All Forum Posts by: Brian Cardwell

https://www.biggerpockets.com/files/1682/downloadSpreadsheet

I hope it works this time.

@Kyle N.  They dont get it. It is ok. There may be a better way but i havent heard any of them say they have done this or the better way to eliminate their primary mortgage. Most of what I have heard is bashing something they dont understand. Dont get me wrong, there are those here who have explain how this doesnt work but since I eliminated my mortgage using this technique I am a little hard to convince that it doesnt work. 

Originally posted by @Brie Schmidt:

Originally posted by @Brian Cardwell:

One more thought here. If you have a $200k mortgage @4.25%for 30years with payment of $983 month and a Heloc for $200k @4.25% and you pay $983 per month. Which will be paid off sooner. I will would say the HELOC would be. What say you?

Actually the mortgage. You need to pay an extra $3.75 per month on the HELOC to pay it off at the same time, to cover the annual fee

Results Summary

Current balance	$200,000
Additional monthly charges	$0
Current monthly payment	$983
Annual fee	$35
Interest rate (APR)	4.25%
Rate change (per year)	0%
Payoff goal (in months)	360
Payoff with a $983 payment	more than 360 months
Payoff in 360 months requires	$986.75 per month

 I don't pay an annual fee for my heloc.

Mortgage

Onn most home mortgages, the interest payment is calculated monthly. Hence, the rate is divided by 12 before calculating the payment. 

Heloc

Interest on a HELOC. Because the balance of a HELOC may change from day to day, depending on draws and repayments,interest on a HELOC is calculated daily rather than monthly. On a 6% HELOC, interest for a day is .06 divided by 365 or .000164, which is multiplied by the average daily balance during the month.

So does this make a difference in how long it takes to pay off either of these products?

Originally posted by @Nicole A.:

I think the trouble is, @Brian Cardwell, that you keep saying it works. You keep saying we don't understand. But you don't actually back it up with your actual numbers. And when real scenarios are run and calculators shown to you, you still refuse to see that you just might have spent more in interest using your HELOC method.

This isn't a "I'm smarter than you" debate towards you, but to truly make sure everyone understands the details involving the interest.

 @Nicole A. 

You maybe correct that I paid more interest than I needed to but I saved thousands of dollars by using the heloc while still having the security of having access to my "Savings". I have issue with folks who chime in and say it's a scam. It is not a scam and it does work. Could I have done it without the HELOC ? Of course I could have. With using the heloc it enabled me to still have access to that extra payment I was making in the event I needed it while still be able to pay my mortgage down earlier. Of course the HELOC interest cost something. I believe it was a small price to pay to still have access to the money and paying down the mortgage at the same time.

Bottom line is I paid off my mortgage in less than 7years and still had access to my money. So no scam here. 

To often on this forum, about this subject I read people bashing and call BS or scam. So I think those are the people who don't understand. 

Less debt equals less money needed to be made to live on. 

One more thought here. If you have a $200k mortgage @4.25%for 30years with payment of $983 month and a Heloc for $200k @4.25% and you pay $983 per month. Which will be paid off sooner. I will would say the HELOC would be. What say you?

Originally posted by @JD Martin:

Originally posted by @Brian Cardwell:

I have to laugh here. I may not be able to explain to the members here at BP how this works but I did this almost 17 years ago and eliminated my mortgage in 6 years 9 month, while not pay any more out of my pocket than I was before I started doing it. So for me there is no one here who can convince me it doesn't work. Could I have taken what I would have Been saving and done it? .... absolutely I could have. Doing it the way I did, I still had access to my money and didn't have to pay any more than I was paying before.

compound interest = mortgage

You can't explain it because it doesn't work the way you think it works. You did in fact pay off your mortgage faster, but it had nothing to do with the HELOC. If your numbers are right I guarantee you spent more in interest than you had to spend. Yes, having a HELOC gave you access to a *line of credit*, which may have been important to you when you were spending all of your cash on pay down. Yes, paying extra money towards the principal of your mortgage paid it down faster. Your mortgage was almost certainly not compound interest, it was simple interest; I'm not even sure if compound interest mortgages are legal in any state in the US.

I realize it's uncomfortable to have your world view challenged, and I applaud you for the financial fortitude to pay off your mortgage. Paying off a mortgage early definitely saves interest. It's the HELOC approach that makes no difference - and probably no sense.

 The numbers in the example were not my actual numbers. My numbers were a bit different but those numbers still work.

We will have to agree to disagree and I am ok with that. The heloc absolutely assisted. Just because you don't understand it doesn't make it make no sense. It works. The HELOC helped I stand by it because the proof was in the pudding.

here is the spreadsheet that I was sent. I had already done this before I knew what it was called.

Spreadsheet

I have to laugh here. I may not be able to explain to the members here at BP how this works but I did this almost 17 years ago and eliminated my mortgage in 6 years 9 month, while not pay any more out of my pocket than I was before I started doing it. So for me there is no one here who can convince me it doesn't work. Could I have taken what I would have Been saving and done it? .... absolutely I could have. Doing it the way I did, I still had access to my money and didn't have to pay any more than I was paying before. compound interest = mortgage

You are saying that mortgages are not front end loaded. I would disagree with you about that. Looking at a amortization table it shows you that about 30% of your payment goes to the principle the first month. In month 240 65% of your payment goes to principle. This sounds front loaded to me. You are correct that you could take the extra 2k you have and put it on the principle. If you do that the money is gone. If you use the heloc to put the 10k on principle, you would still have access to the 2k left over at the end of the month.