.

[@laurencestewart3828]

I sold residential real estate for 15 years and explained the amortization schedule to every first-time buyer. Most people just can't confront this even when it's explained to them.

[@Tryp-j9d]

MOST people CAN’T do 9th grade math. They’re DOPES!!

[@sunoveristambul]

No country except USA does 30 yr, fixed rate home mortgages and it IS THE PATH TO wealth!!

[@Tryp-j9d]

@@sunoveristambul They “ALL” used to be TWENTY-YEAR mortgages…UNTIL the LATE 70s!!

[@ramm8196]

I love your material! I'll pay my house off in a little over 2 years using this system. Thank you for your work!

[@thepreston1021]

Interesting method, using short-term debt to pay long-term; it doesn't factor in risk. I use Short-term debt sparingly. Everything in one's life has to be perfect for 6 months with this method. One could always just use the 2K surplus and pay down the principle every month, never incurring any interest charges. That way, if something unforeseen happens between month 1 and month 6, there's no risk

[@davidwallace3933]

@@bullpuppy7455, I ran an in-depth analysis. Curtailing $2k each month saves more in the long run. Payoff in 90 months paying $52,698.56 in total interest. For the LOC strategy to work, you would have to keep an average balance at or below $1,242.10 for the 88 months to payoff to break even with the prior strategy, but then you would still have to payoff that LOC.

[@BuddabuttDad]

@@davidwallace3933Question. Would this method be worth it with a 1.5% interest rate?

[@CForged]

@@bullpuppy7455good point 👍🏼

[@CForged]

@@davidwallace3933at a cost of higher risk.

[@amberklein1560]

Yes. IF you have an extra $2,000 per month, you can make extra payments. But if you don't, then you can use the bank's money to pay down the mortgage while still being able to live off that money.

[@CherylHarpercompulsivespinner]

Im in Canada and house prices are crazy. People are over bidding but 100 & 200 k. Not sure what they're thinking about . It's like they're asleep. Not sure where this will end. Thanks for educating people.

[@JH-hc5dv]

Eyes Wide Open Now. Thank you Christy. Looking so forward to my white board meeting with you second week of November.

[@VanntasticFinances]

@JH-hc5dv Excited to meet you!!

[@AmarliaVB]

This was very informative, I always knew that having a mortgage benefited the banks majorly. This video gave me the motivation to stop ignoring this fact and do something about it.

[@VanntasticFinances]

Well, I am so glad! Thank you so much for watching!

[@rickkern5785]

Mortgages benefit you by allowing you to live in a much nicer house than you can pay for in cash.

[@munix9351]

​@@rickkern5785yet still pay double for in the end. Unless you were able to sell it well over the price you laid for it.

[@jackieboudreaux6339]

This of course is only for people that are fiscally responsible. If you cannot stop spending then this is disastrous.

[@TerriMadrid]

I think you just changed my life! Thank you!!

[@james88499]

Velocity Banking is the Rube Goldberg machine of financial advice. Kids, if you have an extra $2000 a month put it toward the principle and skip all the VB machinations.

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@sharronbush886]

2000k a month extra principle pmt is not the same as a 24k chunk pronciple payment. Also she suggests chinking 10k (in other videos) and she breaks down the math of the difference. The chink principle payment comes out AHEAD. You dont get everything you need to know from 1 video. Christy does the nath Everytime. Is just MATH! VELOCITY BANKING WINS !

[@sharronbush886]

Thank you Christy!!!!

[@jottin1359]

Wow! Thank you, wished I had heard this in my 20's

[@VanntasticFinances]

MEEEE TOOOOOO!

[@chrisaustin6255]

You should layout your info on the white board in a more structured way so it's easy to understand

[@darrenfield5567]

First, while your math on the 30 year interest cost is correct and eye opening to a lot of people, it also ignores the opportunity cost of using your funds to invest in higher return opportunities and the tax advantages from mortgage interest (compounding interest income looks just as nice in 30 years). However, I still agree in the premise of extinguishing a mortgage as fast as possible as a sound overall strategy. However, I just cannot get behind advice to leverage credit card debt to do so. Your strategy has accelerated the $10k of principal at the expense of much greater risk on that credit card balance. You say “this is the only way for you to get out of debt”….but all you have done is created more debt to do so. If you can afford to pay $2k per month to pay off the the line of credit, you can simply pay that additional $2k per month in principal. Yes, you don’t get the magical math that show the interest savings over 30 years of making that up from payment, but over time you get to a similar answer with significantly lower risk. What happens when you have an unexpected medical bill, car repair, etc and your monthly expenses rise from $3k to $5k? That’s when the traps of credit card debt get you and what is sinking the vast majority of people in debt. Under your approach, I’m now financing at a 20%+ APR vs my post tax mortgage interest rate under 5.25% (in your example). I would highly recommend people build up a little bit of savings first, then pay a structured $2k per month extra on your mortgage (more if you can afford it), the try to walk a tightrope and trying to spin multiple plates of credit card balances.

