Velocity Banking & Calculating Your Borrowing Costs

[@blancagavina818]

This velocity banking stuff is amazing….giving me some hope ❣️🙏

[@faithmoore7520]

Stopping by your channel to say hello!

[@An0n_Ym0us_79]

24:22 I’m a little confused at your calculations here. Can you explain? You multiplied the mortgage amount, $1669*12 and said that was the amount going toward principle. However, a large portion of the $1669 is actually going toward interest. Am I off here? Please let me know if this is accurate…According to the Karl’s mortgage calculator, with a $225,000 mortgage at 2.8% interest, over the course of one year, you will be paying $4446.27 toward principle. Add the chunking to it, $22,616.27 will be coming off of the principle for the year. Still a significant amount paid down on the mortgage, but also a significant difference from the $38k+ you calculated.

[@DenzelNapoleonRodriguez]

You are not off it looks like I was just showing the total dollar amount going toward the mortgage. Yes a large portion of the regular payment is going toward interest. When you make those chunks I was mentioning it does reduce the interest on the payments moving forward and continues to gradually decrease

[@An0n_Ym0us_79]

@@DenzelNapoleonRodriguezThanks for the quick reply. I’m running all of the calculations to make sure I understand so I can figure out the best approach for me. I appreciate the videos!

[@DenzelNapoleonRodriguez]

@@An0n_Ym0us_79 that’s great that’s what I want everyone to do in advance to avoid mistakes. Some of my latest case studies will be more relevant in terms of current rates.

[@Gina-mx9sp]

Around 7:20, you mentioned that the effective interest rate of the 2.8% interest rates is actually a lot higher if you’re at the top of a 30 year amortization vs. the tail end. Can you do a video showing why it’s higher than 2.8 at the top of a mortgage? I’d really love to understand this more.

[@DenzelNapoleonRodriguez]

The way amortized interest works is the interest is front loaded in the beginning years and then decreases over the life of the loan. If you were to look at any amortization schedule you will see what I’m talking about

[@plants4thewin]

Pull up an Amortization schedule and look how much intrest you pay at the beginning of the loan compaired to the end of the loan. You will be shocked. Amortized loans are the most expensive debt out there. I would leap to say that they can be worse than CC Debt if you ride that 30 years out on a house. The banks make a killing. Thats why there is a saying that when you buy a house you buy one for you and one for the bank. I paid my house off in 3 years...I attacked RIGHT AWAY. Please go online and pull up an amortized schedule.

[@DenzelNapoleonRodriguez]

@@plants4thewin very true

[@weareproof8329]

Absolutely great content. Quality video and audio. May I ask what Mic & Camera you use???

[@DenzelNapoleonRodriguez]

M50 canon and a rode podcaster microphone.

[@JohnQistrue]

Do you erase collections from credit reports?

[@DenzelNapoleonRodriguez]

Hello I do not I would recommend looking into DIY options first so you understand what the process looks like then research some credit repair channels

[@smithjo4152]

Also, another question, with a first lien HELOC, if you split the deposits twice per month, two smaller payments, into your HELOC, vs, one single payment, would that accelerate the reduction because interest doesn't build as much with 2 smaller every two weeks vs. Waiting to the end of the month and making only one larger payment. What are your thoughts?

[@DenzelNapoleonRodriguez]

I see what your asking and if you re watch you’ll notice when money is being applied to the HELOC in this video it’s not happening all at once it’s happening like your saying multiple times in this case and every case for that matter as soon as someone receives their paycheck that whole amount goes into the HELOC so that might twice a month or more for some people depending on how they are paid

[@GabrielV-AZ]

🔥🔥🔥

[@alanlajoie7307]

Got it Now my question is I only have two mortgages one primary at 2.625 and rental at 2.99 both fix 30 years Cash flow from our income is $6500 per month. Ran numbers borrowing $30K fromborrowing cost is 1.7% putting the 30K into Ladders CD 3/6/9/12 months your thoughts.

[@DenzelNapoleonRodriguez]

Where are you borrowing the 30k from?

[@alanlajoie7307]

FROM MY 73k heloc on a free and clear rental

[@DenzelNapoleonRodriguez]

@@alanlajoie7307 so do you see value in borrowing funds and throwing it into a CD at what interest rate let me know what that rate is. From there calculate the tax costs and compare it to another opportunity to see if it makes sense for you.

[@alanlajoie7307]

3 month 3.0 % 6 months 3.5 12 months 4.0 % We are looking for best investment we are both in mid sixties . I ran the our numbers borrowing 30K effective rate is lower than 1.7% I know we can do better that. Already have pensions, SSI, IRA now looking for a place to invest our cash. Does it make since to pay off primary or rental ? or invest $$$$

[@DenzelNapoleonRodriguez]

@@alanlajoie7307 I would want to know if I were in your shoes is what am I solving for? Tax free income, more savings, increase more assets that produce cashflow. We need to be intentional with our money rather than chasing rate of return. If I was in my sixties I would have a deep conversation with my spouse and figure out what is my purpose and what am I to do with the time I have left on this earth. Is it dump money into a CD and hope and pray there will be enough money after or can I use my brain more effectively to create impact in the marketplace and create an abundance of wealth. I believe your thinking too small with a CD. I think you know more being on this planet of 60 years you are a master at something and that is likely where I’m putting my money. That is my final conclusion if you would like to discuss further book a call on my calendar or join my ministry of finance

[@sharonporter9350]

Hi Denzel, how can I get in contact with you? This awesome info.

