Payoff your home in 5-7 years using a HELOC. TRUE OR SCAM?

About this video: Will this trick really help you pay off your mortgage faster? In this video I'll go over the debate of using a HELOC to pay off your mortgage. Watch now to find out if it's true or a scam!

=====================
Subscribe Here
=====================

=====================
Links mentioned in video
=====================

====================
Ways to work with me
=====================

=====================
Connect with Christian on Social Media
=====================

=====================
Helpful Playlists
=====================

====================

My Mission here is to provide people with information to help them make the best decisions for them and their families.
Disclaimer: This video is not personalized advice for the viewer
#christianduncan

[chadmcleavy]

Okay, first problem:
to quilify for a mortgage the lender prfers you to have a front end DTI (debt to income ratio) of around 33% after the loan. That means you need to make about 3X what the mortgage would cost to quilify for that $2500 mortgage payment. The number he's using is $5k a month and it should be $7.5k. That effects the numbers greatly right off the bat.

Second issue:
he's not calulating the compounding of the payments in your favor. Yes, the first few months to a year are going to be higher if you do choose to use his numbers but every deposit you make into the HELOC decreases the money paid towards interest and increases the money paid towards principal. The interest payment recalculates after EVERY DEPOSIT you make. You have to do the math after EVERY payment to see the effect, not just the first one like he shows here. He's treating the HELOC payment and doing the math as if it were a traditional amortized loan which is not correct. The whole point to this method is to avoid amortization and get a loan that's calculated through simple interest. Mortgage lenders don't want you to use simple interest because they loose a significant amount of money. A $500k loan works out to about $1.3mil in 30 years with 6-7% interest. With simple interest, it's significantly less depending on how much you pay regularly of course.

Third issue:
Kinda related to the first issue... Why are you spending $5k a month if you only make $5k a month? 0.o If you have $2.5k a month in bills not including a mortgage, you're spending too much on other things. Put the starbucks down and sell a few of the 4 cars you own. I live in Cali where living expenses are crazy and I don't even spend $2.5k on myself. It's not a very realistic number unless you're a family of four and if that's the case, you're likely pulling more than $5k as a household. Again, his starting number is too low.

Fourth issue:
If you put 20% down on a house you don't have PMI (private mortgage inssurance). 20% is the fall off point for the requirment of PMI. That number should be removed entirly from the equation if he's using 20% as the downpayment.

You need to sit down and crunch the numbers yourself. He's just trying to sell you more traditional mortgages. He makes 1-2%

[problackpatriot]

I learned a lot from the comments section on this one.

[joankim]

HELOC method works with positive cash flow. His example only illustrates zero cash flow. You have to make more than you spend.

[brianadams]

Just pay as much extra every month that you can afford on your mortgage and it works the same but without the risk. It really is that simple. example if my mortgage payment is $2500mo and I pay $4000mo that's $1500 x 12 = $18k year extra which is about 7 extra payments a year. Oh and if you have a bad month then just pay the regular payment never mind all this crap.

[taylerellis]

My uncle with positive cash flow did this and actually did pay off his 250k home with a 30 year mortgage in 10 years time. The key is positive cash flow into the heloc. If you are using all your income meaning once all bills are paid there is nothing left this will not work for you and will make things worse.

[daveanderson]

70k a year is not 5k a month net. It's more like 4k. No one earning 70 is buying a 400k home at least not here in the Midwest. And lastly if your spending exactly what your earning you already screwing up lol

[RocketsharK]

The strat most are saying to use is to only put 15 to 20k on the heloc at a time, pay it off then pay another chunk with it.

[BrianBenjieRN]

No one should be putting the their whole mortgage to a heloc. The way to pay it off faster is by chunking towards principal to save on interest and pay the heloc balance back over time periods of 3-6 months. The heloc balance should be only something someone can actually afford to pay off over 3-9 months via cash flow post expenses

[jonburton]

You're being misleading and not fully understanding of how the HELOC or Velocity Banking Strategy works.First of all you need positive cash flow.Ive been using VBS for 3yrs and my 30 yr mortgage will be paid off in 2 more years.

[abrahamgomez]

No offense but you definitely don't know how the HELOC strategy works and please educate yourself on it before scaring people away. This works and you will save a lot of money in interest but what matters the most is getting rid of that mortgage payment.

[billbrannenabr]

No offense meant, but you're not making a $363K loan on a $70k income.. Try doubling that income and then rework the concept. It works. I've personally used the method and paid off a house in less than 5 years. Second item to mention - because the line is revolving, large deposits (commission checks, etc) can go in and then be "borrowed" out. Can't do that with a traditional loan. I will grant and these two points make the system work - You have to make more than you spend (I know..duh, right?) and you have to have discipline (excludes a bunch of folks right off the bat) to successfully use this strategy..

[derrickj]

I'm doing the HELOC method, but I'm only using it as a fallback at the end of the month. I put all my free money into my home mortgage, so around $2K. My HELOC is a backup if there is an unknown expense. I'm only doing this so I can refinance because I have a FHA loan. If I keep at it, I could pay it off in five years.

[silverbison]

Thank you I was going to do this, but not now. Going to just make one or two principal payments more a year.

[ryanteuscher]

You need to look at the chuncking method, too. Where you chunk the heloc and only use what you have in a savings generating interest. Then you use the remainder or the Heloc for ur living expenses.

[The_Gallowglass]

I forgot what my dad's wife's parents said, but they didn't use any line of credit. They just made a double payment every month and paid off their house in 8-10 years, or something like that.

[JJ-zrfu]

Thanks for the video when I heard this I was wondering if there’s a special advantage to moving cash through a heloc but it didn’t seem so.

[dees.]

Hey a home EQUITY line only lets you take out the equity. A new home only has the down payment as equity. How to you get a heloc for the loan amount of the home? Am I wrong?

[feelinforty]

Here's how a heloc CAN work to pay off your mortgage early....
You keep the HELOC as close to zero as possible but must have a balance. Put ALL your income into paying your mortgage down and your bills from the HELOC one day before payday... for which you will nearly pay off the HELOC, and the rest to the mortgage.
The idea is to apply all "extra" monies to your mortgage. Any money in your savings Acct is basically collecting zero interest. And your helix becomes your emergency reserve fund.

[jwsouhrada]

Meh, I’ll just stick with making biweekly payments with additional principle payments

[siegelpmp]

I'm in the process of looking into this HELOC method. I looked at it a few years ago, and I was told that I didn't have enough extra cash flow to make it work. It's really like your example where nearly all of the income is being used up for the mortgage and cost of living. Many people would find that they don't have the income or they have too much debt to make this work. But, the way you talked about 'average income and average cost of a house', your examples doctored and skewed the math, making the method look like it wasn't a good idea.