Velocity Banking Explained: A Step-by-Step Guide

[@ninawong5964]

Thanks for making such a detailed video!

[@glycyldi]

Really? He never explained where the $500 came from, how the HELOC was repaid, the interest on the HELOC...

[@brandonbarclow3135]

I've done this strategy, and it works. Paid off the remaining $115K of my mortgage in 10 months. I've watched countless videos, and there is too much attention focused on interest. Bottom line, do you want to pay a little interest on the HELOC to be out of your mortgage in 5 to 7 years? People are so hypnotized by the interest that they are missing the whole idea of eliminating the mortgage.

[@amandalee714]

Why pay the extra money monthly instead of taking the whole amount and put it towards the mortgage all at once?

[@brandonbarclow3135]

@@amandalee714 You can absolutely pay extra every single month. A simple example. Let's assume that after paying all of your bills, you have $2000 left over. You can take the entire $2000 and send it to your mortgage company. But that would be insane right? Of course, you wouldn't do that. The reason is that the mortgage is a "closed ended" debt instrument. When you send extra payments, you can never get those back. A HELOC is "open ended." So you can take 100% of your paycheck and send it to the HELOC. You can then make withdrawals to cover your expenses. So long as you expenses do not exceed your paycheck, the HELOC balance will naturally go down. I only withdrew $20K at a time and made chunks to the mortgage. I've shown proof that this works, but people are hell bent on poking holes in the strategy. I've stopped trying to convince people.

[@myinhairitance7741]

Wow...that's awesome. I appreciate you sharing that. I would love to see how it was done in 10 months. I'm so curious to see the math so that I can apply the concept.

[@adrianb6942]

Your strategy may work for people who struggle with saving money. For others, they can simply put extra money toward the principle and pay off their mortgage just as fast if not faster

[@jamesd7154]

Thanks for sharing. What ive noticed looking at videos and comments is the people poking holes in it seem to have connections to the banking and real-estate industries. Yet those who have tried it have said it absolutely works. I appreciate this guys unbiased review. Just saying......

[@marynussio9880]

My dad told my husband and I when we were first buying a house something similar to this. He didn’t say anything about using a HELOC, because I don’t know if it was around. He did, however, advise that we double pay our principal on our house in the beginning of our mortgage, because it is such a small amount compared to the interest. So we didn’t double the payment per say, we just doubled paying the principal and then that way saved a lot of money . Obviously later on, when it’s more principal is the larger part of the mortgage payment this may not be possible, but I always add something to my mortgage payment.

[@sidshri6080]

"We double pay our principal on our house in the beginning of our mortgage, because it is such a small amount compared to the interest. So we didn’t double the entire mortgage payment per say, we just doubled paying the principal and then that way saved a lot of money . Obviously later on, when the principal itself becomes the larger part of the mortgage payment this may not be possible". Thank you! What a great strategy. Amen!

[@anfieldreds_1892]

per se, not per say. Per se is a latin word:)

[@Ticonderoga12]

Velocity banking is an effective tool to use when using a heloc. But it takes DISCIPLINE. YOU have to stay on top of how much money is flowing out of the heloc and making sure u replenish most if not all that u withdraw so that the interest on the heloc doesnt get out of control, especially in this market where rates on heloc continue to rise. The other upside is u have the heloc on hand in case of unforeseen expenditures which u kno life is gonna throw at u. Great video nice n simple and u can draw too,lol.

[@GeauxRilla]

Most helocs are a fixed rate no?

[@Ticonderoga12]

@GeauxRilla it varies but most are adjustable

[@chucktaylor89519]

Simply add your $500 monthly surplus to your mortgage payment as a principal reduction payment and you will pay off the mortgage faster than with the VB strategy.

[@briandeluca6908]

Then you can not reuse that 500 it's gone forever

[@chucktaylor89519]

Just get a HELOC and use it if you need it.@@briandeluca6908

[@the_wyatt]

​@@briandeluca6908this keeps being said but I haven't seen it presented in a clear way. What is the concept of $500 being gone forever?

[@stevefirst9521]

not gone forever. simply a wealth transfer from cash to home equity. it is less liquid, but not gone and in fact if values go up, you have increases on the entire value (leverage).@@briandeluca6908

[@glycyldi]

@@briandeluca6908 The whole "reuse" money concept is for people who have dyscalculia.

