Author Topic: Mortgage payoff acceleration using HELOC  (Read 19053 times)

GoSounders

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Mortgage payoff acceleration using HELOC
« on: December 22, 2015, 07:35:46 AM »
Hey gang - second post, first question.  I've listed to this Listen Money Matters podcast regarding using your HELOC to slash interest payments off of your mortgage - https://www.listenmoneymatters.com/how-to-actually-save-thousands-on-your-mortgage/

Have any of you tried this?  I've dug into it a bit, and there isn't much out there on the interwebs.  I can't seem to find any reason not to do it.  I'm in the process of selling my house and moving close to my work, so once I'm in the new place I'd like to start using this process.

For those who don't know, process is basically this:

1) Take out a HELOC on your house
2) Use the HELOC to make a lump sum payment to your mortgage
3a) Run your paychecks through your HELOC to 'make payments' on the HELOC - essentially using the surplus of your income to pay off the balance of the HELOC.  It works like a revolving checking account with simple interest.  During this time you are still making mortgage payments
3b) Here is the key - after all expenses and investments, you must have leftover income that goes towards paying down the HELOC. 
4) Over the course of a few months, pay down the HELOC to zero and start the process over again

You shave tens of thousands off of your mortgage by accelerating principle reduction and, for lack of a better term, cost avoidance on interest payments due to the amortization schedule.

The main argument against doing this is that you lose mortgage interest deduction and 'lock up' your equity in your house.  However, once you've paid your house off, you have a large liquid cash reserve in the HELOC to go buy other properties or stock or whatever other investments you want. 

Thoughts?  It would take discipline, but that's par for the course on this forum.  Thanks!

onlykelsey

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Re: Mortgage payoff acceleration using HELOC
« Reply #1 on: December 22, 2015, 07:44:25 AM »
I haven't done this, but I'm following out of curiosity.  I have a 50K purchase money HELOC (I put 15% down and 5% down via HELOC to get to 20% minimum required) which I stupidly repaid aggressively adn then tapped for my wedding, so I'm always interested in discussions regarding what's most efficient to pay off first for most folks.  My HELOC is 3.25 but floats, and my mortgage is 4.25 fixed.

Something someone alerted me to yesterday is that HELOC lines were widely frozen in 2008 and 2009, and that, presumably, the same thing could happen again.  So it may not be the best to become dependent on having that credit available, although it sounds like you're just looking to use your HELOC to save money, not out of necessity.

Neustache

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Re: Mortgage payoff acceleration using HELOC
« Reply #2 on: December 22, 2015, 07:45:00 AM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

Le Barbu

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Re: Mortgage payoff acceleration using HELOC
« Reply #3 on: December 22, 2015, 07:59:51 AM »
4 quarters make a dollar
or
8 quarters minus 4 make a dollar
or
2 quarters plus 2 quarters make a dollar
or
16 quarters divided by 4 quarters make a dollar
or
2 quarters multiplied 2 quarters make a dollar
and
there's infinite ways of manipulating quarters to make a dollar!

Do you believe it?

sonnys

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Re: Mortgage payoff acceleration using HELOC
« Reply #4 on: December 22, 2015, 08:15:32 AM »
Not sure if I can post outside links here but I looked into this a few years ago and instead decided to go with a 15 year fixed mortgage at 3.5%.  I originally heard about this concept through a friend who used this - http://www.truthinequity.com

My main issues with this idea are that the rate for the HELOC is floating and that lines did get frozen when times were rough.  Granted we have not seen any runaway inflation and hopefully won't, I just sleep better at night knowing that my rate is fixed and I can always make more payments in the months when I have some spare to throw around.  Having said that, I did just start looking into this again :) so please let me know if anyone has used this method and what their experience has been.

K-ice

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Re: Mortgage payoff acceleration using HELOC
« Reply #5 on: December 22, 2015, 08:25:37 AM »
I haven't read the podcast but we do have a HELOC on our home.

It only makes sense if the interest on the HELOC is less than the mortgage.

We used our HELOC once for a mtg prepayment but only so we could get a max lump sum in for the year then repaid it very fast in January.

We didn't actually do what you mention but having the HELOC did provide us with lots of potential "squishy" debt and a lot more confidence to throw lump payments at the mortgage and keep almost no emergency fund. Very MMM before I even found this site.

A few negative points to consider.

You will be on the hook for a larger payment. Mtg + HELOC every month.

Let's say your mtg is already $1000 per month. Even if you make a large lump sum the payment is the same. (It is nice to see a bigger portion go to the principle after a lump sum pmt.) You are also responsible for the HELOC payment which is generally just interest.

So in the case of an emergency, job loss etc be sure you can handle the extra payment. Don't bite off more than you can handle in a short time.

Second, HELOC rates can increase without warning. Your calcs may work today but if your HELOC goes up by 1% does it still work?

Again, Don't bite off more than you can handle in a short time.

Finally, be sure you don't violate any of your mortgage prepayment limits. Getting hit with a penalty for that might negate any interest savings.

But overall I think it's a cool idea and worth trying for a few months to be sure your diciplined enough to pay off the HELOC.




sonnys

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Re: Mortgage payoff acceleration using HELOC
« Reply #6 on: December 22, 2015, 08:31:04 AM »
Just to add, I think the website that I mentioned provides large loans to payoff your entire mortgage and then you just owe the HELOC.  I think they mentioned this is a popular method in Australia?  It's been a while so I forget now.  I was intrigued but decided to go against it because I personally didn't know anyone except this one person who I didn't know well doing it.  It's a different paradigm and I see some benefit of using my emergency funds which are only earning me 1% but it's still scary.

Neustache

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Re: Mortgage payoff acceleration using HELOC
« Reply #7 on: December 22, 2015, 08:32:08 AM »
I feel like I'd rather do something similar with a zero percent intro credit card.  I routinely get offers for 20 plus months of zero percent intro rates.  I could see putting all expenses/bills on the credit card, not paying it off, and using income to pay down the mortgage for a time, especially if I'm planning on a recast at some point to lower the payments.   Then of course paying off the credit card before getting charged any interest.

Super risky if something happens and you can't payoff the credit card, but as long as you keep it low each time (10K at a time) then it could be fine. 