[@kvnndvn]

Yeah of people like me have a 2.75% fixed 30 year rate should not be paying it off. Invest your money.

[@CForged]

I like that phrase, spin multiple plates of credit. Although she does recommend clearing all credit cards to the goal of paying down mortgage with LOC. In the first half of a 30 year it actually is safer than throwing all that cash into the mortgage money pit. Most people actually 1% of Americans pay off their mortgage

[@sharronbush886]

I had to watch several videos before it clicked! Velocity Banking DOES work! I am grateful for her advice and am using her advice and it is working! My mortgage is 2.81% and I want to save thousands of interest. I will have a lot more money when I am not paying a mortgage payment every month! Thank you Christy! Yes, for whomever is concerned I do save money (invest). I am working down debt!

[@kevinjaquez7622]

After watching the other video like ten times I found this video and now I understand it!!! This is a genius strategy

[@lillithjones993]

You’re not the only one that had to watch it several times

[@nickimillennium]

I used simple math calculations to determine that I would save $60K by chunking twice a year for the first years (where the interest will be the highest on the amortization schedule) . This works. Even the high interest in a PLOC at my credit union for two chunks is less than the interest on the amortization schedule for one year

[@davanansalick6126]

Thank you so much 🙏🏽

[@VanntasticFinances]

😃 Thank you!

[@palmeto1130]

The main point is, satisfying the heloc payment by depositing income into heloc, thus increasing cash flow. Because it’s a line of credit you can pull it back out when needed to pay for expenses.

[@aaronjennings8385]

That's a detail that some ignore.

[@Gettin_chunky]

I pay my monthly plus what was planned to go to principal in the next payment. I’ll be done in 15 yrs.

[@jasonlessard2373]

Understanding that the chunk payment satisfies the mortgage payment for the month. What would it look like if you made the 10k chunk then instead of going all the way to zero. You made a 5k chunk every 3-4 months , satisfying another payment freeing up cash flow, feeding that much more into the cycle?

[@Peace_from_within]

Good idea!! I say if the LOC has available balance to cover full monthly expenses plus an additional large chunk (Down to 5k balance instead of 0 then a 5 K chunk payment to the mortgage, even better and faster total payoff!! I say, the more of that 250K we can pay off faster by transferring to simple loan accounts, the less amortized interest on the mortgage we will pay, which is thousands in savings!

[@Mike-ym6rl]

I wish I had known about velocity banking back in 2008/2009. I lost a beautiful home in Florida in the last market crash. I still have bad dreams about that to this day. I am now retired living in a small rented apartment with an income of less than $2000/month.

[@santanaurias3112]

Why did you lose it? You quit working?

[@VanntasticFinances]

I’m so sorry to hear that! But stay encouraged and keep moving forward! We can retire when we’re dead!😂

[@zo3821]

@@santanaurias3112lol crazy market crash. Home foreclosures everywhere. Housing bubble burst. You must be young.

[@Mike-ym6rl]

@@santanaurias3112 I had a tri-plex. Lost my job, tenants also lost their jobs...no cashflow.. Lived in it for eight years. With velocity banking could have been paid off.

[@gnd111]

@@santanaurias3112 Many people lost good jobs during subprime lending crash signed into law by Clinton and come to fruition 10 years later, PS...its about to happen again.

[@spike238]

Property = equity , which offsets the mortgage debt , , most mortgages only allow a percentage of the balance owing per year as an additional payment , some only allow 1 extra month per year , read the mortgage agreement before getting your hopes up ,

[@Sergio-ps6cb]

Thanks!

[@VanntasticFinances]

Thank you so much!!