[@johnnymclemore8255]

So if he uses $500 a month from his HELOC to pay extra towards his monthly payment, what happens to the HELOC after two years and he has a $12,000 + whatever interest has been charged, line of equity balance? Sure he is paying it faster but is not also increasing his HELOC balance? Would it be better to just pay an extra $500 a month to decrease principle?

[@Xadar24]

exactly, interest for a heloc or ploc is generally higher than for a mortgage so making extra payments towards your debt is generally preferable

[@ryebread447]

Good ?

[@OperationRacecar]

He left off an important part of the video..you’re supposed to treat the heloc like your new checking acct, and when you make money from you job, it goes into the heloc to pay the heloc balance down.

[@johnnymclemore8255]

@@OperationRacecar Ahh OK I have seen YT videos of people paying off debt using this type of method.

[@adamseidel9780]

Exactly, this is totally mathematically illiterate. You’re just transferring the principal of the extra payments onto a higher interest, less secured, variable rate debt. Bad!

[@Susanhartman.]

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

[@ThomasChai05]

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.

[@mariaguerrero08]

In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.

[@mikegarvey17]

@@mariaguerrero08 My partner’s been considering going the same route, could you share more info please on the advisor that guides you.

[@mariaguerrero08]

"Camille Alicia Garcia" maintains an online presence. Just make a simple search for her name online.

[@CliveBirse]

Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.

[@amandakelly1418]

Maybe you misspoke or I misunderstood, but at 1:54 you state that making a mortgage payment from the HELOC lowers the balance of the HELOC and reduces the average daily balance. That is not true. Using funds from the HELOC (for whatever reason) increases the balance and the ADB.

[@SilverLiningsGoldenYears]

You definitely explained velocity banking in straightforward and simple way. Very nice. However, it seems that some commenters are simple, too. Cash flow is king, and by using the heloc/ploc/cc, one can kill both debt birds with the same stone, and have an emergency fund in their line of credit to pull out IN CASE they NEED to. Once you pay extra on the principal of an amortized loan, you can't take it back. Change my mind...

[@treyaaron8552]

Great videos. Just 1 suggestion-since you’re so soft spoken, turn the volume up on the video. I have the volume up all the way on my end, but you’re still hard to understand/hear.

[@randomcharacter6501]

Tap the video. Hit the gear icon. Turn on captions. This may be helpful in the future.

[@Anneluu]

Thank you for sharing!

[@lynnstewart2326]

I used this strategy to pay off my rv a year early.

[@ManoElMacho]

2:44 black ink on blackboard. Nice. Genius idea

[@BlueGardenCottage]

I would love to know how this could work in the UK because here, almost all loans and mortgages come with a penalty for paying off early (how dare you try to get out of making the banks money by interest!?) There is apparently a situation where if you have a mortgage that allows it, you are permitted to make one extra payment per year without penalty. I heard of some folks who use this to save money through the year then make that extra payment in the month permitted and reduce their mortgage that way paying it off in less years but never as fast as that unless you make huge amounts of money and can save that much. Because loans and credit cards here have both annual and monthly interest rates, its also difficult to get out of that one.

[@bsgarey]

Inventing in the stock market or other investments instead of paying off the mortgage creates unrest in you mind. I believe paying of the mortgage is the best mental piece of mind.

[@jeehill9592]

I dont understand why someone would leverage debt as opposed to just contributing extra cash flow to their mortgage payments. Wouldnt leveraging debt defeat the purpose by accruing interest?

[@mommifong]

You actually can come out paying less interest. Rich people use other people money all the time it takes discipline

[@thomasxxxxxx2345]

@@mommifong No you cannot. It is never cost effective to replace one loan with another loan that has higher interest. Never. Mortgages are the cheapest loans around (because they are secured by a property)

[@Redbird006]

Under the same mortgage scenario, simply paying $500 extra per month on your mortgage would result in $123k in interest ($13k better than the strategy shown) and the mortgage would be paid off in 18 years and 4 months… 1 year and 8 months faster. This strategy is not only useless but a hindrance.

[@lifewithmargot]

I can see how that would be great for a mortgage! I’m just wondering if you had figured in the interest on the helix for its full term too?

[@analogsignal]

No one ever talks about paying down the actual HELOC WHILE paying the mortgage…seems like borrowing from Peter to pay Paul

[@vinniecharity]

You are, but when “robbing Peter to pay Paul” you are especially paying some of the interest to yourself instead of to the bank. This is winning…

[@Nsmithq99]

It's worse...Peter charges more interest than Paul.

