How to pay off a 30 year home mortgage in 5-7 years (2023)

How to pay off a 30 year home mortgage in 5 to 7 years. This is the most up to date version of our explanation on how you can pay off a 30-year mortgage in just 5 to 7 years on average.
In the video, I will demonstrate how a banking strategy can be used to pay off a 30 year home mortgage in just 5-7 years without sending double payments, changing your current level of income, without refinancing, without loan modification, and without hurting your credit.

Key Parts:
0:00 Introduction
0:40 Disclaimer
0:54 Why is Your Mortgage Dangerous?
6:11 Why you should never Refinance!?
8:13 Intro to HELOC
8:32 HELOC vs Mortgage
11:19 Intro to Average Daily Interest
15:00 Intro to 1st Lien HELOC Strategy
22:52 Recession Impact on HELOC?
23:51 Free HELOC Calculator Download

Disclaimer: I am not an attorney, accountant, or financial planner. This video is intended to be an educational video. This video should not be taken as financial, legal, and/or tax advice. Sam Kwak is a Certified Credit Counselor #11613. This is not a credit counseling session. I suggest that all viewers consult with professionals prior to implementing any or all parts of our strategy.

RECAP OF THE VIDEO:
I start this video with an explanation as to why a 30-year mortgage is like a trap for 21st-century homeowners. The reason being is that Americans (and Canadians) experience frequent life changes that cause them to move or they are eluded to refinancing because the refinance rates might be low. Unfortunately, such an event happens before 7-10 years into the mortgage. In the first 5-7 years, the vast majority of your mortgage payment goes straight to interest payment. A very small portion of your monthly payment actually goes to pay down the principal balance of the mortgage. Fortunately, there is a way to escape this. We're going to introduce a new tool to help us with this called a Home Equity Line of Credit (HELOC)

A HELOC is different than a traditional mortgage in several ways. The two main things to remember are (1) a HELOC is a revolving line of credit - which means you have the ability to pay back and re-use any available limit of the HELOC; and (2) a HELOC uses average daily interest calculation (simple interest) instead of an amortization interest calculation which is used by your 30-year mortgage. There's a common myth out there saying that HELOC interest rates are always variable and higher. This isn't true... There are HELOCs out there with fixed interests rate and some even have lower interest rates.

Now, in 2021 - the best version of this strategy (in my opinion) is to use a 1st lien HELOC to completely replace your mortgage. By doing this, we now only have one debt against your home. No more 30 year amortized mortgage! Just a 1st lien HELOC. With the 1st lien HELOC, you're now able to deposit all of your income (and event savings) into the HELOC balance to reduce the average daily balance - which ultimately means a lower interest amount you'll pay on a daily basis. Doing this will keep the interest bill low while still being able to draw the funds out for expenses, emergencies, or even a rare investment opportunity.

This strategy has many names such as: velocity banking, debt acceleration, mortgage acceleration, the "pill method", or even the velocity method. Here at the Kwak Brothers, we call it: "Accelerated Banking Concept" or ABC for short.

😃 Thanks for Subscribing & Liking our Video!

#heloc #mortgage #refinance

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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.

[Riggsnic_co]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[justinsanders]

How to pay off your mortgage faster: trim unnecessary expenses. Increase principle payments. Simple

[cw]

I paid off my mortgage in 8 years. Was paid off the year before Covid. Best decision I ever made. I have no CC debt either. Everyone talks about inflation and high interest rates but i haven't noticed. I created my own personal economy so I don't need to worry about interest and inflation. 🙂🙂

[russellbateman]

Despite the naysayers posting in here, we did this circa 2006 and, while we didn't pay in 5-7 years, we did kill it pretty much in 10 (instead of 30). It does work.

[torqued]

This is the type of stuff that should be taught to us in high school.

[imdoc]

Great video. I’m making my last mortgage payment this month. It took me 7 years to pay off my house after paying off $200k in student loans. Discipline and living within your means was key.

[ExxonMobilCompany]

I wasn't financial free until my 40's and I'm still in my 40's, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone that it doesn't matter if you don't have any of them right now, you can start today regardless your age invest and change your future! Investing in the financial market is a grand choice I made.

