Author Topic: Pay off your mortgage in 5 years-is it scam?  (Read 1108 times)

flowerofsun

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Pay off your mortgage in 5 years-is it scam?
« on: December 02, 2018, 06:11:21 PM »
Have you guys heard of those companies that tell you that you can pay off your mortgage in 5 years. Is it a scam?
I just dont understand how it works...
YOu open a credit line with them, then you pay all your groceries from that line and somehow you pay off your house in 5 years...
Can anybody explain it to me please? And is it legit or a scam?

Pizzabrewer

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #1 on: December 02, 2018, 06:28:01 PM »
Never heard of this. Do you have a link?

Telecaster

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #2 on: December 02, 2018, 07:06:35 PM »
It is stupid.  All it is is pre-paying your mortgage with other debt.   If you want to pre-pay your mortgage, you can simply pay extra on your mortgage.

flowerofsun

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #3 on: December 02, 2018, 10:39:53 PM »
Never heard of this. Do you have a link?
There are so many companies that do it...
Not sure if I am allowed to post a link here, but here it is:
https://www.google.com/search?q=pay+off+your+mortgage+in+5+years&oq=pay+off+your+mortgage+in+5+years&aqs=chrome..69i57j69i60j0l4.6477j0j7&sourceid=chrome&ie=UTF-8

If you cant see or open the link just type in google search: pay off your mortgage in 5 years

Lots of companies will pop up

flowerofsun

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #4 on: December 02, 2018, 10:40:36 PM »
It is stupid.  All it is is pre-paying your mortgage with other debt.   If you want to pre-pay your mortgage, you can simply pay extra on your mortgage.
But how does it work?
I just dont get it

waltworks

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #5 on: December 02, 2018, 10:52:11 PM »
It works by taking out another loan to pay off the mortgage loan. It's idiotic. At best, it's moving money around for no net gain. At worst, it's costing you a bunch of fees and maybe a higher rate as well.

If for some reason you have a relatively high interest mortgage (say, 6%+) you can easily just refinance the loan. No need for anything fancy or weird.

It's a scam in the sense that someone else is making money off you, and you're not benefitting. It's not as bad as 3-card monty or guessing which walnut shell the pea is under or wiring money to a Nigerian prince, but it's not good either.

-W

Telecaster

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #6 on: December 03, 2018, 02:40:48 AM »
It is stupid.  All it is is pre-paying your mortgage with other debt.   If you want to pre-pay your mortgage, you can simply pay extra on your mortgage.
But how does it work?
I just dont get it

By pre-paying your mortgage by using other debt. 

wbranch

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #7 on: December 03, 2018, 10:31:07 AM »
I just googled it since I had never heard of this before. I did not see any companies, just people selling books and blog posts. Replacing your mortgage with other debt and calling it paying off your mortgage is one of the silliest things I have heard.

If you want to payoff your mortgage in 5 years you have to pay more towards the principal. I googled early mortgage payoff calculator and found this website: https://www.vmf.com/home/early_payoff_calculator
Plug in your mortgage numbers and it tells you how much extra to pay per month. Couldn't be any easier. Takes 10 minutes less than if you put the numbers in a spreadsheet and calculated the 5 year payoff yourself.

Nate79

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #8 on: December 03, 2018, 07:53:51 PM »
Yes, it is a very old scam.

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August26th

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #9 on: December 04, 2018, 12:21:32 PM »
I am neither endorsing nor bashing this product, and I have zero personal interest in it, but this company addresses what you’re talking about:

http://www.cmgfi.com/consumer/refi-all-in-one

They also have a loan simulator on their website which I have not taken the time to look at.

redbirdfan

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #10 on: December 06, 2018, 07:33:23 PM »
If you are paying for a company to set anything up...that's a waste of money.  It works by 'forcing' you to put all disposable income towards your mortgage.  You could do the same thing yourself.  I set up a similar system on my own...but I go back and forth as to whether paying off a relatively low interest mortgage quickly is the best financial decision.  You can create a spreadsheet to run your own numbers.  You would need the following:

1. Enough equity in your home to take out a line of credit (local credit unions tend to have low intro rates ranging from 2-3% for 6-12 months). 
2. The home equity line of credit should be accessible enough for you to deposit your paychecks and all other income back into the HELOC.
3. Pay all your bills etc. through the HELOC.

You could do the same thing sending all of your disposable income to pay down your mortgage but you would not have as much liquidity.  If you are disciplined enough to keep the system going, you can pay down significant amounts of debt quickly.  The blog Money Life Wax (I am not affiliated with the blog) goes through the steps for someone paying down large sums of student loans.  It works, but it can risky.

katsiki

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #11 on: December 07, 2018, 06:10:00 AM »
If you are paying for a company to set anything up...that's a waste of money.  It works by 'forcing' you to put all disposable income towards your mortgage.  You could do the same thing yourself.  I set up a similar system on my own...but I go back and forth as to whether paying off a relatively low interest mortgage quickly is the best financial decision.  You can create a spreadsheet to run your own numbers.  You would need the following:

1. Enough equity in your home to take out a line of credit (local credit unions tend to have low intro rates ranging from 2-3% for 6-12 months). 
2. The home equity line of credit should be accessible enough for you to deposit your paychecks and all other income back into the HELOC.
3. Pay all your bills etc. through the HELOC.

You could do the same thing sending all of your disposable income to pay down your mortgage but you would not have as much liquidity.  If you are disciplined enough to keep the system going, you can pay down significant amounts of debt quickly.  The blog Money Life Wax (I am not affiliated with the blog) goes through the steps for someone paying down large sums of student loans.  It works, but it can risky.

With HELOC rates up, does this still even work?  (Beyond an intro period...)  Just curious.

redbirdfan

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #12 on: December 10, 2018, 07:10:52 PM »
Quote
With HELOC rates up, does this still even work?  (Beyond an intro period...)

Sort of.  Your primary mortgage interest rate is being charged on a lower balance while the (likely higher) HELOC interest rate is being charged on a lower balance.  The HELOC balance should gradually be reduced as you receive paychecks/income.  If the spread on the two interest rates isn't extreme it still pencils out.  Again, the real magic comes from the decision to put all discretionary income towards the mortgage.  The HELOC part just enables you to pay off large chunks of the mortgage at once.  I recast the mortgage when I deploy the HELOC to reduce the required minimum monthly payment. 

This method is worth it to me if you can significantly cut into the mortgage in 2 years or less (hence why I constantly recast the mortgage).  I don't trust interest rates or my working situation beyond the one year teaser rate and one year of float.     

katsiki

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Re: Pay off your mortgage in 5 years-is it scam?
« Reply #13 on: December 11, 2018, 07:36:05 AM »
Thanks @redbirdfan

I am planning to recast in a 1-2 years when the balance has gone down significantly.