[@edrosales1520]

​@@Nsmithq99 It depends a lot on what the interest rates, and the margin between them is. In this case, you are no longer subject to the 4% interest on that debt. By paying off that loan sooner, you can then use that cash flow to pay down the 5% loan. You also have to consider what your cash flow/cash needs look like. Having one of your obligations be satisfied by another loan can create some wiggle room in your budget, or give you an opportunity to build something which can produce greater returns

[@carolinakid8805]

If you have a positive cash flow then simply pay an extra $500.00 a month on your mortgage. Instead of putting $500.00 dollars a month onto another loan, and creating more debt.

[@MrSimoMlt]

That's exactly what i was going to say. This velocity thing is just not comparing apples to apples. Of course you will finish 10 years early by putting an extra $500 a month. And I think it will cost you more if you do Velocity banking.

[@1RamTough]

@@MrSimoMltit definitely does, I’ve created amortization schedules on these, and the best method is always using your income instead of paying off a lower interest rate debt with a higher interest rate debt.

[@LouisThorp]

Why not do both and pay off mtortgage even faster?

[@1RamTough]

@@LouisThorp because it is quicker and less expensive just to apply any extra cash flow directly to the mortgage than applying it to a higher interest loan that has been applied to the mortgage.

[@Nsmithq99]

This makes no sense. Why borrow at 5% to pay off a 4% mortgage? Just make additional payments on your mortgage as you are able. Also, Helocs generally charge more than 5%. The example doesn’t even mention the amount of interest paid on the Heloc. There is no magic to paying a loan, simply pay the principal as fast as you can and get the lowest interest rate available.

[@SheilaS-iu9qe]

Not everyone has enough cashflow to pay off huge chunks of their mortgage so quickly at the beginning….

[@Lvatopesado]

@@SheilaS-iu9qe - That was my situation 30 years ago. My monthly payment was only $ 914.

[@Nsmithq99]

This explanation completely ignores the interest and payments on the HELOC. Not only is there a monthly payment, but you are incurring 5% interest on a balance that is increasing by $500/month. So sure, you'll pay less on the first mortgage, but you'll be paying even more than the savings on the HELOC. Why is that not explained? And it's not "80% interest over the life of the mortgage", it is 4% PER YEAR, ON THE CURRENT BALANCE. Which is the same with any loan...if you make it a 100 year loan, you'll pay many times the principal in total interest, but that doesn't mean it was greater than 4% annually. That's like comparing apples and oranges.

[@DavidOldenburg1]

Most HELOCS are tied to prime rate which is 8.5% ...

[@Nsmithq99]

@@DavidOldenburg1 Yes, prime plus several points. And your point is?

[@northstarpatriot8257]

I have two auto loans $30k 3 years left do home mortgage $5k income $1k net can get HELOC at 8 percent with 5 percent intro rate. My question can I pay off my car loans quicker and the HELOC. I can't seem to wrap my head that it can be shorter then 3 years?

[@JeffMalott]

Now .... What do you do when the bank cancels or calls that line of credit

[@ASmith-jn7kf]

Huh?? Why would that happen??

[@JeffMalott]

Happened in 08-09 ... when home prices tanked and people were holding helocs

[@RyanTinger]

Why not make payments directly to the principle of the mortgage?

[@ConceptsMadeSimple]

I made another video explaining the key differences between an extra payment and using velocity banking. This should help answer your question kzbin.info/www/bejne/gqSlgnWMo7Cmiqc

[@briandeluca6908]

You didnt really show it correctly hence why there are multiple comments having confusion

[@willfulmisfortune3679]

I missing something. Why not just pay the 500 put of pocket, rather than from the HELOC? Im missing the part where the interest/debt gets paid on the HELOC?