[@zetraviusallen4466]

I would love to see this method applied to a 15-year mortgage

[@CForged]

A 15 year is still front loaded so it should work for the first seven

[@tysonkennedy9639]

If you paid that extra $2000/month onto your house payment for 6 months, you'd be more than $12,000 down on that payment. Plus you'd be paying less interest on it the entire time. All of this is assuming you don't use your extra money to make higher payments.. This is the wrong way to do it, the bank wants you to pay higher interest loans, I am assuming you just work for one and make money on talking people into these loans? This is a bad idea, people should not be doing it.

[@jameslaughlin3298]

Paying an extra $2000 a month on the principal pays this mortgage off about 10 months sooner that the method she explains. Plus, it’s simpler.

[@momoscurry3398]

People don't have an Extra 2000$ lying around... please explain

[@jameslaughlin3298]

@@momoscurry3398 Sure - in this example the amount available for principal reduction is approximately $2,000.

[@johnmea5140]

The math she shows on this assumes the LOC does NOT compound interest daily or using the average daily balance. Good luck getting one of those. You can easily get a CC that compounds interest on only the unpaid balance, but they will not let you pay your mortgage with a CC.

[@gnd111]

@john...Heloc are simple interest like car loans.

[@krg038]

You mention a CC as a LOC. I dont know of a CC that has a high cash out LOC. Usually its about 20% of the LOC to cash out. My mortage does not allow me to pay with a CC. My expenses are low except for my mortage. No CC payments. No car payments. $600 cash flow. Enjoy your other videos too.

[@gnd111]

@krg HELOC is a CC...simple interest unlike front loaded amortization loan from bank

[@markhanson6506]

Instead of depositing your payroll check into the LOC, why don't you just use your $2000 monthly cash flow to pay down on that LOC. Doesn't that accomplish the same thing? Or instead of taking out a 10K LOC to pay down the mortgage. Why don't you just take the $2k monthly cash flow and pay it down on the principle of the mortgage every month?

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@terrencetaylor4822]

Featured snippet from the web According to Census Bureau data, over 38 percent of owner-occupied housing units are owned free and clear. Not 1% I don't know where you get your numbers from.

[@Landon_Hughes]

My mom told me about you and it sounded like an MLM. After listening to you talk about it, it makes a LOT more sense. I will most likely be doing this when I buy my first condo. Edit: this is very much a different way to think compared to the usual way we were all taught (either from school or from family members)

[@VanntasticFinances]

Thanks Landon! Good luck with your journey!

[@Landon_Hughes]

@@VanntasticFinances thanks!

[@thaneschaffer]

The problem with this whole analysis is that is a misdirection from what your goals should be. A nut shell game at higher rates to rob Peter to pay Paul to save $10k on your mortgage isn't really useful information. In Vanns example she indicates there is an extra $2k in additional disposable income. If you add that extra $2k on to your mortgage of $1381 as additional principal for a $3381 payment instead, then even this 5.25% mortgage would be paid off in about 7.5 years.

[@ronaldstansell3728]

It doesnt really make sense what you are saying! Because in your example you are saying that the mortgage balance will go from 250 down to 240 right away! This part is true yes, but the mortgage payment every month does not change! It will Stay the same at the 1,300 plus per month regardless if the principal is 240k or 250k! In your example it would make much more sense to pay the 2 k in extra income directly towards principal on the mortgage! Then at the end of 5 months it’s paid down to 240 and the interest you are esentilly paying on the heloc that could go to towards principal also the 1,000 dollars roughly in interest! Is there something Im not understanding here??

[@spectator1123]

@@steve-on3234 Actually the balance on the mortgage will immediately drop by 10K then in your ensuing monthly payments, even if the payments remain the same, more money will go towards principal than the interest. Therefore in the amortization schedule, the number of remaining payments would drop.

[@ronaldstansell3728]

@@steve-on3234 Yes this is exaclty what I was thinking also! Why sacrifice a great interest rate for a junky one? It doesnt make sense!

[@DougTvedt]

How are you paying the mortgage while you're paying down the LOC debt? I'm confused.

[@sheshotjfk8375]

You are still making your regularly scheduled mortgage payments. This is on top of those. You have to have some extra cash coming in over expenses every month to make this work. It's just like if you have an extra 2K every month and you pay that toward your mortgage then you will pay it off WAYY faster BUT she is explaining that if you use a Line of Credit on top of that it is an added bonus. You use the Line of Credit to pay off a big chunk of the mortgage, lets say 10K, and then use the extra 2K a month to pay off the LOC over a number of months. This way, the whole time you are paying off the LOC more of your monthly mortgage payment is going to paying off the house as opposed to going to interest on the house. According to her math it is a big difference as opposed to just putting the extra monthly cash right onto the mortgage. I haven't ran the calculations myself so I am just trusting her math.

