HELOC payoff strategy

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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes

Twice recently people have told me of this new strategy to use a HELOC to pay off your mortgage faster. You essentially take out a HELOC to pay off your first lien, and then use that account to direct deposit your paycheck and make it your primary banking account.

From what they are telling me, it seems you can accomplish the same thing by making extra payments on your loan.

The difference is your mortgage is fixed for 30 years and the HELOC is variable with an annual fee

This sounds stupid. What am I missing?

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Scott L.

Investor · Flower Mound, TX · Member since 2017 · 182 posts · 198 votes

I have a secret strategy to pay your mortgage off faster. You make bigger payments and/or more frequent payments than the amortization schedule requires. Now the bad news...I have a business method patent on this so you owe me a royalty every time you do it. If you don’t pay, I sue.

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Brent Coombs
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
7y
Originally posted by @Brian Cardwell:

Originally posted by @Brent Coombs:
@Brian Cardwell, yep, I do win. If you have a HELOC balance owing, your home is not paid off!
(But if you have no balance owing on the HELOC, how many opportunities are you wasting?
No balance on the HELOC = house being paid off.
I miss no opportunities because I have the money to take advantage them. Why? Because I don't have a mortgage payment. .... Funny how that works.
"No balance on the HELOC = house being paid off", until you use your HELOC again! Cheers...
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Brian CardwellPro Member
Investor · Odenton, MD · Member since 2017 · 204 posts · 144 votes
7y
Originally posted by @Brent Coombs:

Originally posted by @Brian Cardwell:
Originally posted by @Brent Coombs:

@Brian Cardwell, yep, I do win. If you have a HELOC balance owing, your home is not paid off!
(But if you have no balance owing on the HELOC, how many opportunities are you wasting?
No balance on the HELOC = house being paid off.
I miss no opportunities because I have the money to take advantage them. Why? Because I don't have a mortgage payment. .... Funny how that works.
"No balance on the HELOC = house being paid off", until you use your HELOC again! Cheers...
Don't be THAT guy. The point is the HELOC strategy works if used properly. Is it the best way? It depends on several factors.....
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