[@ConfusedThree-hy4tl]

Hi Tyler, thanks for your reply. You are falling victim to some common misunderstanding. Responding in the same order of your points: $15,000 @ 5% costs you more than $200,000 at 4%, because 5% to borrow money is more than 4%. The mistake is comparing $15,000 vs $200,000. In comparisons such as these, all factors must be the same with only one variable changing. Apples-to-apples as we say, is this: $15,000 @ 5% for 1 year vs $15,000 @ 4% for 1 year. Or $200,000 @ 5% for 1 year vs $200,000 at 4% for 1 year. Loan amount and time are the same. Interest rate is different. Then calculate and see which costs more. If you took the 15,000 and put on the mortgage you’d have 4% interest on 185,000 instead of 4% on 200,000 ---> it costs 5% interest to reduce the mortgage by $15,000 here. If you don't reduce from $200,000 to $185,000, how much does that $15,000 cost you? 4%, the amount on your mortgage, which is less than 5%. Your last paragraph, which is related to your first one, is a misunderstanding. If you get a mortgage for $200,000 @ 4%, your interest is calculated on the remaining balance, not the entire $200,000 for the life of the loan. Interest is always based on the outstanding balance, even when looking at daily average balance. We can agree that the lower the balance, the lower the interest, right? That said, your first payment on a mortgage has the highest amount going to interest and as you pay down the principal, the amount going to interest decreases. Interest is not deliberately "front loaded" in an evil plot by the bank. It is just math. Here are some numbers: $200,000 mortgage @ 4% for 30 years. Payment is is $954.83 per month. 1st payment is $666.67 interest and $288.16 principal. Remaining balance $199,711.84 ($200,000 * 4% / 12 (months) = $666.67 interest) 2nd payment is $665.71 interest and $289.12 principal. Remaining balance $199,422.71 ($199,711.84 * 4% / 12 (months) = $665.71 interest) ---> see how interest is slightly lower since it was calculated on the slightly lower remaining balance? When you make your 120th payment, which is the 10th year of payments, the outstanding balance after payment 119 is $157,996.10 120th payment is $526.65 interest and $428.18 principal. Remaining balance $157,567.92. (previous balance $157,996.10 * 4% / 12 months = $526.65 interest) See how the interest is always based on remaining balance, not the original $200,000 every time? Same to your point on Average Daily Balance. Conceptually we can understand the interest is higher for higher balances and higher interest rates, and lower for lower balances and interest rates. An easy way to conceptualize this: imagine you have a line of credit with an outstanding balance and a 5% interest rate. You get an offer in the mail to transfer that debt to a line of credit with 0% interest rate, no other fees or charges. You would take that deal, because 0% is less than 5%. If you got an offer for 6% would you take that deal? Obviously not, because it is higher than your existing 5% rate. (Both calculate interest the same way; Average Daily Balance). I hope this has been clear and helps the discussion. I am happy to have a dialogue and answer any questions you have, as well as provide a spreadsheet showing my calculations.

[@briandeluca6908]

I do not see where your numbers used simple intrest, you can not negate the 5% is simple internet and the moetage is amortizing

[@ConfusedThree-hy4tl]

@@briandeluca6908 Thanks for your reply. One thing you have to understand is that Amortization refers to the process of paying off a loan until it is amortized, brought to death, when the balance is 0. Interest is either Simple Interest or Compound Interest. I believe you mean to compare Simple Interest to Compound Interest. That said, Compound Interest depends heavily on the compounding period, that is, how often is interest added to the outstanding balance? The more often, the higher the interest cost. The maximum rate of compound interest is called continuously compounding interest. 4% continuously compounded becomes 4.08%. 4.08% is less than 5%. Actually, my comment that you replied to showed all calculations. The mortgage numbers are correct in that they are calculated the same way all mortgages are calculated. By definition, if I calculate a mortgage at 5%, the costs will be higher than 4%.

[@glycyldi]

@@briandeluca6908 Yes, you can. Both are a percentage of the outstanding balance over a period of time. They are essentially the same thing. One may be "average daily balance" and the other a monthly balance, but the difference is trivial. Can you explain why/how they are different without using the term "front loaded"?

[@glycyldi]

You are absolutely correct. I think the problem here is that some people don't understand math and some people deliberately misstate the math.

[@Tbillion001]

Great clear and concise. I guess the benefit here is the visual of paying more on the mortgage as a psychological gain. But you have clearly put apples to apples above... kudos. Maybe u can share a spreadsheet and people put in their numbers to compare and that will be a lot of help? In conclusion 5% loan is never cheaper than a 4% loan regardless of the language used. If you have more cash flow then pay more to the principal. Slow but cheaper.

[@Apeiron242]

Black text on dark gray is a poor choice.

[@caragsdale10]

This sooo reminds me of 15 years ago (2008). Everyone was getting a loan for any and all reasons. Wanna guess what happened? Think it won’t happen again?

[@ASmith-jn7kf]

How do you know that's what happened??