[@jaywalk6628]

Or simply put the $2,000 per month extra to the mortgage and in 32 months the mortgage is now $176,000.00

[@jaywalk6628]

@@westo1873 Wife and I have just two mortgage payments left paying extra directly to the loan. Get them payments out of the way and enjoy life with some breathing room.

[@joepfeiler5911]

If you have 2 k extra cash flow a month, how long have you had it? How long will it continue? If you had it in the past, where is all the money now?

[@darius5951]

You can definitely save, but when you factor in the cash flow that would've been building in your bank account, the savings aren't as big. If you took $10k x 10 times to pay Heloc that's $100k that would've been still in your savings/checking account. But it was transferred to your mortgage balance. You're paying the debt off quicker, but that's mainly because you deposited $100k from your savings (cash flow) that you no longer have.

[@am1296]

Yes you reduce $10k on one side, and owe $10k on the other But you haved saved on huge interest amount and years. The cost? A small fixed interest amount.

[@victoriakennedy4811]

the reason people don't pay down their mortgages this way is because they have problems with family and also jobs, they get where when you are about to pay things down there is always something that happens to stop you being able to sort it out.

[@michaellatta]

Yes it goes faster if you put an extra 2k each month to paying off debt. I wonder what the balance would be in the mortgage if you paid an extra 2k each month.

[@byrdn77]

Help me understand.... if you take out any line of credit... you have a payment that you have to pay back. I understood that our payroll satisfies the payment.. but wouldn't you add that in for debt?

[@SirArioch]

Why not just pay the extra $2,000/month to the mortgage? Extra mortgage payments go directly to principle.

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@flycow69]

If you think that is bad the actual 30 year mortgage rate is actually over 7.5636 % with good credit and they might even add 1% to it. That is the reason you rent now and you have no double the insurance the previous house owner had or the tax that used to be for half of the house price that you now own add landscaping and other expenses. Who ever tells you you’re waiting your rent money tell him or her that renting for 2 or 3 years is cheaper than having a mortgage for 30 years almost at 8% ( plus insurance plus taxes plus landscaping plus you already paying for a house that was worth half what you’re buying now. ) check the listing to understand no real estate house should ever double in price in 3 years. The housing bubble will burst but you don’t want to be the one holding the bag.

[@onestar45]

This is a game changer!!!!!!!. Christy, where is the interest in th computation? Please clarify. Tuanks

[@petertoplak2421]

Sorry folks but this doesn't work. When she walks through her monthly HELOC example she never adds back the interest on the average daily balance, which make it look like it is and interest free loan. Then she casually mentions than in 6 months she would have paid $1,035 interest on the HELOC. Hello? I plugged in her example into a mortgage caculator. On a 250K mortgage @ 5.25% interest in Yr-1 the total cumulative interest is $13,041. If someone makes a $10K one time payment in the first month, the total cumulative interest is reduced to $12,549, which is an interest saving of $492 for the year. On the other hand if someone who has $2,000 extra available cash applies it every month for the first 5 months (5x2,000 =10,000) will pay a total cumulative interest of $12,640. So the upfront lump sump payment saves $91 interest in the year, but if the money is coming from a high interest account such as a HELOC, the advantage will be eaten up by the 21% interest. In the first month the daily balance of that HELOC will be somewhere below $8,000. One month interest on $8,000 @ 21% is $140. On the first month alone she has paid more interest for the HELOC than the lump sump payment saves in a whole year! She would have been better off submitting $2,000 extra loan payment towards the mortgage balance.

[@masterovwon7196]

She did in fact add in interest. It was 2100 divided by 365 accrued daily, so roughly 5 dollars a day on the LOC. She even stretched the mortgage out over 36 months showing if just making regular mortgage payments, it would cost 44k just to pay the mortgage down 10k. Thats 34k in interest alone on the mortgage vs 6,300 using the LOC over 3 years.

[@schzean]

Why not pay the 2K extra to the mortgage in the form of extra principal each month and your mortgage will drop just as fast, and with a 5.25% interest rate instead of this crazy 21% interest rate (plus fees to open and maintain a HELOC)?!? This is totally unnecessary to use this method since you have the cash flow to pay extra on your mortgage. Nothing genius about this and it involves more risk and hassles and likely more cost in the end. How about compare the two methods side by side apples to apples instead of the misleading presentation of paying only the scheduled payment to the mortgage to get to the 2025 240K balance on your mortgage, while using an additional $2K each month paid in the HELOC method to pay it down in six months. You should compare things apples to apples to fairly assess which method is better and show costs of both ways exactly.