Jack

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Re: Mortgage payoff acceleration using HELOC
« Reply #8 on: December 22, 2015, 08:45:38 AM »
Fundamentally, this is arbitrage between the interest rate of a mortgage vs. that of a HELOC (4.25% - 3.25% = 1%, in an example above). If I'm going to play arbitrage games, I'm going to to play them on the difference between the interest rate of a mortgage vs. the rate of return of the stock market (10% - 4.25% = 5.75%) instead! For that reason, I have a 30-year-fixed mortgage and no intention whatsoever of paying it off ahead of schedule.

onlykelsey

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Re: Mortgage payoff acceleration using HELOC
« Reply #9 on: December 22, 2015, 08:50:43 AM »
Fundamentally, this is arbitrage between the interest rate of a mortgage vs. that of a HELOC (4.25% - 3.25% = 1%, in an example above). If I'm going to play arbitrage games, I'm going to to play them on the difference between the interest rate of a mortgage vs. the rate of return of the stock market (10% - 4.25% = 5.75%) instead! For that reason, I have a 30-year-fixed mortgage and no intention whatsoever of paying it off ahead of schedule.

A good response.  I struggle all the time with investing in the market vs. paying off HELOC vs. paying off debt.  I guess if your time frame is long enough, the market always makes sense. 

Neustache

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Re: Mortgage payoff acceleration using HELOC
« Reply #10 on: December 22, 2015, 08:52:57 AM »
I could see it being more helpful I you have something like PMI that you are trying to get rid of on your loan.  I kind of did that by leaving a high credit card balance on a zero percent card and only paying the minimum when I was trying to get rid of PMI. 

But hopefully current mustachians aren't doing something as silly as getting a loan with PMI on it. 

GoSounders

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Re: Mortgage payoff acceleration using HELOC
« Reply #11 on: December 22, 2015, 08:20:10 PM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

HELOC's do charge interest, however it is simple interest. If you are depositing your paychecks into the account every payday, you are making payments on the HELOC.  You are also paying your mortgage and any other expenses out of the HELOC. I know it took me a while to understand the concept. Basically it's like a checking account that is revolving. Here is an example:

HELOC is $10k

Take HELOC, pay $10k towards mortgage

Monthly expenses are $4k all up (mortgage included)

Monthly income it's $6k. All of it gets deposited into the HELOC monthly

All expenses are paid out of the HELOC. So every month, you are paying down the HELOC by $2k, taking 5 months to pay it back (actually less, due to simple interest)

Once balance is back to zero on the HELOC, take the $10k and dump it back into the mortgage

So, in 10 months you've knocked $20k off of your mortgage principle, all while paying your normal monthly mortgage. That $20k reduces the interest payments by tens of thousands of dollars, far less than you are paying in simple interest on the HELOC balance. Here is the kicker: if your investments are already accounted for in your expenses, you are not sacrificing future returns. You are avoiding paying loads of interest. As I said in my original post, once you you have paid off the mortgage, you have a large reserve of equity in your HELOC to go buy other investments.

I can't figure out why not to do this...

matchewed

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Re: Mortgage payoff acceleration using HELOC
« Reply #12 on: December 23, 2015, 06:52:29 AM »
I can't figure out why not to do this...

Because if you're doing this for optimum leverage it's less than optimum as Jack already pointed out. It has added risks in the event of a bank cancelling your HELOC for less return. The bank can't cancel my investment account and I have on average higher return.

I can't figure out why to do this...

K-ice

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Re: Mortgage payoff acceleration using HELOC
« Reply #13 on: December 23, 2015, 08:14:23 AM »
I think we all know investing has historically given better returns than paying off the mortgage.
I also think investing is better going forward.

But if the OP has decided to prioritize paying off the mortgage then they have a legitimate question.

It makes more sense to borrow a small amount ~$10K from a low interest HELOC, throw it at the mortgage and pay back the HELOC than to let ~$10K stock pile in a savings account earning very little. And then throw that chunk on the mortgage. Repeat every 6 months or so.

Depositing your paycheque immediately into the HELOC gets those green soldiers working for you immediately.


I think that's the OPs question. Has anyone actually put it into practice?




sirdoug007

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Re: Mortgage payoff acceleration using HELOC
« Reply #14 on: December 23, 2015, 10:14:10 AM »
After reading through the comments I am convinced these guys don't know what they are talking about.

They are making a false distinction between "amortized interest" and simple interest.  In fact, mortgages are simple interest just like HELOCs.  You pay 1/12 of the interest rate on the last month's principal amount each payment. E.g., 4% on $100k would pay $333.33 in interest. If you had a $100k HELOC at 4% you would also pay $333.33.

This is really just a way to prepay your mortgage by making larger monthly payments.

Today mortgage rates are lower than HELOC rates so this makes no sense.

sirdoug007

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Re: Mortgage payoff acceleration using HELOC
« Reply #15 on: December 23, 2015, 10:24:40 AM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

HELOC's do charge interest, however it is simple interest. If you are depositing your paychecks into the account every payday, you are making payments on the HELOC.  You are also paying your mortgage and any other expenses out of the HELOC. I know it took me a while to understand the concept. Basically it's like a checking account that is revolving. Here is an example:

HELOC is $10k

Take HELOC, pay $10k towards mortgage

Monthly expenses are $4k all up (mortgage included)

Monthly income it's $6k. All of it gets deposited into the HELOC monthly

All expenses are paid out of the HELOC. So every month, you are paying down the HELOC by $2k, taking 5 months to pay it back (actually less, due to simple interest)

Once balance is back to zero on the HELOC, take the $10k and dump it back into the mortgage

So, in 10 months you've knocked $20k off of your mortgage principle, all while paying your normal monthly mortgage. That $20k reduces the interest payments by tens of thousands of dollars, far less than you are paying in simple interest on the HELOC balance. Here is the kicker: if your investments are already accounted for in your expenses, you are not sacrificing future returns. You are avoiding paying loads of interest. As I said in my original post, once you you have paid off the mortgage, you have a large reserve of equity in your HELOC to go buy other investments.

I can't figure out why not to do this...

Explain to me how you pay off a $10k HELOC at 5% in less than 5 months by paying $2k/month?

It actually takes 6 months to pay it off completely and costs you $126.93 in interest.

