has anyone tried Kwak brothers heloc strategy to close your mortgage? any feedback? https://youtu.be/eGVn9iq1e6c
I used to do this before these guys showed up on youtube. It is called velocity banking. It is not for everyone. If you value growing your money from stock market rather than putting in real estate then don’t even think about it. You can also just keep making additional payments that you were going to chunk via velocity banking. There are few financial situations in which you can leverage this method. It was useful for me personally when I needed it the most. I don’t do it anymore. I was on track to payoff mortgage under 10years and have already saved over 250k in lifetime interest. They’ve specifically handled objection of paying extra payments vs this method and I agree it is advantageous but again it is not for everyone. The best part of chunking from heloc is you immediately reduce the lifetime interest upfront and you can use heloc like your checking account.
I donot understand how you will reduce the lifetime interest. lets say my mortgage is 500k. and I am getting heloc for 100k. 100k from heloc goes into my mortgage and reduces 100k. but does it changes my monthly payments or the amortization schedule? I believe interest will be changed to 400k immediately? but what happens to the amortization chart? also, for the Heloc - assuming i keep 100k or close to that cash floating round I will pay very less or no interest. am I understanding it correctly? also is it advisable to keep emergency funds in heloc (or a part of emergency fund)
Your monthly schedule remains exactly same but it shaves several months/ years of payments. Instead of 30 years you payoff in 5-10years. The interest on heloc that I paid to payoff almost 200k principal was not more than $180. I use heloc as emergency fund as well however if market crashes bad then bank can immediately freeze withdrawing from heloc so that’s the risk you have to consider.
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Use a heloc to pay off/down your mortgage. Use the heloc as a checking account. Heloc doesn’t front load interest like a mortgage does so you end up ahead.