[@sergewoodbueno]

It takes discipline for sure. But look up simple interest vs amortized interest and hopefully you will see why the method presented here works better. Not everybody can wrap their head around this.

[@VanntasticFinances]

Exactly! Thanks for sharing!

[@VanntasticFinances]

Bless you. Keep watching. The confusion will clear. Thanks for commenting though!

[@JohnColley]

well, it's been three weeks, have you done as @Buenoconsulting suggested and plugged the numbers into the calculators yourself to compare your apples to apples?? Did you find what you were looking for? Were you surprised? It only takes 5min. Let us know how it goes!

[@cmargo10]

So you payed an extra $2000 a month. Couldn’t you just pay an extra 2k a month on your principal? What am I missing here?

[@saragoltz1191]

That’s my question too.

[@VanntasticFinances]

The cash flow is GONE once it goes into mortgage. Using line of credit…the bank’s money goes in and you keep your cash in LOC for YOUR use, if needed. Thanks for watching!

[@VanntasticFinances]

The cash flow is GONE once it goes into mortgage. Using line of credit…the bank’s money goes in and you keep your cash in LOC for YOUR use, if needed. Thanks for watching!

[@saragoltz1191]

What if you just got the $10,000 line of credit but not use it. Just pay the $2k a month to the mortgage? Not the same thing? I didn’t do the math but in 5 months you will pay less on interest by not putting it on the credit card? You still have the line of credit available to you with a credit card limit of $10k.

[@jerrylisby3440]

​@@nomansland6376 yes if nothing happens to your income. But why take a chance on a 15 year mortgage with higher payments in case you lose your job or your income goes down? The only advantage to 15 year mortgage is a lower interest rate

[@victoriabarnett4279]

Fascinating! Learning lots. Thanks!

[@getinthespace7715]

We are unfortunately in a position where we cannot rent because of the crazy short term rental market in the location we are moving to. There are no long term rentals. Luckily we are doubling our income AND moving to a rural area. We are targeting a cheap place and putting 100% of my wife's new salary into the mortgage. She just graduated with her M.S. RN. and will be pulling in 6 figures. At 7.5% interest the math looks WAY worse. We are looking at buying a house for about $250k or less with a $20k down payment. We are looking at a $2000 payment with a total payment of almost 700k over the life of a 30 year loan. Thankfully, We can dump 100% of my wife's income into this and some of mine. We could have the mortgage paid down to 150k in the first year and off in 2-3 years. If I could I would rather rent for a year, buy property and start building a small house with cash. Can build 3x the house you can buy for the same money.

[@Melaniejd902]

Please invest in some recording equipment like a microphone. The sound is terrible in your videos

[@stanleykania6037]

thank you

[@patkarp1965]

If you have $5000 a month of money to put down as extra payments. Why use a LOC? Just put that money towards the mortgage. Here is what people are missing. The interest on that 10k in the mortgage is only 5.25% If you have extra money to pay it down it is better to pay it down rather then pay a higher interest rate on a LOC Heck you will be paying money that would go as interest to the LOC towards the principal of the mortgage. Here is a way to look at this. Say to yourself that 10K of that mortgage is my LOC. It's rate is 10% So I will make extra payments to the mortgage as if I was paying back my LOC. Not only will you pay the 10K towards your principal but an additional 5% every year it takes you to pay it. Why give that money to a LOC?

[@uha01]

The problem with this is simple: Life happens. You can lose your job, there will be vacations, birthdays, medical bills, etc, etc. Take discipline to follow this method and sadly the average Joe does not have it nor the cash flow.

[@monicalandon8107]

being disciplined is important to making this concept work. You are right on that.

[@LearnwithLoriJill]

I'm confused only about the bills being $3000. Is the mortgage in that? Because I didn't think you could pay a mortgage with a credit card?

[@VanntasticFinances]

If you’re using a credit card for velocity then payments for mortgage, other debts, will remain in checking. Only chargeable expenses go onto card. Thanks for watching.

[@Colangelo405]

If you have an extra 2k every month, wouldn't you pay less interest if you just put that extra toward your mortgage every month?