[jf]

Huge trouble for big spenders or gamblers. Unlike a checking account, your house and property are gone when your equity balance hits $0 on a HELOC.

[mathebulamkhize]

Year-over-year inflation stood at 6.5% in December 2022—the lowest that figure has been in more than a year. Inflation was in line with what economists expected and gave many of them a reason to believe that the peak of inflation may be behind us. I have approximately $150k stagnant in my port_folio that needs growth. What is the best way to take advantage of this downturn?

[jcs]

Thanks for posting, all I could say has already been said here in different ways. I just called my credit union to open my HELOC. You've made a subscriber out of me.

[Major_Pipps]

I'm impressed with how easy you were able to break down and explain this info. Nicely done

[pamelaj]

I did this two times. The first time was when I got divorced. I paid off a 50k mortgage in 3 years as a single mom. Then, I did it again, mostly .B. As a single Mom. I paidas an extra $600.00 a month. I am thanking God above for leading me in that direction. I should have had a custom built home (expensive home) paid off in 2016. What I couldn't anticipate was my future. I had to have a back surgery that didn't pan out! I became disabled. I thank God everyday that I did this. It made the difference between losing my home or almost paying it off. Listen to this guy. He is right 👍

[muhammetisk]

*Creditlord* literally gave me a fresh start. Before, I was stressed out and exhausted from being turned down from lender to lender. As of now, I'm currently in the phase of purchasing a home. I'm more confident and I feel more secure.

[rentospropertymanagementso]

The explanation truly motivates. Thank you for sharing.

[kkakdugiman]

I finally paid off my whole mortgage in 5 1/2 years. This has been quite an achievement for me. Thank goodness I did well in saving money for many years since I was a teen.

[geodel]

Just found this video
Very informative and detailed so I subscribed and gave thumbs up
Going to binge watch the others you have
Thank you for a great video

[sarahtaylor]

FINALLY! I've been telling people about the way amortization charts are scheduled ever since I figured it out. It's NOT common knowledge, and the banks don't want you to know about it either. THANK you, sir, for bringing this to light!!

[ManuelHernandez-xtpr]

You spoke correctly at 17:00 check to mortgage at $200k, but at 19:00, balance should be $194k after applying $6k income to pay down heloc. Concept not lost, but details are important when dealing with finances.

[henrythomas]

A decent enlightening post that you have shared and appreciate your work for sharing the data. I value your endeavors and all the best. Praise your work and continue sharing your data.

[elmo]

Just want to say that I'm Canadian, so the bank rules might be different in your country. First mortgage was paid off in 5 years with an interest of 9.4% (back in 1994). Saved up and purchased a rental home and paid that off in 3 years (4.3%). There are many ways how to achieve this. Check with your bank and find out the rules on your mortgage. With a fix mortgage, most bank will allow you to make one extra payment per year (either calendar year, or anniversary year). So basically, just save as much as possible and deposit as much as you can (to the limit....some bank will allow you up to 20% of your initial value of the mortgage borrow....so $200K, you would be allow a max of $40K per year at 20%). If you're your income is weekly, you would get 26 pay check per year, and not 24....meaning change your mortgage payment to weekly...by doing so a 25 year mortgage will drop to about 20 years....and you would not even feel any pain. Always remember it's not what you do in the last few years of the mortgage, but the first few. Just use something online and see how much interest you're paying vs the principal. Example, let's say your mortgage ($300k) payment is $1, 700/month, about $1200 is in interest, while $500 goes toward principal. I know this will be hard, but for easy math, you were to find a way to save $1K/month, that's $12K you can deposit toward the mortgage. By doing this, your mortgage had just dropped by 20 months....20 months of interest, so about $10k in savings (not to mentioned that you paid off your mortgage faster, meaning more time to save for retirement). IF your mortgage is on calendar year, you got a few months to deposit some money towards your mortgage...even it's just $500 (using the example above)...just that alone will take one month payment off you total mortgage...saving you $1200. Can't stress my method works, the only problem is that everything is on paper....meaning you don't see the vacation, or the brand new flat screen tv....you have to wait, and when your mortgage is paid off....you can sit back and enjoy....retired at the age of 40.