[@babyj5261985]

If Chris has an extra $500/month why not just make principal payments with that $500? Why even open up the HELOC?

[@ConceptsMadeSimple]

Good question, I have another video that dives into the differences between making an extra payment vs using velocity banking (opening a HELOC) kzbin.info/www/bejne/gqSlgnWMo7Cmiqc

[@babyj5261985]

@@ConceptsMadeSimple seems like an extra step for no reason.

[@glycyldi]

@@babyj5261985 It is. Most VB shysters claim that the HELOC saves money because it's simple interest vs. the mortgages "amortized" interest. Absolute nonsense, but that's how it's sold.

[@aaronadams01]

This has got to be the dumbest strategy I have ever heard of. So you get a HELOC, use it to pay the principle of the mortgage, but they completely disregard the payment to the HELOC and the associated interest rate, which today is at 9%. So what you might save on one side of the coin you will pay on the other. You cannot borrow your way out of debt. You would be better off just paying an extra $500/month without the HELOC.

[@GeauxRilla]

Except you direct deposit your income into the heloc and expenses come out of that same account as well, surviving off cash flow , and destroy the "4%" amortized front loaded interest payment on the mortgage with the nowadays "9%" heloc rate. You first must understand how the interest is calculated before comparing 4-9% face value.

[@thomasxxxxxx2345]

@@GeauxRilla Have YOU actually made the calculation? I am putting aside the notion of "front loaded interest" sold to gullible audiences by VB scammers (hint: mortgages ARE NOT front loaded and ARE simple interest) Now the average household income in the US is about $6 000 per month. Let us take a BEST case scenario. In this best case the person receives this $6 000 on the first day of the month and they are able to pay ALL their expenses from the HELOC on the last day of the month , thus keeping a favorable balance of $6 000 the full year (or almost) At 4% interest rate this saves them $240 per year, or 20$ per month. However because this BEST case is never achieved the savings will be more around $10 per month. So what interest rate difference do you think you are "killing" with about $10 per month? (and that is before we apply HELOC fees which will more than negate those measely $10)

[@aaronadams01]

@@GeauxRilla It does make me laugh when I hear people talk about "front loaded" interest. There's nothing front loaded. The interest is the higher at the beginning of every loan because that's when the principle balance of the loan is the highest. It's just basic math. The law requires that a certain minimum percentage of the payment be applied to the principle balance.

[@DrFinancialLiteracy]

​@@aaronadams01Amen.thank you

[@DrFinancialLiteracy]

​@@GeauxRillaAwesome

[@mikerilling2745]

This only works if you have heavy debt like a mortgage and such for the vast majority of us who only have recurring utilities, and whose home is paid for it doesn’t work at all

[@ASmith-jn7kf]

Okay it's not supposed to work for you then. Not everything is going to be for everybody.

[@NightWolf-vv5me]

You're speaking for millions of people smh😂. It just doesn't work for you because you say it doesn't

[@adamhero459]

You are not explaining it that well. Basically velocity banking only useful for one thing and has to be in a specific situation. and as for interest savings, it usually isn’t the best option. The reason you would want to do this os to have access to the amount you pay down in case something unexpected happens on the future. But in terms of saving internet it is almost always better to go with a loan/mortgage as line of credit rates are generally higher and the interest saving from using the average daily balance on a line of credit usually does not make enough difference to counter the higher interest rate. The only time it makes sense to use a line of credit this way is if you can’t be approve for a line of credit and a lower rate loan/mortgage at the same time and want to ability to have access to the amount you pay down the principal by each month. For example, in your example of a 4% mortgage vs a 5% heloc, the average daily balance of the line of credit needs to be 80% or lower compared to the mortgage balance , or in your example it has to be less than the amount that would have been kept on the mortgage instead of being on the line of credit, to be less interest per month. So this means for month 1 of that $50k balance of the line of credit, you will need an average daily balance of $40k to just match the interest that would have been charged on that 50k balance of it was kept on the line of credit. So in month one, in order to save on interest, you would need to have to pay down over $10k of the line of credit balance , and keep it there long enough to be able to have bring down the average daily balance enough. But we’ll over 80% of people don’t have the annual income to be able to do this. Sure at some point everyone will be able to bring down the average daily balance where they would save interest, but that would be near the end of paying down that $50k line of credit balance. And since most of the interest of any credit product is front loaded, the savings at the end will not save interest overall. In fact, if this worked , why would you even pay down the line of credit at all? If it makes sense to use the line of credit this way, you should always be putting as much of the mortgage as you can onto line of credit. In fact, the only time velocity banking works with a line of credit is if prime rates drop enough during a mortgage term that you are locked into and the line of credit rate drop s below your fixed mortgage/loan rate. The best way to use velocity banking is with a credit card that you can pay off each month when you offload all your expenses onto it. This is because when you pay off a credit card each month there is no interest. But the issue with a credit card is that it takes more work to manage it properly as not all monthly expenses can go on a credit card while maintaining that interest savings The best way to pay the house off in terms of paying less internet is to just make $500 extra a month to the mortgage and not use the line of credit. You can use any free online mortgage calculator that allows extra payments to see this.

