Pay Off Any Amortized Loan Quickly! Mortgage Interest is TOO High of a Price to Pay for a Home!
HTML-код
- Опубликовано: 8 дек 2022
- 🆓 Join my FREE Velocity Banking Private Community
vanntastic.ck.page/group
WHITEBOARD Personal Analysis
👉 calendly.com/vanncwi/personal...
☎️ View My Financial Coaching Services: calendly.com/vanncwi
PMC: privatemoneyclub.com/?aff=118
📧Contact Me: www.vannfs.com/contact-8
👉 Have My 7-Figure Coach Help You Launch An Online E-Commerce Business dreamclients.org/vann
🏦 INFINITE BANKING CONCEPT
go.oncehub.com/mstv
📝 Download My FREE "Vanntastic Finance Worksheet" 👉 www.vannfs.com/general-5
About Christy Vann: www.vannfs.com/about
GET HEALTHY! While Losing Unwanted Pounds- OPTAVIA!
Go Here coach.optavia.com/120001158182
FETCH! Come save money with me! Sign up w/ code 1EQG55 & get 2,000 pts:
referral.fetch.com/vvv3/refer.... See you there!
FOLLOW ME HERE 👇👇👇
FACEBOOK- Vanntastic_Finances
INSTAGRAM- Vanntastic_Finances
WEBSITE- www.vannfs.com/
EMAIL- support@vannfs.com
Christy Vann and its affiliates do not provide financial, tax, legal or accounting advice; the information presented on this web site/RUclips channel are presented for information/educational purposes only, and following the advice in this video is the responsibility of the viewer and not the video creator.
By participating in this RUclips page, you agree to comply with the following guidelines. In any case, the information provided is “as is” with all faults and without warranty of any kind, expressed or implied. In no event shall Christy Vann, or any affiliate organization be liable for any damages, lost profits, or lost data even if we have been informed of the possibility thereof. Linked Items may create a financial benefit for Christy Vann. Christy Vann is an affiliate of Unstung Marketing LLC and may receive compensation for referring you to their services.
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.
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.
That's a detail that some ignore.
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!
Thanks Michael!
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.
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.
@@thomasxxxxxx2345I agree!
@thomasxxxxxx2345 hi so it only works if the mortgage rate is higher than the LOC rate?
@@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?!?
No. It depends on mortgage rate and cash flow.
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!
This is the video that finally made velocity banking click for me. I wasn’t getting it until this. THANK YOU!
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.
Yeah of people like me have a 2.75% fixed 30 year rate should not be paying it off. Invest your money.
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
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!
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.
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.
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.
That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.
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
While that may be true, you'll still have paid ~$8283.06 in interest during that 6 month period while you slowly chip away at it from the top down. It's definitely better than $44,176.32, but still worse than the $1,035.00 in interest incurred using this method. I guess it really all depends on each persons situation, and how much risk you are willing to take to save yourself that extra money.
Actually I think I miscalculated that $8283.06 figure. The more I think about it I feel like I might save a few dollars using this method, so the risk vs reward likely isn't anywhere near what I was originally thinking. If I am thinking about this correctly, the 21 APR of the LOC should come to ~1.75% interest per month, which is still lower than the 5.25% that the mortgage has, so you'd still save money in the end. Just not quite as much as I first thought.
@@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.
@@davidwallace3933Question. Would this method be worth it with a 1.5% interest rate?
@@bullpuppy7455good point 👍🏼
This of course is only for people that are fiscally responsible. If you cannot stop spending then this is disastrous.
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.
Fascinating! Learning lots. Thanks!
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.
Well, I am so glad! Thank you so much for watching!
Mortgages benefit you by allowing you to live in a much nicer house than you can pay for in cash.
@@rickkern5785yet still pay double for in the end. Unless you were able to sell it well over the price you laid for it.
Why not just pay the extra $2,000/month to the mortgage? Extra mortgage payments go directly to principle.
That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.
Please invest in some recording equipment like a microphone. The sound is terrible in your videos
I love your material! I'll pay my house off in a little over 2 years using this system. Thank you for your work!
The only value in using a HELOC is that you can move other debt into the HELOC. A mortgage at the same interest rate has the same interest charge as a HELOC. The difference is that the HELOC minimum payment will go down, and you can borrow more again. All the examples will pay off the mortgage in the same amount of time if you make the same monthly payment to a HELOC or mortgage. There is no need to use a HELOC if there is no debt except the house.
Not a front loaded mortgage. There are plenty of examples that a 4%mortgage is actually 80% interest in the first 10 years. You can throw money at it but it’s risky. The interest is a wash but the principal will be compounded down in reverse order
This is literally WITCH CRAFT... HOW COME WE ARE NOT EDUCATED ON THIS
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?
That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.
