31
Jul
Is It Really Possible To Pay Off My 30-year Fixed Rate Mortgage In 5-7 Years?
I saw a so-called expert on a news broadcast this morning who said people in Australia and Europe have discovered a way to leverage their debt and finances in order to pay off their home mortgages at a faster rate without changing their monthly payments. How is this possible? It was quickly suggested that a Home Equity Line of Credit (HELOC) was the secret, but what does getting more debt have to do with eliminating debt?
Yes, it’s possible. But it may not be advisable.
July 31st, 2009 at 2:34 pmA HELOC is the secret. Without getting into the details, you’re not borrowing more money. You’re using the HELOC like a checking account, shifting money (from your paycheck into it), then paying the mortgage out of it. And the sophisticated software that you pay for also tells you when to make additional contributions.
The systems I’ve seen cost something like $3,500. The argument is that you’ll save that much in interest in the first year. And maybe you will. But it is expensive up front. The only real requirement (other than perhaps your ability to obtain a HELOC in today’s credit environment) is that you have a monthly positive cash flow…that your income is exceeding your expenses. The numbers don’t work if you’re going into debt every month.
You can accomplish something sort of similar–not as efficiently–by making extra principal payments on your mortgage every month. Like I said, the program I’m familiar with is a lot more efficient, but it’s pricey.
Hope that helps.
it works but of course you have to pay more to do so. Here is how it works. There is a program that uses your money and you use the HELOC to pay all your bills. You deposit your pay checks into the HELOC. Since these are interest only for 10 years then you are paying very little towards interest every month. The program at certain point will tell you to send X to the principal amount. You write that check as well out of the HELOC. You will never pay the HELOC off until the 1st trust deed has been paid and the last bill you write is to close the HELOC.
July 31st, 2009 at 2:34 pmI haveseen this presentation several times but all they are doing isusingg your discretionary money to pay it down and off. You can do the same month in and month out by sending more to pay off early and not pay them $3000-$5000 for the program
I am a mortgage banker in TN & KY
Well one way to do it is borrow at a lower rate.
July 31st, 2009 at 2:34 pmA HELOC usually is amortized for 30 year rate, but the term is only 10 years. At the end of ten years, you must payoff the loan. In many HELOCs you can make interest only or pay towards principal. this is just an example.
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July 31st, 2009 at 2:34 pmSounds like a scam, wouldn’t you just be left with a HELOC just as big as your mortgage? The only way to pay off a debt is to put more money into the payments.
July 31st, 2009 at 2:34 pmIt took us 11 years. Just kept adding to our monthly payment earmarking the extra as principle. Some months only 100 extra and other times 1k.
July 31st, 2009 at 2:34 pmumm yeah its called huge payments or coming across alot of money…
July 31st, 2009 at 2:34 pm