Month   Principal   Interest   Payment
1   $10,000.00    $41.67   $2,000.00
2   $8,041.67      $33.51   $2,000.00
3   $6,075.17      $25.31   $2,000.00
4   $4,100.49      $17.09   $2,000.00
5   $2,117.57      $8.82   $2,000.00
6   $126.40         $0.53   $126.93

« Last Edit: December 23, 2015, 10:28:27 AM by sirdoug007 »

Paul der Krake

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Re: Mortgage payoff acceleration using HELOC
« Reply #16 on: December 23, 2015, 10:34:01 AM »
Fundamentally, this is arbitrage between the interest rate of a mortgage vs. that of a HELOC (4.25% - 3.25% = 1%, in an example above). If I'm going to play arbitrage games, I'm going to to play them on the difference between the interest rate of a mortgage vs. the rate of return of the stock market (10% - 4.25% = 5.75%) instead! For that reason, I have a 30-year-fixed mortgage and no intention whatsoever of paying it off ahead of schedule.
This is a great rule of thumb, but one should also consider the impact of having a payment if you're thinking of doing a Roth conversion ladder. Having a mortgage during the conversion period could potentially force you to have higher income to cover expenses past the point where the conversion isn't fully tax-free anymore. If mortgage free when it's time to start converting, that leaves a lot more buffer. Pretty nice if you intend on having a couple "expensive" years of traveling the world or whatnot immediately after FIREing.

Obviously this will not apply to people with rock-bottom expenses and a small mortgage, but it's something to keep in mind.

Le Barbu

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Re: Mortgage payoff acceleration using HELOC
« Reply #17 on: December 23, 2015, 01:13:03 PM »
I think we all know investing has historically given better returns than paying off the mortgage.
I also think investing is better going forward.

But if the OP has decided to prioritize paying off the mortgage then they have a legitimate question.

It makes more sense to borrow a small amount ~$10K from a low interest HELOC, throw it at the mortgage and pay back the HELOC than to let ~$10K stock pile in a savings account earning very little. And then throw that chunk on the mortgage. Repeat every 6 months or so.

Depositing your paycheque immediately into the HELOC gets those green soldiers working for you immediately.


I think that's the OPs question. Has anyone actually put it into practice?

What the OP does not consider is trying to shovel every dollar toward debt (HELOC or mortgage) you have no EF? Liquidity is as important and even if your EF have little or no return, it's a keystone of any financial plan. Debt level is important, investing, taxes and fees. If one decide to go out of balance, sooner or later there will be consequences. Even if his maths works (they does'nt) it would be trivial anyway.

zephyr911

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Re: Mortgage payoff acceleration using HELOC
« Reply #18 on: December 23, 2015, 01:38:51 PM »
They are making a false distinction between "amortized interest" and simple interest.  In fact, mortgages are simple interest just like HELOCs.  You pay 1/12 of the interest rate on the last month's principal amount each payment. E.g., 4% on $100k would pay $333.33 in interest. If you had a $100k HELOC at 4% you would also pay $333.33.

Actually, the key to the entire approach is that the interest calculation IS different. HELOCs generally use the average daily balance (open-ended) while the mortgage uses the initial amount for each billing cycle (closed-ended). So even a higher-rate HELOC can reduce total interest payments because the balance fluctuates as funds go in and out during the month.

EXAMPLE: pay $5K on the mortgage from a HELOC on the 1st, knock it down as paychecks come in during the month, tally an average balance of $4K... if the HELOC APR is <25% over the mortgage APR, you paid less interest.

This is the big selling point for the vendors (scammers, IMHO) charging big money for software to help you calculate what to pay and when, using this method. They claim they can steer the use of the HELOC so efficiently that even after paying their fees you'll pay off the mortgage faster than if you just send all your free cash directly to it.

I'm pretty sure it could be done with an Excel spreadsheet and a few minutes of effort every week, and I actually dig that kind of endeavor, but I've never been in a position to try it. Maybe soon though. :)

zephyr911

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Re: Mortgage payoff acceleration using HELOC
« Reply #19 on: December 24, 2015, 07:41:04 AM »
What the OP does not consider is trying to shovel every dollar toward debt (HELOC or mortgage) you have no EF?
Unless the HELOC is cut or frozen, it functions as your EF. If you have assets and a high SR, a cash EF represents only the illusion of safety.
If I held 6 months worth of spending ($12K) in an EF, I'd lose an average of $840 worth of investment returns annually. Let's assume a worst-case 9.9% interest rate on borrowing the money instead. I have access to better lines, but that is my worst one. If I get hit with an unexpected $12K bill, and I charge it on a credit card, I pay no interest for 30-60 days, leaving me (pessimistically) 4-5 months at 9.9% to pay it off. Assuming 4.5 months of straight-line amortization using the average daily balance calculation, I pay about $445 - less than 4% - on the amount charged before it's eliminated. This is assuming no assistance from DW, no spending reductions, and no extra side work. Realistically, we suck it up and kill it much faster.
Or, we pay anywhere from $0 to 3% to punt it onto another card at 0% for 15-21 months (common and easily attainable).
Since we're both at a 50% SR or higher, either one of us could be laid off tomorrow and still be cash-flow positive. In the absolute worst case - double unemployment - we still only need enough cash to cover 2-4 weeks while we liquidate investments. The costs would be higher but the odds of it happening are so low that we choose to keep our funds invested. In the long run it means we retire earlier, or we leave a bigger endowment to our favorite causes.
Quote
Liquidity is as important and even if your EF have little or no return, it's a keystone of any financial plan. Debt level is important, investing, taxes and fees. If one decide to go out of balance, sooner or later there will be consequences. Even if his maths works (they does'nt) it would be trivial anyway.
MMM disagrees.

sirdoug007

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Re: Mortgage payoff acceleration using HELOC
« Reply #20 on: December 24, 2015, 08:45:25 AM »
They are making a false distinction between "amortized interest" and simple interest.  In fact, mortgages are simple interest just like HELOCs.  You pay 1/12 of the interest rate on the last month's principal amount each payment. E.g., 4% on $100k would pay $333.33 in interest. If you had a $100k HELOC at 4% you would also pay $333.33.

Actually, the key to the entire approach is that the interest calculation IS different. HELOCs generally use the average daily balance (open-ended) while the mortgage uses the initial amount for each billing cycle (closed-ended). So even a higher-rate HELOC can reduce total interest payments because the balance fluctuates as funds go in and out during the month.