This is a game changer!!!!!!!. Christy, where is the interest in th computation? Please clarify. Tuanks
Thank you for sharing 😊
Good information to know and share
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.
That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.
Wow! Thank you, wished I had heard this in my 20's
MEEEE TOOOOOO!
Thank you!!
Christy, can you explain further your statement that only 1% of Americans pay off their mortgage? I’m trying to make sense of that. Thanks 🙏🏼
They move and sell the house before they finish buying it?
Will a large principal payment push out the next payment due date on a mortgage? Thanks for the cool videos!
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.
That would work well for monastic ascetic. Most people want to have some form of liquidity in case of an emergency.
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 !
Thank you Christy!!!!
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?
Eyes Wide Open Now. Thank you Christy. Looking so forward to my white board meeting with you second week of November.
@JH-hc5dv Excited to meet you!!
excellent very informative
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.
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.
You should layout your info on the white board in a more structured way so it's easy to understand
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.
Great info
After watching the other video like ten times I found this video and now I understand it!!! This is a genius strategy
This is wonderful!
God is good!
thank you
Thanks for sharing this great information. The $10K from HELOC I would pay to principal on my mortgage correct ?
Thanks
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 ,
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.
Thank you so much 🙏🏽
😃 Thank you!
my mortgage is 3.38%. Paying that loan off is a fools errand, as the average SP return is more than double that, and inflation is eating away at the value of the loan at the same time🤡🤡
I used to think like that until last year. Took money that I could’ve paid the house off with and invested it instead. Lost 20% or more due to market sinking. When you invest your money instead of paying off debt, you are ignoring the risk factor of investing.
@@markkauffman6184 Trying to time the market seldom works. Use dollar cost average to enter. Expect the market to go up and down, but more up generally.
I pay my monthly plus what was planned to go to principal in the next payment. I’ll be done in 15 yrs.
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%.
So infuriating. I've watched a good 40 videos on HELOCs to pay off/down mortgages. I still don't see the benefit of doing small increments (like $10K in this video)
PRO: I get the mentality of using the HELOC as an open credit card. There are several benefits to this. Got it!
CON:
* In this example, you have $2K "extra" a month. WHY use the HELOC and pay the daily interest, and not just add $2K to your mortgage payment each month. This would be $2K straight, with no HELOC interest. And you'd pay $10K in 5 months instead of the 6 months mentioned in this video.
* By my math (and I could be wrong), in those 6 months, you paid $542 in HELOC interest, but only saved $200 in interest off the 30 yr mortgage in those 6 months. Seems like I'm $342 in the hole using the HELOC
* Again, by my math, if a person had the $2K a month to pay directly to principal, they could pay this mortgage off in 90 months (7.5 years), and skip the HELOC high interest
You’re not considering the amortization schedule.
Because your cutting a bigger chunk of the mortgage right away saving you interest on the larger principle with an ammortization schedule attached. The LOC is calculated simple imterest.
Girrrrl, you are a genius!! Thank you for sharing your wisdom.
Thank U Thank U Thank U 👍🏾
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.
Paying an extra $2000 a month on the principal pays this mortgage off about 10 months sooner that the method she explains. Plus, it’s simpler.
People don't have an Extra 2000$ lying around... please explain
@@momoscurry3398 Sure - in this example the amount available for principal reduction is approximately $2,000.
Thanks
How are you paying the mortgage while you're paying down the LOC debt? I'm confused.
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.
Amen to that 🙏 🙌 👏.
Can you show how to use Karl's mortgage calculator to get our mortgage payoff numbers please
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.
Why did you lose it? You quit working?
I’m so sorry to hear that! But stay encouraged and keep moving forward! We can retire when we’re dead!😂
@@santanaurias3112lol crazy market crash. Home foreclosures everywhere. Housing bubble burst. You must be young.
@@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.
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?
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
Thanks!
Thank you so much!!
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.
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.
Exactly! Thanks for sharing!
Bless you. Keep watching. The confusion will clear. Thanks for commenting though!
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!
Or simply put the $2,000 per month extra to the mortgage and in 32 months the mortgage is now $176,000.00
Exactly what I was coming to post. Why not skip the 21% interest and just pay the extra 2k to mortgage? In 32 months using this method, we paid down 60k and paid high interest that whole time on heloc. Just paying the extra 2k a mo we paid down 64k and no extra interest in 32 mos. No brainer.
@@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.
@@jaywalk6628 We have 100k left on mortgage @2.785% interest, have so far 40k in the bank earning 4.85% interest in HYSA. As soon as we have the entire balance or the interest drops on savings below the amount of the mortgage, we will pay off the remaining balance, never affecting our cash flow AND earning higher interest in savings.