[@srehou2]

I have a degree in finance and years of experience in specifically mortgages. This method has zero financial advantages besides forcing undisciplined people into paying off their mortgage. The outcome is the same whether you use your leftover money and jam it into your mortgage debt every time or use a HELOC to prepay mortgage debt and deposit your pay into your HELOC. It’s literally the same and even worse to use the HELOC as it’s higher interest. The one advantage is you might be less inclined to spend money as you are always indebted to the HELOC so feel like you are broke all the time. But again, it’s literally the same as using leftover money to prepay your mortgage

[@thomasxxxxxx2345]

It is actually more expensive than just paying extra on the mortgage. Depending on the HELOC rate it is even more expensive than just putting the money aside in a safe deposit (such as CDs at 4%) and then making a large chunk payment on the mortgage at a time of your choosing On top of that you have fees and extra risks with the HELOC (how are all those HELOCs from 2 years back doing with the rate increase ? Not one VB advocate talks about that). Plus quite frankly with easy money accessible in the HELOC , those with little discipline will be tempted to increase their debt for purposes other than paying down the mortgage Alltogether this is a catastrophe

[@Gallardo6669]

Dont play this game. Just dont by shi* and pay more towards the house, listen to dave Ramsey.

[@mikerilling2745]

He can easily just make that $500 payment directly to the bank and save the interest. What is the point of using a HELOC?

[@ASmith-jn7kf]

I think the point is that, he doesn't have the extra money which is why he is borrowing it and paying it back as he is able (as he has an interest rate which he wouldn't if he had the money, he could just pay it right back).

[@AndBusinessIsGood]

You’re just advancing your income using credit. How does it make sense you’d be making more in payments while your income is the same? You are just leveraging debt. I was just going to say this but then I heard him say to consult our own financial advisor. Why would I to do that, does anyone even do that after watching a KZbin financial KZbin video? Watch from where you get your information, leveraging debt seems dangerous to me and alot of people come to you for financial advice whether you say so or not.

[@graveyarddoji9620]

He has to pay off the heloc every month. Why wouldn’t he just pay the extra $500 if he has it?

[@ConceptsMadeSimple]

This video here on the difference between making an extra payment and velocity banking will help answer your question: kzbin.info/www/bejne/gqSlgnWMo7Cmiqc

[@TheRicardoSanchez]

If you don’t have or can’t get a HELOC then this is all moot

[@finalmatrix]

First, I thought higher interest rate on HELOC doesn't make sense instead of mortgage. Later, I did calculations. Paying off the HELOC in 10 years save lots of interest over 25 years mortgage even at a higher rate! The things I like about having a smaller HELOC vs mortgage: flexible payment, we can pay interest only or put all cash flow into it and immediately increase monthly cash flow. With a mortgage, we pay extra lumpsum prepayment but monthly payment remains the same until we pay off the mortgage. The key is to have a large cash flow and put all cashflow into the HELOC unless there's emergency.

[@tonymasson]

This explanation is ok, but the example and pros/cons are horrible. Velocity Banking can save 100’s of thousand of dollars with very low risk if you know what you’re doing.

[@georgestone0123]

I've come to realize that the key to amassing wealth lies in making sound investments. I purchased my first home at the age of 21 for $87,000 and sold it for $197,000. My second home, acquired for $170,000, was later sold for $320,000, and my third property, purchased at $300,000, fetched $589,000, with buyers covering all closing costs and expenses. Not reaching a million before retirement feels like an unfulfilled goal.||

[@georgestone0123]

I initially started my investment journey with the guidance of a financial advisor named *Jenny Pamogas Canaya.* Her transparent approach granted me full control of my investments, and her fees are reasonable, considering my return on investment. Nonetheless, it's crucial to conduct thorough research before engaging with any financial advisor.