EXAMPLE: pay $5K on the mortgage from a HELOC on the 1st, knock it down as paychecks come in during the month, tally an average balance of $4K... if the HELOC APR is <25% over the mortgage APR, you paid less interest.

This is the big selling point for the vendors (scammers, IMHO) charging big money for software to help you calculate what to pay and when, using this method. They claim they can steer the use of the HELOC so efficiently that even after paying their fees you'll pay off the mortgage faster than if you just send all your free cash directly to it.

I'm pretty sure it could be done with an Excel spreadsheet and a few minutes of effort every week, and I actually dig that kind of endeavor, but I've never been in a position to try it. Maybe soon though. :)

What you are talking about here is a tiny effect when you are talking about a 30 year mortgage for over $100k. 

The difference between paying daily and at the end of the month on a 4% loan on $100k would be $5.63 less interest in the first month, which would be the largest savings. 

Adding less than $6/month to your mortgage payment isn't going to do much.

zephyr911

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Re: Mortgage payoff acceleration using HELOC
« Reply #21 on: December 24, 2015, 09:08:09 AM »
What you are talking about here is a tiny effect when you are talking about a 30 year mortgage for over $100k. 

The difference between paying daily and at the end of the month on a 4% loan on $100k would be $5.63 less interest in the first month, which would be the largest savings. 

Adding less than $6/month to your mortgage payment isn't going to do much.
You're shifting the goalposts.

I'm not trying to sell you on this approach, nor did I claim the difference is huge. I was responding to your statement that there is no difference in how interest is calculated. There is, in fact, a known difference in typical calculation methods, which can produce non-zero cost savings.

It's up to each of us to decide how much effort is justified by any given cost avoidance.

Le Barbu

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Re: Mortgage payoff acceleration using HELOC
« Reply #22 on: December 25, 2015, 06:47:53 AM »
What the OP does not consider is trying to shovel every dollar toward debt (HELOC or mortgage) you have no EF?
Unless the HELOC is cut or frozen, it functions as your EF. If you have assets and a high SR, a cash EF represents only the illusion of safety.
If I held 6 months worth of spending ($12K) in an EF, I'd lose an average of $840 worth of investment returns annually. Let's assume a worst-case 9.9% interest rate on borrowing the money instead. I have access to better lines, but that is my worst one. If I get hit with an unexpected $12K bill, and I charge it on a credit card, I pay no interest for 30-60 days, leaving me (pessimistically) 4-5 months at 9.9% to pay it off. Assuming 4.5 months of straight-line amortization using the average daily balance calculation, I pay about $445 - less than 4% - on the amount charged before it's eliminated. This is assuming no assistance from DW, no spending reductions, and no extra side work. Realistically, we suck it up and kill it much farter
Or, we pay anywhere from $0 to 3% to punt it onto another card at 0% for 15-21 months (common and easily attainable).
Since we're both at a 50% SR or higher, either one of us could be laid off tomorrow and still be cash-flow positive. In the absolute worst case - double unemployment - we still only need enough cash to cover 2-4 weeks while we liquidate investments. The costs would be higher but the odds of it happening are so low that we choose to keep our funds invested. In the long run it means we retire earlier, or we leave a bigger endowment to our favorite causes.
Quote
Liquidity is as important and even if your EF have little or no return, it's a keystone of any financial plan. Debt level is important, investing, taxes and fees. If one decide to go out of balance, sooner or later there will be consequences. Even if his maths works (they does'nt) it would be trivial anyway.
MMM disagrees.
I agree with you in many ways about EF. First, 30k$ or 6 months of expenses may be to much. EF are indeed overrated in the mainstream medias. I also think you got to know the Big Picture of an individual to give good advices. I understand your opportunity cost calculations but lets try an example. If OP got a 10k$ windfall for Christmas, he would better of paying his debt or invest 9k$ and keep 1k$ as an EF or invest 10k$? You could answer the latest but I may choose the second. You know, both are good and the big difference is between option 1 and the two other one.

I see a lot of people missing hugues opportunity every day because they are tight on money. My EF is 10k$ on average and represent 2-3 months of expenses for our family. This buffer allows us to do a lot of transactions with no need to use HELOC or any other form of credit. The account may swing from 5k$ to 15k$ through the year. This buffer also represent just a bit more than 1% of our NW. This is why I dont think its opportunity cost outweigth the benefit.
« Last Edit: December 25, 2015, 06:51:18 AM by Le Barbu »

mdharmandm

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Re: Mortgage payoff acceleration using HELOC
« Reply #23 on: December 28, 2015, 01:48:56 AM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

HELOC's do charge interest, however it is simple interest. If you are depositing your paychecks into the account every payday, you are making payments on the HELOC.  You are also paying your mortgage and any other expenses out of the HELOC. I know it took me a while to understand the concept. Basically it's like a checking account that is revolving. Here is an example:

HELOC is $10k

Take HELOC, pay $10k towards mortgage

Monthly expenses are $4k all up (mortgage included)

Monthly income it's $6k. All of it gets deposited into the HELOC monthly

All expenses are paid out of the HELOC. So every month, you are paying down the HELOC by $2k, taking 5 months to pay it back (actually less, due to simple interest)

Once balance is back to zero on the HELOC, take the $10k and dump it back into the mortgage

So, in 10 months you've knocked $20k off of your mortgage principle, all while paying your normal monthly mortgage. That $20k reduces the interest payments by tens of thousands of dollars, far less than you are paying in simple interest on the HELOC balance. Here is the kicker: if your investments are already accounted for in your expenses, you are not sacrificing future returns. You are avoiding paying loads of interest. As I said in my original post, once you you have paid off the mortgage, you have a large reserve of equity in your HELOC to go buy other investments.

I can't figure out why not to do this...

Explain to me how you pay off a $10k HELOC at 5% in less than 5 months by paying $2k/month?

It actually takes 6 months to pay it off completely and costs you $126.93 in interest.