[@smithjo4152]

Hello Denzel. Great teachings. Question, at 53, using velocity banking, thinking of going with a first lien HELOC to accelerate my principal balance reduction on my $625,000 mortgage. Plus United financial reached out to me about the IUL. MY question is when Do you refinance out of the first lien position HELOC? The overall goal is at 62 to move to a REVERSE MORTGAGE. Please share your thoughts.

[@smithjo4152]

Please share your thoughts

[@ABCD-si7px]

Reverse mortgages are insane.

[@vivienignacio7349]

Can you explain how you arrived at the 1.6% number?

[@DenzelNapoleonRodriguez]

First I recommend writing the numbers down just like I did and see if you get the same numbers as me. Let me know if you did that first. Add the 3 months of borrowing costs to see if you end up at 1.6%

[@sabinovalencia2997]

income 4744 minus expenses 3119.92..it's 1624.08 cash flow instead 1424... which it's telling me 9085 divided by 1624.08 it's 5.5 payments.. like you said it will take 4 to 6 months to pay i don't see much difference.. preferably pay the debt and avoid all of that confusion

[@DenzelNapoleonRodriguez]

Remember if you are sticking to debt snowball you remain at 1,424 and that extra payment will most likely get applied at the end of each month after all bills have been paid. When you do the math on how interest will affect you in that time frame it will actually take longer for you to pay off the debt

[@DenzelNapoleonRodriguez]

Remember You don’t have 9085 to start with you only have what’s in cashflow at the end of each month. So when you do debt snowball just remove the line of credit from my example then run your numbers because we are assuming you never got a line of credit

[@sabinovalencia2997]

Sounds good..any strategy with smart ways always is best for you....that was my point of view anyways i learned a lot from your videos .. thanks

[@curleebishopjr7074]

Is the 9085 a debt and 1424 a monthly payment? Plus if the 1624 is cash flow and you using your cash flow to pay off a debt your checking account is zero so you can’t buy anything else kids want some ice cream you gotta still know if you’re broke after unless you use a credit card and I hope the credit cards is part of your expense, help me understand.

[@DenzelNapoleonRodriguez]

@@curleebishopjr7074 look on the left side 9085 is a debt added up and 1424 is cashflow

[@ROCKNROLLSOUL69]

This is painful. Completely lost. Lol

[@DenzelNapoleonRodriguez]

It does take time I would look at some other case studies or check out my velocity banking pre-game work it helps you get in the right framework and understanding of the concept.

[@patrickpakapala8768]

Hi Denzel can you please look at this new credit card that came out and is based on your home equity. It's called AVEN it acts and can be paid as a credit card (with very low rates 8-14%) I think this is great ! it's a HELOC credit card without the high cost and paperwork of the traditional HELOC's. Please check and do a video on it. Many thanks and blessings.

[@alexbethea4331]

I don't have a ploc but they want to give me a HELOC. I'm 5 years into my mortgage and don't want to start that over. Any suggestions?

[@DenzelNapoleonRodriguez]

what does that mean when you say you do not want to start over? Provide more clarity please.

[@alexbethea4331]

@@DenzelNapoleonRodriguez Start over as in mortgage payment.

[@DenzelNapoleonRodriguez]

@@alexbethea4331 are you looking to obtain a first lien HELOC or a second position HELOC

[@alexbethea4331]

@@DenzelNapoleonRodriguez I'm looking at 1st position. Just learned the difference between the two from you this week.

[@DenzelNapoleonRodriguez]

@@alexbethea4331 obtaining a first lien HELOC is not the same as refinancing into another amortized mortgage. So you are going from amortized to simple interest. You can instantly remove escrow and that money sits in the HELOC all year round lowering the interest you pay. You can park your savings and emergency fund in there as well as sinking funds. You can potentially remove PMI if you have on your current mortgage and the becomes principle. There is a lot of moves that occur and the costs is lower than a traditional refinance. You are going forward rather than backwards on a transitional refinance so keep doing more research and run the numbers to fully comprehend the next financial moves you make.

[@dabadass6969]

The method of calculating your borrowing cost is flawed. You are underestimating the blue number by up to 35%. You are also not providing time for the grace period on the credit cards to reset but continuing to spend leveraging cash back to offset the PLOC interest costs. This in turn causes your last 3moPR figure to be off by up to 100% which would need to multiplied by 4 to get an apples to apples comparison to the mortgage APR as you said the process repeats multiple times per year. I'm on your video not because I dispute this concept but I'm trying to weigh the risks of living out of a LOC. I would recommend advocating for an emergency fund of some sort after paying off the CCs to offset the inherent risks of velocity banking.

[@DenzelNapoleonRodriguez]

I would like to discuss this deeper with you. The credit card that gets used in this situation no interest is ever paid. there is no concern for grace period because we are paying the statement balance each and every month on the due date from the debt tool. We can set up auto pay for that as well. In regards to the interest we pay on the line of credit I am actually over estimating on costs due to how I calculated it assumes I would the original chunk amount for ten days then the lowest balance for ten days then the ending balance for ten days that is not the case so the actual costs of the PLOC becomes lower. On the topic of emergency fund I'm all for it I leave that up to client preference. Most of the time when working with clients I am not using any of their pre existing savings or emergency funds or sinking funds to enhance the numbers I just use the month to month numbers. Thank you for your input.

[@tyronelarry6112]

33333

[@michaeldonley7741]

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