[@MYEVILTWIN1000]

Why not transfer your payroll directly onto your mortgage, especially if you have a redraw facility

[@VanntasticFinances]

Because YOUR MONEY IS GONE. 😔 Once you put in mortgage, it’s gone. That’s the point of using LINES OF CREDIT. You can always access your money.

[@MYEVILTWIN1000]

@@VanntasticFinances that’s why it’s called a redraw, you can redraw back out over and above your minimum payment

[@aaronjennings8385]

​@@MYEVILTWIN1000Mortgages in America do not typically have a redraw function like those found in Australian home loans. The redraw facility, which allows borrowers to withdraw extra repayments made on their home loan, is a feature commonly associated with home loans in Australia and other countries but is not typically part of mortgage products in the United States.

[@rodentsofunusualsize]

The main point you are showing is the benefit of paying extra toward principal on an amortized loan. However, the way you make the comparison to justify transferring a 10,000 chunk to a 21% LOC is misleading. When using the LOC approach, you are contributing an extra 2,000/month of cash flow to debt reduction. As you point out, after 6 months you have the 10,000 LOC paid off. But the payoff of this 10,000 is really just 5 payments of the 2,000/month cash flow. So a more fair comparison would be to calculate the home loan balance for the approach of paying an additional 2,000 per month toward principle. While the primary benefit is due to paying an additional 10,000 via the extra cash flow there will also be a small difference between paying the 10,000 toward the loan at time zero (i.e., via transfer to LOC) versus having it spread out over 5 monthly payments. But an accurate comparison of this smaller detail will require more careful tracking of the effective interest rates involved. Granted, the LOC can have an effective rate below the nominal 21% due to the average daily balance being used for calculating the accrued interest, it isn't clear that it is low enough to be favorable compared to the home loan rate of 5.25%.

[@ykmjc]

Where are you making your line of credit payment? It's not shown anywhere, only your living expenses are shown? Faulty math everywhere!

[@joecies]

why not just pay an extra 2k ( your cashflow ) against the mortgage every month? -- In the 6 months you show, you would have knocked down the mortgage by 12k vs 10k.

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@ykmjc]

correct this is just a scam!

[@ArrowRozz]

In the US the percentage that managed to pay off their homes. In the US, 38% of homes are free of mortgages.

[@operator0017]

Yes thank you so very much

[@hunybee5558]

Thank you for sharing 😊

[@karlkable]

Hi. Great video. My only question is how does that compare to just putting the $2000/month directly to the mortgage? Thanks!

[@justme7422]

How do you make a mortgage payment on a credit card?

[@justjames9246]

I've had this concept in my head for quite some time. But finding a HELOC that I can use has been difficult. In addition to the ongoing interest charge, they charge an additional interest charge that wrecks the plan. Additionally, all of the ones I've found specify that you can only use it to make improvements on the house. So where do I find a straightforward HELOC or even a HELOC where I can pull cash directly without the extra up front interest charge?

[@shelisegr8love]

Use a line of credit or credit card.

[@joelmalcolm-qu2pn]

Instead of taking a line and paying it down with the extra 2k, yould be better off paying the 2k per month on the mortgage. Yould have more principal paid after 6 months then doing whatever funny math you came up with.

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@ykmjc]

@@aaronjennings8385 you're a scammer

[@hugh261]

So, if I pay 21% interest on the $10,000 while I pay it down instead of 6%, I'm coming out ahead? I guess I just don't have what it takes to play 4D chess.

[@VanntasticFinances]

Maybe not. :) It's not for everyone...Thanks for watching any way!

[@elsagonzalez5161]

My question would be what are the chances for someone to get a LOC that high if they have a loan of $250K?

[@VanntasticFinances]

Great chance! If you have the equity, cash flow and good DTI.

[@blagagoertzen]

Can you show how to use Karl's mortgage calculator to get our mortgage payoff numbers please

[@hollywoodwear123]

But you are not taking out insurance and property taxes out of each monthly payment. Instead you need to calculate the monthly principle you are paying monthly

[@tlr-nut7275]

If you can afford to pay the $1,380 for mortgage and pay of the $10,000 LOC, why not just get a 10 year mortgage?

[@aaronjennings8385]

That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.

[@limitlesschoices]

What happens when banks stop lending or freeze your line of credit?

[@VanntasticFinances]

If they slow down, they’ll start back. That’s how they’re making billions

[@rickkern5785]

Then you quit borrowing against your line of credit. If you build equity in your house by paying a large down and/or paying it down quickly the bank will not limit your line of credit. When you have significant assets that you own it becomes easy to borrow money.