Month   Principal   Interest   Payment
1   $10,000.00    $41.67   $2,000.00
2   $8,041.67      $33.51   $2,000.00
3   $6,075.17      $25.31   $2,000.00
4   $4,100.49      $17.09   $2,000.00
5   $2,117.57      $8.82   $2,000.00
6   $126.40         $0.53   $126.93

Sirdoug,

I think the part you are missing is the fact that they are routing their normal income through the HELOC. Given the same example and your income comes in on the 1st and your expenses are paid equally on the 1st and the 15th.  Here is what I get:
Time(months)    Principle($)  Interest($)
0                        6000           12.33
.5                       8000           16.44
1                        4000           8.22
1.5                     6000           12.33
2                        2000           4.11
2.5                     4000           8.22
3                        0                 0
3.5                     2000           4.11

I assumed each month had 30 days for simplicity and you took out the HELOC at time 0.

Your balance at 4 would be a negative number (+ cash in the account). I'm not sure if HELOCs allow this but you could then start the process all over again. I get the total interest paid as $65.75 (simple interest I=PxRxT) and as you can see it was paid off in less time.

Also, if the mortgage interest calculator I used hasn't lied to me you save yourself $5,177.75 interest (for a 30 yr loan at 3%).

Please let me know if I screwed up my math/reasoning somewhere. I listened to the episode on LMM and maybe I drank a little too much of the cool-aid.



Frs1661

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Re: Mortgage payoff acceleration using HELOC
« Reply #24 on: December 28, 2015, 03:42:12 AM »
Seems like a big hassle to save $5177.75 over 30 years (unless I've misunderstood). Why not just invest $901.50 in the market today, wait 30 years (hope for at least a 6% CAGR) and call it good?

Or $5.15/ month for 30 years at 6% if you prefer :-D

If this 'mortgage acceleration' takes an hour every 3 months for 30 years, you made less than $15 per hour.

Sent from my YOGA Tablet 2-1050F using Tapatalk
« Last Edit: December 28, 2015, 03:47:11 AM by Frs1661 »

Playing with Fire UK

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Re: Mortgage payoff acceleration using HELOC
« Reply #25 on: December 28, 2015, 05:24:21 AM »
My Rule: Any webpage or blog with 'actually' in the title is bullshit.

There is no magic bullet, if you can pay off high interest debt with lower interest debt you will win, if you can make more after tax in investments than low interest debt you will win. If you have a bank/checking account paying no interest while holding debt on which you pay interest you will lose small. If you make an overly complicated plan and it goes wrong you will lose big.

SunshineGirl

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Re: Mortgage payoff acceleration using HELOC
« Reply #26 on: December 28, 2015, 09:32:38 AM »
This worked for us 15 years ago, unsure if anything has changed, but this enabled us to save a TON of interest on our mortgage. It's simple.

You ask your mortgage company to send you your loan amortization schedule. (I suppose you can get this online these days, but the key is it must be the official one from the bank and should have payment numbers on it.)

Every month, you physically mail in your mortgage payment. In addition, (this is the key) you prepay the principal payment on the last mortgage payment on your amortization schedule and include instructions: "this is for the principal on payment #302. Please cancel the interest due on this payment." You HAVE to pay the exact amount and specify which payment number it is for.

Once you start doing it and are sure you're doing it correctly, then you can send in many pre-payments at once (all on different checks with separate instructions - "use check #43 to pay mortgage payment #304") and cancel a ton of interest from the back end of your loan.


Playing with Fire UK

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Re: Mortgage payoff acceleration using HELOC
« Reply #27 on: December 28, 2015, 12:10:55 PM »
This worked for us 15 years ago, unsure if anything has changed, but this enabled us to save a TON of interest on our mortgage. It's simple.

Wow I'm lucky. My mortgage automatically worked like this with every extra payment I made no matter what the size was or whether the bank took the extra payment automatically. I can see it was worth it but this is vastly more complicated than it needs to be in the twenty-first century. It sounds like an offset mortgage account which we have in the UK, you link a savings and/or bank account and the credit in the bank accounts is offset to the mortgage debt.

Although, going back to the original post; yes you can save loads of interest by pre-paying your mortgage, but (unless I've missed something about the rules) this isn't some kind of magic, it's just that interest compounds, so by paying earlier you save more. I suppose by making all the payments from your HELOC you'll get a month's more interest on a payment that is scheduled for the day before payday compared to setting the account to zero as the next paycheque comes in or keeping a buffer, but the difference is making the extra payments.

zephyr911

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Re: Mortgage payoff acceleration using HELOC
« Reply #28 on: December 28, 2015, 01:15:04 PM »
This worked for us 15 years ago...
You lost me at mailing checks. In 2015, I log in and click "extra principal payment". Lower balance -> less monthly interest -> more principal paid -> faster amortization. Snowball of doom.

We put a few grand extra into our mortgage in the first quarter we had it, and we'll be done years early even if we just make minimum payments hereafter.

Jeremy E.

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Re: Mortgage payoff acceleration using HELOC
« Reply #29 on: December 28, 2015, 01:39:05 PM »
I have a few other ideas,
1. Take out a HELOC and put all of the money in VTSAX, make minimum payments on HELOC and mortgage, when it makes sense, take money out of HELOC again and invest it into VTSAX
2. Take out a HELOC to use for an emergency fund and invest your emergency fund into VTSAX

I think number 1 is a little risky, and like number 2 a lot. I also think both of these are better options than what you suggest.

sirdoug007

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Re: Mortgage payoff acceleration using HELOC
« Reply #30 on: December 28, 2015, 07:48:04 PM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

HELOC's do charge interest, however it is simple interest. If you are depositing your paychecks into the account every payday, you are making payments on the HELOC.  You are also paying your mortgage and any other expenses out of the HELOC. I know it took me a while to understand the concept. Basically it's like a checking account that is revolving. Here is an example:

HELOC is $10k

Take HELOC, pay $10k towards mortgage

Monthly expenses are $4k all up (mortgage included)

Monthly income it's $6k. All of it gets deposited into the HELOC monthly

All expenses are paid out of the HELOC. So every month, you are paying down the HELOC by $2k, taking 5 months to pay it back (actually less, due to simple interest)

Once balance is back to zero on the HELOC, take the $10k and dump it back into the mortgage

So, in 10 months you've knocked $20k off of your mortgage principle, all while paying your normal monthly mortgage. That $20k reduces the interest payments by tens of thousands of dollars, far less than you are paying in simple interest on the HELOC balance. Here is the kicker: if your investments are already accounted for in your expenses, you are not sacrificing future returns. You are avoiding paying loads of interest. As I said in my original post, once you you have paid off the mortgage, you have a large reserve of equity in your HELOC to go buy other investments.