[@tahirisaid2693]

I've come across several positive endorsements of Jenny Pamogas Canaya on various platforms, including KZbin channels, seminars, and more.

[@tahirisaid2693]

Thanks to these recommendations, I successfully located her online profile and have already reached out to her with a message

[@confusedzentradi]

Paying extra to any loan will reduce the interest, total amount paid and time it takes to pay it off. However, your approach has one big flaw in that the HELOC rate is higher than the mortgage rate. Interest is the cost to borrow money. Why would I pay 5% to pay a loan that costs 4%? Secondly, when getting a mortgage, if you were offered 4% with an option for a 5% HELOC, or a 5% mortgage with a 4% HELOC, your method would make more sense as the HELOC rate is lower than the mortgage. But then you would just take the 4% mortgage to begin with as it is lower. Third, if you borrow from a HELOC, you have to pay it monthly. Again, if the rate is higher than the mortgage, it doesn’t make sense. Instead of borrowing at 5% and paying off 4% and also paying the HELOC, you would just pay extra to the lower 4% mortgage. Before you reply with a general comment about Average Daily Balance, please provide numbers to back up that point. This is what will happen: I’ll disprove your math and logic, you will either avoid providing numbers or deflect from answering, then ban me. How do I know? There are a group of us who have been banned by a few Velocity Banking content creators for simply showing the flaws and actual calculations that I am doing here. In the end, borrowing money at a higher rate to pay off a lower rate is simply illogical and bad advice. No one goes to get a loan and tells the bank, 4%, that is too low, I do Velocity Banking, give me a higher rate. While this sounds ridiculous, I have had several Velocity Banking content creators tell me that interest rate is irrelevant and can be as high as I want, Velocity Banking nullifies the effect. Rank nonsense. Thanks for reading and if you’re inclined to have an adult conversation instead of banning me, I would be happy to run numbers with you.

[@briandeluca6908]

You have no clue how intrest works if you don't get the concept of amortizing vs simple instrest. They are not the same

[@confusedzentradi]

@@briandeluca6908 please enlighten me via an example with calculations showing the differences between the two.

[@wendybcardinale]

If you don't understand amortization vs simple interest, I'm not surprised you're getting banned. You need a basic understanding of both these concepts before you can ask for an advanced discussion.

[@nikij.6058]

With velocity banking you put you paycheck in the HELOC each month. Satisfies the payment and you benefit from simple interest vs. amortization which wasn’t mentioned here. You can pay off all of your debt this way without using cash. You have to be disciplined to use this approach, it works.

[@confusedzentradi]

@@nikij.6058 A few points. HELOCs and mortgages calculate interest the same way. Please research how interest works, then you will find that you mean to say Simple vs Compound. Also, when you pay bills, you are using cash by definition.

[@daltonscott6893]

Better off using cash flow to pay down debt.

[@MrSimoMlt]

Dont put $500 extra on a HELOC and tell people hey look i paid my debt faster. Of course because you're putting more money.

[@scottcoleman5088]

The difference is between simple interest and amortized interest. Amortized will taze you.

[@thomasxxxxxx2345]

@@scottcoleman5088 It will be hard for amortized interest to do anything to anyone since amortized interest DOES NOT EXIST

[@lons5472]

Meanwhile your current home starts to fall apart lol.

[@vikrantkumar4477]

So he is paying debt of 4% using the debt of 5% interest? WTF? What kind of dumb people do that? Am I missing anything here?

[@midishh]

interest is irrelevant if you just pay off the debt quickly...dave ramsey says that too

[@MichaelGonzalez-v2s]

547 Emelia Course

[@nonetheless01]

Why not put the 50k on the mortgage at once ?

[@bryanc8275]

That is what's missing. Put the whole thing in for the huge savings from the mortgage. Then just pay the HELOC off. Rinse and repeat

[@kellenfisher9784]

Wouldn’t you be better off investing that $500 into sp500 for 20 years?

[@delezo9038]

This explanation makes absolutely no sense. It is not taking into account the fact that he has to pay interest on the $500 he drew from the HELOC

[@whiterabbit4606]

So use debt to pay off debt. Smart. 🙄

[@merlinmilton7596]

721 Eugenia Cape

[@osteenbarnes2041]

64054 Laurianne Turnpike