[@davidwallace3933]

How does this strategy compare with simply paying off $2k extra on your mortgage each month for 5 months? Perhaps you would pay a little more interest on the mortgage, but you should save more interest on the LOC. Am I wrong?

[@VanntasticFinances]

Yes…you’re not understanding. There is very little interest paid on LOC…and if you make cash flow payments toward the mortgage, you have lost all of that cash flow in the loan. With the LOC ..you keep all of your cash flow in your control. Thank you for watching!

[@davidwallace3933]

@@VanntasticFinances, thank you for your fast response. I have some questions. I'll letter them so you can more easily respond. A. Wouldn't paying a $2k curtailment monthly payoff the loan in 90 months costing $52,698.56 in total mortgage interest? B. Wouldn't paying a $10k curtailment every 6 months starting with month 1 payoff in 100 months paying a total of $58,029.14 in total mortgage interest? Please, what did I calculate incorrectly?

[@JLH1956]

Can I do this with 10k savings in the bank?

[@JoeKing-lo8em]

So just throw your entire monthly income to the LOC??? What would you live on for the month? Why are you adding the expenses to the LOC after paying the monthly income?

[@sunoveristambul]

love this

[@TruthPain]

So basically a LOC of $10K, paid in military precision style over 6 months, knocks off $10,000 of mortgage principle for (ballpark) betweeen $500-$1000 in interest fees per month. I'm paying $698 a month in interest right now on a 4.625%, 30 year fixed. Sobody tell he how this makes no sense? I've done the spreadsheet side-by side, comparing the LOC version versus accelerated "direct to mortage" payments. The LOC comes out on top, again based on the math she has on the board.

[@CIPP703]

Great info

[@brendaconn5838]

So you are paying $2,000 a month to pay off the $10,000. But what if you don't have that much left over after expenses?

[@VanntasticFinances]

Any cash flow you have will bring balance is down. Thank you so much for watching!

[@scottmason2245]

Not paying the interest on the mortgage is the concept here. Its cheaper to pay off a line of credit/ heloc than it is to pay interest on the mortgage.

[@lashawnya9769]

Two words: Mind blown!

[@Bholland31471]

Who do you specifically get a LOC from? When i search for LOC, i get a lot of links for personal loans, which is not what we want. Be careful.

[@idrearamacirmtamta1293]

Can I buy a house with an LOC instead of a mortgage?

[@markkauffman6184]

I paid off my mortgage with a home equity line of credit.

[@idrearamacirmtamta1293]

@markkauffman6184 good to know thanks

[@Dajeffe1]

Kind of a goober question here.....my mortgage holder appears to only want a checking or savings account from which to draw the payment. Love this idea, but my present, preferred line of credit (CC) does not seem to be an option.

[@zo3821]

There’s lots of credit cards that will send you checks. You can write them to whoever you want to even cash to yourself. A lot of the time the money will be zero percent interest for 6-18 months depending on the offer and credit score. When I was younger just starting a family, we lived zero percent credit card to zero percent credit card. I rotated balances constantly lol. Crazy times. In 2014 I started my investment portfolio with $10k 12 month zero percent LOC, which has really paid off now.

[@VanntasticFinances]

@Dajeffe1 I wouldn’t suggest using a credit card for debt payments. Too many fees associated

[@rickkern5785]

Wait a minute-- 37% of houses in the US do not have a mortgage on them according to zillow. Maybe only 1% of mortgages are paid off as people move and refinance.

[@ibrahimi220]

If I’m understanding the core concept of your video- then What’s the mathematical formula if the person just paid the additional 2k per month from their disposable income towards the principle of the 250k loan? Wouldn’t they be ahead by 2k in 5mos if they paid directly towards principle instead of 6mos of LOC with interest?

[@rickkern5785]

yup If you just pay the spare $2000 per month on your payment it will all be applied to principle. Way simpler than double borrowing. You would be 10k paid off if you paid an extra 2k for five months.

[@marjake3147]

You fellas obviously don't understand the concept of amortized VS simple interest. If you pay 10K right away, you've jumped 30+ house payments ahead. If you pay 2K a month, you've only made a little more than 2 payments each month. The amortized amount is based on the balance of the loan. Go back and watch the presentation again! FYI, the difference between the two types of loans is the amortized loan has all the interest loaded in the front of the loan while simple interest takes the interest amount and spreads it evenly from month to month.