I can't figure out why not to do this...

Explain to me how you pay off a $10k HELOC at 5% in less than 5 months by paying $2k/month?

It actually takes 6 months to pay it off completely and costs you $126.93 in interest.

Month   Principal   Interest   Payment
1   $10,000.00    $41.67   $2,000.00
2   $8,041.67      $33.51   $2,000.00
3   $6,075.17      $25.31   $2,000.00
4   $4,100.49      $17.09   $2,000.00
5   $2,117.57      $8.82   $2,000.00
6   $126.40         $0.53   $126.93

Sirdoug,

I think the part you are missing is the fact that they are routing their normal income through the HELOC. Given the same example and your income comes in on the 1st and your expenses are paid equally on the 1st and the 15th.  Here is what I get:
Time(months)    Principle($)  Interest($)
0                        6000           12.33
.5                       8000           16.44
1                        4000           8.22
1.5                     6000           12.33
2                        2000           4.11
2.5                     4000           8.22
3                        0                 0
3.5                     2000           4.11

I assumed each month had 30 days for simplicity and you took out the HELOC at time 0.

Your balance at 4 would be a negative number (+ cash in the account). I'm not sure if HELOCs allow this but you could then start the process all over again. I get the total interest paid as $65.75 (simple interest I=PxRxT) and as you can see it was paid off in less time.

Also, if the mortgage interest calculator I used hasn't lied to me you save yourself $5,177.75 interest (for a 30 yr loan at 3%).

Please let me know if I screwed up my math/reasoning somewhere. I listened to the episode on LMM and maybe I drank a little too much of the cool-aid.

Your math is off because at 3.5 months you have payed the HELOC down to zero but still have $2000 in expenses that have to be paid.  So your HELOC immediately goes back to $2000.  You actually get to $0 at 5 months.

Month   Principal   Interest           Income
0           10000       0                   4000
0.5         6000       12.5               -2000
1            8000       16.67             4000
1.5         4000       8.33              -2000
2            6000       12.5               4000
2.5         2000       4.17              -2000
3            4000       8.33              4000
3.5          0000         0                 -2000
4            2000       4.17               4000
4.5        -2000       0                    -2000
5            0000       0                   4000


If you think about it, it has to take 5 months to pay $10,000 to zero paying $2k/month.  There is just no way around that math. 

mdharmandm

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Re: Mortgage payoff acceleration using HELOC
« Reply #31 on: December 29, 2015, 12:17:24 AM »
I'm trying to wrap my head around this, as I've never had a HELOC.

Don't HELOC's charge interest? And isn't it usually higher than your normal interest rate on a 30 year fixed mortgage?

How are the HELOC's payments figured out?  It is a small percentage of the balance like a credit card might be? 

HELOC's do charge interest, however it is simple interest. If you are depositing your paychecks into the account every payday, you are making payments on the HELOC.  You are also paying your mortgage and any other expenses out of the HELOC. I know it took me a while to understand the concept. Basically it's like a checking account that is revolving. Here is an example:

HELOC is $10k

Take HELOC, pay $10k towards mortgage

Monthly expenses are $4k all up (mortgage included)

Monthly income it's $6k. All of it gets deposited into the HELOC monthly

All expenses are paid out of the HELOC. So every month, you are paying down the HELOC by $2k, taking 5 months to pay it back (actually less, due to simple interest)

Once balance is back to zero on the HELOC, take the $10k and dump it back into the mortgage

So, in 10 months you've knocked $20k off of your mortgage principle, all while paying your normal monthly mortgage. That $20k reduces the interest payments by tens of thousands of dollars, far less than you are paying in simple interest on the HELOC balance. Here is the kicker: if your investments are already accounted for in your expenses, you are not sacrificing future returns. You are avoiding paying loads of interest. As I said in my original post, once you you have paid off the mortgage, you have a large reserve of equity in your HELOC to go buy other investments.

I can't figure out why not to do this...

Explain to me how you pay off a $10k HELOC at 5% in less than 5 months by paying $2k/month?

It actually takes 6 months to pay it off completely and costs you $126.93 in interest.

Month   Principal   Interest   Payment
1   $10,000.00    $41.67   $2,000.00
2   $8,041.67      $33.51   $2,000.00
3   $6,075.17      $25.31   $2,000.00
4   $4,100.49      $17.09   $2,000.00
5   $2,117.57      $8.82   $2,000.00
6   $126.40         $0.53   $126.93

Sirdoug,

I think the part you are missing is the fact that they are routing their normal income through the HELOC. Given the same example and your income comes in on the 1st and your expenses are paid equally on the 1st and the 15th.  Here is what I get:
Time(months)    Principle($)  Interest($)
0                        6000           12.33
.5                       8000           16.44
1                        4000           8.22
1.5                     6000           12.33
2                        2000           4.11
2.5                     4000           8.22
3                        0                 0
3.5                     2000           4.11

I assumed each month had 30 days for simplicity and you took out the HELOC at time 0.

Your balance at 4 would be a negative number (+ cash in the account). I'm not sure if HELOCs allow this but you could then start the process all over again. I get the total interest paid as $65.75 (simple interest I=PxRxT) and as you can see it was paid off in less time.

Also, if the mortgage interest calculator I used hasn't lied to me you save yourself $5,177.75 interest (for a 30 yr loan at 3%).

Please let me know if I screwed up my math/reasoning somewhere. I listened to the episode on LMM and maybe I drank a little too much of the cool-aid.

Your math is off because at 3.5 months you have payed the HELOC down to zero but still have $2000 in expenses that have to be paid.  So your HELOC immediately goes back to $2000.  You actually get to $0 at 5 months.

Month   Principal   Interest           Income
0           10000       0                   4000
0.5         6000       12.5               -2000
1            8000       16.67             4000
1.5         4000       8.33              -2000
2            6000       12.5               4000
2.5         2000       4.17              -2000
3            4000       8.33              4000
3.5          0000         0                 -2000
4            2000       4.17               4000
4.5        -2000       0                    -2000
5            0000       0                   4000


If you think about it, it has to take 5 months to pay $10,000 to zero paying $2k/month.  There is just no way around that math.