The argument she makes on cash flow is sort of silly, every six months chunk 10k(just like she does), but keep your extra 2k in the bank as your "cash flow"(4k a year extra stays in the bank, after 3 years you can make an extra 10k payment as well and go back to your original 2k of cash flow) and earn interest instead of paying it. This pays off 70k every three years, on top of what you paid through your normal mortgage payments, without all the convoluted nonsense(and risk) of an LOC. Not to mention, if you aren't paying an average of 100/mo in interest you could throw that extra 3-4k every 3 years at it as well(or one extra mortgage payment yearly). You become your own LOC in a sense. Congrats on your house pay off jaywalk!
This is very informative. If I am renting right now. Should I go out and buy a house? Do I get the loan first? Then use the line of credit for the first payment?
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?
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!
I would love to see this method applied to a 15-year mortgage
A 15 year is still front loaded so it should work for the first seven
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.
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.
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?
How can I ask questions about your theory?
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.
I live in Commiefornia. The lower payments via re-fi have become necessary just to get by (back when interest rates were low). Six figure income, living paycheck to paycheck, not extravagantly, never eat out, no vacations, no car payments, etc. Sounds effing ridiculous, but it's a real thing here.
would it make sense to get PLC to afford repairs and or improvements rather than dip into retirement savings?
HELP!! @VANNtastic! When you put the money on the LOC, what about the interest you need to pay on that? Do they not charge because you are adding the minimum pymts with your $5000??? Thank you for this video!!!!
your deposits to the LoC (whether they're weekly, bi-weekly, or monthly) MORE THAN satisfy the monthly obligation (well above the minimum) and you just use the credit card they give you when you open that LoC to pay your regular bills (food, utilities, gas, etc...) which is the $3000 she keeps adding back onto the LoC balance.
How do you make a mortgage payment on a credit card?
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.
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.
I can’t pay mortgage or cars with CC (HLOC) so transfer the money bank into the checking to pay those?!
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?
This is brilliant!!!
Thanks for watching!
How do you invest with this strategy? I understand the strategy and would like more insight on the investing side.?
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.
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.
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.
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.
@Dajeffe1 I wouldn’t suggest using a credit card for debt payments. Too many fees associated
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.
being disciplined is important to making this concept work. You are right on that.
Wow, this is fantastic!
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.
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??
@@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.
@@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!
Hi Christy, thanks for the videos. will the downpayment for the house come from LOC or the velocity method be applied after the downpayment? Also, will one go get HELOC for the house just like you will go get a mortgage? or you just need LOC to start the payment? I am just hearing about velocity banking today for the first time.
You cannot use a heloc for a down payment - unless the heloc is against a property you already own and are using it to buy a second home. You can only get a heloc after you have equity in the property. For most people that means they either had a substantial cash down payment, or have paid on the property for some time, or the property has appreciated in value.
@sjha020165 Go study a little bit more. Thanks for watching!
@babafelaawosile4945 Yes! There are companies I can refer you to that do FIRST LIEN HELOCs on new properties. OR you can use a LOC to get you started. Your choice!
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)
Thanks Landon! Good luck with your journey!
@@VanntasticFinances thanks!
So if I got it right if today I want to purchase a house I should put more than 20 down payment to get HELOC without paying mortgage insurance right?
I'm still confused. 🤔 I have a small mortgage I need to get rid of and no other debt. How about a LOC for the balance of the mortgage? Then hit the LOC hard?
If you use a credit card but pay the monthly charges on time, you don't pay any interest depending on the card I guess. I never have anyway. HECLOCs are different but a credit card could be used very easily this way. We live in a high cost of living area where all homes are million dollar homes now. What if you owe $600K on your mortgage which is typical here? is it still worth the effort? Or is it better to use VB for the other debts?
@@traybern What are the "UM" and string of explanation marks for? You come across as overly dramatic. As someone with an 848 FICO score and 820 Experian score, I have had no need for this information but am simply interested in this content. That's why I asked.
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?
Some banks will tell you to use HELOC for home improvements. That makes no sense. Do they check receipts every month?
Use a line of credit or credit card.
Can I do this with 10k savings in the bank?
so you are making a one time 10k lump sum payment...and you secure and season the line of credit 6 months BEFORE getting the mortgage approval?
Two words: Mind blown!
My fixed expenses are normally paid by by Direct Debit, can I pay DD's from my Credit Card ? or would I have to keep moving money into my current account to keep the bills paid ?
Hi Christen! If the expenses are chargeable …you can do automated debits from credit card. If your credit card is linked to your checking account, then you don’t have to worry about transferring money out. Only income in. You can have lines of credit linked to your checking, as well. Thanks for reaching out!
If you have 100k line of credit can you pay 100k towards the principal instead of the 10k
What about the mortgage insurance? Is that amortized, too?
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.