[@ibrahimi220]

@@marjake3147 ..I’ve made principal payments on my mortgage before. I’ve literally told the bank - I want this amount applied towards principal. That’s why I was asking what’s the difference between borrowing money to pay on principal if you already have the money to pay on it.

[@marjake3147]

@@ibrahimi220 I appreciate what you're saying, however paying "a little extra" doesn't have the impact that this program does. If you only pay a little extra (even if it's every month) the only thing you accomplish is you shorten the life of the loan. But go to your banker and ask them if you paid an extra $100 a month, how much it would shorten the loan. Some people are afraid to pay the extra interest on the 10K but you have to keep this in mind; by paying down the mortgage you are only paying interest on the first payment of $1380. The rest is applied directly to the principal amount. By using her program to pay down the interest on the 10K loan, you won't actually pay anywhere near the 21%. If you do this every time you get that 10K paid off, you will pay off the mortgage in record time. Much better program than paying a little extra every month-

[@KosmicKaren]

@@marjake3147 Thank you for that excellent explanation

[@glebb215]

Thank U Thank U Thank U 👍🏾

[@jmunn44]

What’s the difference of just paying the extra 2k toward the mortgage

[@davidwallace3933]

Yeah, I ran the numbers, and I believe curtailing $2k each month saves more in the long run. Payoff in 90 months paying $52,698.56 in total interest.

[@CForged]

The more people that don’t get it the better. I would personally not teach this valuable lesson and keep it from mainstream

[@MaverickPerspective]

What if all you have is a CC. You can’t pay your mortgage with a CC

[@3roachkidsdhe]

Someone please show this to Dave Ramsey so he can explain why this is not the way!!

[@VanntasticFinances]

🤣🤣🤣🤣🤣🤣🤣 I love DR!

[@brianadams6204]

This is nothing but a scam just take the extra $2k you have every month and pay that on your mortgage and you will pay off the home much quicker then your net worth will increase by the value of the home.

[@VanntasticFinances]

@brianadams6204. It is a scam! Scamming billions off of fellow Americans… You will lose cash flow if you put directly onto mortgage, but that is your prerogative. I’m not mad at ya. Have a great 4th!

[@darrenfield5567]

@@VanntasticFinancesyou are looking for ways to help people get out of mortgage debt….I appreciate that and think your heart is in the right place, but your approach is high risk and not recommended for the vast majority of Americans

[@VanntasticFinances]

@darrenfield5567 I choose to believe all people have a right to have enough information to make educated decisions. If they choose to continue to make bad decisions, then it’s on them. If they make right decisions and find peace, then Godspeed! No judgment here…just facts.

[@debrawarner6165]

Because 2g is not enough.

[@Val.leyGirl]

This is wonderful!

[@VanntasticFinances]

God is good!

[@gt-c-]

* * Confusing and Complicate...mortgage works...this is why 99.99% of people have it ! * *

[@rationalron5511]

Nonetheless, you’re nearly buying the bank a house purely in interest.

[@veronicacox112]

Good information to know and share

[@FMD023]

Check this, I got a VA loan that actually approved me for 825k with ZERO DOWN. They had me deposit 20k at first but near the end they returned they deposit to me. My mortgage a month is 4100 but it has dropped to 4000. I wanted and asked for them to drop the escrow and that I could handle the 2 payment for property tax but navy fed wouldn’t do it due to the insane amount without no money down. In my situation, I am definitely NOT going to pay off my mortgage sooner. Yes I pay maybe 200 to the principle but that’s it. My rate is locked at 2.3% 30 years. I even seek advice from my finance professor at usc and he told me in my situation I’m thinking the right way.

[@VanntasticFinances]

I need more details..

[@FMD023]

@@kkadam96 u mean the banks risk is 825K. My monthly payment was almost 4100. Just got back escrow refund and they told me my payment dropped to 3980ish. I told my bank I would rather pay the 2 installments on property tax instead of paying into escrow every month and was told not a chance. I can understand why because the bank giving me 825 with zero down is crazy from the get go for a first time home buyer. 2 years ago if I told someone my monthly mortgage was 4K they would say that’s crazy but today in hindsight, I’m winning. I don’t pay PMI with zero down on a 825k house that was valued 950k a month after I bought it. According to Zillow or whichever site u use my home is now above the 1 million mark. I would be making the same payments for a far smaller home had I not bought in July of 2021.