So it may not be completely paid off based on future projected expenses (even if they are real expenses), but for those 15 days periods (3.5-4 and 4.5-5) you still are not carrying a balance on the account and not accruing interest. I'm failing to see how this is a bad plan to pay off your mortgage quicker and with less interest expended while maintaining liquidity. Perhaps it is not the most efficient when you compare 30 yr gains in the stock market vs interest saved over the same 30 yr period (although if $65.75 nets you $5177.75 over a 30 yr period, I don't think you are going to beat that (stock market at 7% would only net you approx $500 at 30 yrs)). Also, you could build up your equity in the house you own, cancel current HELOC and get a bigger one to use as a down payment for a rental property and essentially do the same on that house, running both the rental returns and normal income. It looks like you could speed up the whole process, no? As long as you are doing it intelligently and not over leveraging yourself, is this a bad idea?

onlykelsey

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Re: Mortgage payoff acceleration using HELOC
« Reply #32 on: December 29, 2015, 07:29:08 AM »
I have a few other ideas,
1. Take out a HELOC and put all of the money in VTSAX, make minimum payments on HELOC and mortgage, when it makes sense, take money out of HELOC again and invest it into VTSAX
2. Take out a HELOC to use for an emergency fund and invest your emergency fund into VTSAX

I think number 1 is a little risky, and like number 2 a lot. I also think both of these are better options than what you suggest.

I was trying to sell myself on 2 (and invest my cash emergency money) but someone pointed out to me that HELOCs can be shut down by the bank in their discretion, and they often are in downturns a la 2008/9.  I suppose the same is true of every form of credit line, but spending the money on a 20% credit card doesn't have the same attraction.

K-ice

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Re: Mortgage payoff acceleration using HELOC
« Reply #33 on: January 09, 2016, 12:39:44 PM »
OK I finally got around to doing some of the math myself.

I also listened to the podcast.

I've done the Excel and it does help.

But: "you have to spend less than you earn."

Also you should consider 3 scenarios. (Yes I am ignoring the investing scenario.)
1) 30 mtg do nothing
2) 30 mtg make an extra 10K pmt at the END of the year
3) 30 mtg + Heloc, make extra 10K pmt at the START of the year

Assume 100K borrowed, 3.5% interest, pmt 447$

HELOC also 3.5% interest, paycheque $4000, expenses $3000 (including the mtg pmt)

Assume paycheque on 1st of month and expenses due on 15th. (results would be slightly better if you can push your bill pmts to the 30th)

So here are my results
1) total interest paid $61000, paid off in 30 years
2) total interest paid $14800, paid off in 8 years
3) total interest paid $12900, paid off in 7y 1 month

The $12900 includes about $12200 for the mortgage PLUS $700 from the HELOC Every year the HELOC does this crazy sign wave where it starts at -10000, jumps up to -6000, crashes down to -9000 and repeats every month slowly climbing and there is a bit of interest too.

The HELOC balance actually becomes positive at month 7, but then falls below zero again. +ve -ve for months 7,8,9 and is finally totally positive at month 10. (This might be the basis for some arguing above.)

So, in summary, if you plan to pay an extra 10K every year there is only about a $2000 and 1 year advantage. With the HELOC method vs stash and pay at the end.

Is this worth it? If you can't figure it out, don't do anything financially you don't understand.
 
I think the extra 10K HELOC is hair on fire debt that would keep me focused on paying it off and therefore paying my mtg of faster. The HELOC generally has much better advantages to a checking account. (Again do your own research and understand the difference.)  Close your checking account, especially if it charges you fees every month and makes you keep a minimum balance and charges you for cheques. Also if you ever use overdraft the HELOC is much better, usually pennies interest vs ~$50 in fees and interest.

About 10years ago an account friend said he  uses a HELOC instead of a checking account but keeps a positive balance.

I never really took the time to figure it all out. 

The only negative I see is if you may be tempted use the HELOC to spend above your means for travel, cars etc.  I've had a HELOC for 5 years and never abused it but never really put it to work for me either.

I plan to use this method when we refinance our rental property. I'll keep you posted. 

GoSounders

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Re: Mortgage payoff acceleration using HELOC
« Reply #34 on: February 18, 2016, 10:37:26 PM »
OK I finally got around to doing some of the math myself.

I also listened to the podcast.

I've done the Excel and it does help.

But: "you have to spend less than you earn."

Also you should consider 3 scenarios. (Yes I am ignoring the investing scenario.)
1) 30 mtg do nothing
2) 30 mtg make an extra 10K pmt at the END of the year
3) 30 mtg + Heloc, make extra 10K pmt at the START of the year

Assume 100K borrowed, 3.5% interest, pmt 447$

HELOC also 3.5% interest, paycheque $4000, expenses $3000 (including the mtg pmt)

Assume paycheque on 1st of month and expenses due on 15th. (results would be slightly better if you can push your bill pmts to the 30th)

So here are my results
1) total interest paid $61000, paid off in 30 years
2) total interest paid $14800, paid off in 8 years
3) total interest paid $12900, paid off in 7y 1 month

The $12900 includes about $12200 for the mortgage PLUS $700 from the HELOC Every year the HELOC does this crazy sign wave where it starts at -10000, jumps up to -6000, crashes down to -9000 and repeats every month slowly climbing and there is a bit of interest too.

The HELOC balance actually becomes positive at month 7, but then falls below zero again. +ve -ve for months 7,8,9 and is finally totally positive at month 10. (This might be the basis for some arguing above.)

So, in summary, if you plan to pay an extra 10K every year there is only about a $2000 and 1 year advantage. With the HELOC method vs stash and pay at the end.

Is this worth it? If you can't figure it out, don't do anything financially you don't understand.
 
I think the extra 10K HELOC is hair on fire debt that would keep me focused on paying it off and therefore paying my mtg of faster. The HELOC generally has much better advantages to a checking account. (Again do your own research and understand the difference.)  Close your checking account, especially if it charges you fees every month and makes you keep a minimum balance and charges you for cheques. Also if you ever use overdraft the HELOC is much better, usually pennies interest vs ~$50 in fees and interest.

About 10years ago an account friend said he  uses a HELOC instead of a checking account but keeps a positive balance.

I never really took the time to figure it all out. 

The only negative I see is if you may be tempted use the HELOC to spend above your means for travel, cars etc.  I've had a HELOC for 5 years and never abused it but never really put it to work for me either.

I plan to use this method when we refinance our rental property. I'll keep you posted.

Thanks for this response. I agree that a one time a year strategy is optimal. 

freedomfightergal

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Re: Mortgage payoff acceleration using HELOC
« Reply #35 on: January 01, 2019, 07:40:32 PM »




The way I understand the HELOC method is how the Australian "Off-set account" works.  The bank lets you have cash sitting in the off-set account but it's balance is deducted daily from the Mortgage principal to calculate interest.  So you can create a similar effect with a HELOC.  I'm going to set this up soon.  I plan to take out a HELOC that is double + my monthly income and only draw what my monthly income is, (Banker suggested this so it looks like low use of credit).  Then I'll send an extra Principal payment to my Mortgage equal to my paycheck, and when my paycheck comes in it will bring the balance of the HELOC to $0 - ie no interest on that amount and it reduces as I spend the pay and back to zero again every month.

EG

HELOC OF $30K
MONTHLY PAY OF $6K
Mortgage amount due $500 per month.  Interest rate of 4.75%, $100k amortized over 30 years
Third Federal has low HELOC rates of 4.49% (prime -1.01%)

send mortgage extra $6k from HELOC,
Day 1 - Receive $6k paycheck, so HELOC balance back to zero ($6k of mortgage interest calculated saved on mortgage)
Day 2 - Buy $200 groceries, save $5.8k of interest
Day 3 - pay mortgage $500, save $5.3k of interest
Also, will cover Expenses using interest free credit card and pay in full at end of month
etc, keep using pay until back to -$6k, then boom new pay lands in account and takes interest back to zero on that amount.
If Heloc rates get too high, simply pay it off and stop using the method.

In this way I'm using it like an Australian off-set account and getting a 4.75% return.

Ideally you'll have some surplus to build up and pay another chunk and need discipline to avoid using the HELOC for more debt.

That's my understanding, if I have it wrong let me know. Would also be great to hear of others that have successfully used it



 

SeattleCPA

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Re: Mortgage payoff acceleration using HELOC
« Reply #36 on: January 02, 2019, 06:42:20 PM »
My Rule: Any webpage or blog with 'actually' in the title is bullshit.

There is no magic bullet, if you can pay off high interest debt with lower interest debt you will win, if you can make more after tax in investments than low interest debt you will win. If you have a bank/checking account paying no interest while holding debt on which you pay interest you will lose small. If you make an overly complicated plan and it goes wrong you will lose big.

+1 to above.

Also anything that's very complicated is probably a bad idea... (I may be a little jaundiced here... a regular part of my job is trying to unscramble or decipher some financial gambit a salesman or financial con artist is attempting to "sell" to a client.)

Neo

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Re: Mortgage payoff acceleration using HELOC
« Reply #37 on: January 04, 2019, 10:53:57 PM »
Dont HELOCs have origination and appraisal fees associated with them. Those could also erode any financial benefit of your strategy.

Playing with Fire UK

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Re: Mortgage payoff acceleration using HELOC
« Reply #38 on: January 05, 2019, 05:01:34 AM »
My Rule: Any webpage or blog with 'actually' in the title is bullshit.

There is no magic bullet, if you can pay off high interest debt with lower interest debt you will win, if you can make more after tax in investments than low interest debt you will win. If you have a bank/checking account paying no interest while holding debt on which you pay interest you will lose small. If you make an overly complicated plan and it goes wrong you will lose big.

+1 to above.

Also anything that's very complicated is probably a bad idea... (I may be a little jaundiced here... a regular part of my job is trying to unscramble or decipher some financial gambit a salesman or financial con artist is attempting to "sell" to a client.)

Yes, if it's wildly complicated there are too many places to intentionally disguise or accidentally miss the thing that makes a scheme a terrible idea.

SnackDog

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Re: Mortgage payoff acceleration using HELOC
« Reply #39 on: January 05, 2019, 07:02:25 AM »
The HELOC only makes sense to me if you have significant equity.  In that case, just keep paying your normal mortgage as per the schedule.  Get a HELOC for as much as you can borrow and invest it all.  Pay the monthly HELOC note however you like.  If your investments do better long term than the interest rates, you have won.  If HELOC rates rise over 4-5%, pay off the HELOC by liquidating investments.

K-ice

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Re: Mortgage payoff acceleration using HELOC
« Reply #40 on: January 09, 2019, 04:35:02 AM »
Interesting, it has been exactly 3 years since I posted on this topic.

Shortly after our mortgage came up for renewal on a rental property. (Something we need to do about every 5 years in Canada.)

Anyway, we were not happy with the renewal terms at bank A, & we already had an unused HELOC on our primary residence with bank B. So we just wrote a large cheque from the HELOC to pay off the mortgage. (Bank A was a little shocked we could walk away from them.)

We planned on getting a mortgage again on the rental but never bothered. We canceled our rental bank account ($2500 float eliminated) and started getting all the rent cheques put straight into the HELOC. All rental Bills were directly paid from the HELOC.

The HELOC also gave us the flexibility to make as many lump sum payments as we want.

Sure, investing might have been better, but I’m with a partner who prefers mortgage payoff.
(Paying off the mortgage is much more financially prudent than divorce;) )

So 3 years later this has been great for us. I would never pay anyone to set this up for us. That sounds like a scam. But your bank should be able to help you.



Car Jack

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Re: Mortgage payoff acceleration using HELOC
« Reply #41 on: January 09, 2019, 12:02:03 PM »
Dont HELOCs have origination and appraisal fees associated with them. Those could also erode any financial benefit of your strategy.

Mine had no fees whatsoever.  It's my backup emergency fund to my savings bonds and actual emergency fund......aka, overkill.  It does come in handy when I have to back up a large check all of a sudden (legal fees last year...it happened).  Transfer from HELOC to checking with a couple clicks.  Covered.  Then move money from Ally or Redneck.

ilsy

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Re: Mortgage payoff acceleration using HELOC
« Reply #42 on: January 10, 2019, 09:07:49 PM »
Dont HELOCs have origination and appraisal fees associated with them. Those could also erode any financial benefit of your strategy.

Mine had no fees whatsoever.
Are you in US?