"How To Pay Off Your Home Loan 10 Years Sooner Without Spending
One Penny In Extra Payments !"
How a Simple Plan with a Common, Yet Overlooked Home Loan Can
Save You Hundreds of Thousands of Dollars Without Changing Your
Budget By a Single Penny!
Hello, Top Guns!
You will laugh at the simplicity of this plan, and, at the same
time, think what a great idea it is. It was a real
light-bulb-going-off-in-my-head type of feeling for me.
So here it is:
"Replace Your Checking Account with A Home Equity Line Of
Credit and You Will Save (Or Make) A Ton of Money."
That is all you really need to know, but let me give you the
how and why of it so you can understand.
A Home Equity Line Of Credit (HELOC) has 2 unique features that
no other home loan offers that make this possible. They are:
1. It is a Revolving Account--
Just like a checking account or a credit card. That means you
can deposit money into it and take it out when you need it. That
is why you get a debit card and checks when you open a HELOC.
2. Interest Compounds Daily Instead Of Monthly--
While this may sound like a negative, it is really a benefit. I
will explain below.
Say you just got paid at work. You go to the bank as you
normally would to deposit your check, but you deposit it into
your HELOC instead of your checking account. You go to the store
to buy some groceries. You pay them with you debit card or
checks, but you use the ones tied to your HELOC instead of your
checking account.
It is exactly how you do it now, except it is sourced from your
HELOC, not your checking account.
I know what you are thinking; "Well great Nick, but how the
heck is it going to save me money?"
Do you remember how I said the interest compounds daily? Go
grab your bank statement from your checking account. Do you see
were it tells you what your starting and ending balance is? You
will also see something that says "Average Daily Balance." That
means with all of the deposits and withdrawals, this is the
average amount you had in the account. If you park this money
into you HELOC it will lower the balance of your loan, thus
lowering your payment. Because it compounds daily, it does not
matter if you are constantly making deposits and withdrawals,
you still benefit. Any amount you deposit into the HELOC above
your basic interest goes 100% to lowering the principal balance.
Let us work with some hard number so you can see it in action.
Say you have a $150,000 HELOC at 8%. This would make your full
payment $1,100, with $1,000 of that going toward interest.
Therefore, a whopping $100 goes toward principal. You also have
an average daily balance in your checking account is $10,000.
You park the $10,000 into your HELOC, making the balance
$140,000. That would lower the interest part of your payment to
$933, a savings of $67. Therefore, of your $1,100 payment, $167
goes toward principal instead of $100. For some of you that
might not sound like much, so let me put it in these terms:
You will save $140,040 in interest on this $150,000 loan!
You would have it paid off in 20 years instead of 30. That is
120 less payments times $1,167 per month. Imagine the drop in
your stress level because of the lack of money worries! The
funny part of it is the fact you can save actually more, A LOT
MORE! I did not even talk about the tax strategies involved, or
the way how this $140,040 savings can actually be a $509,000
gain! Does that sound interesting, if not almost unbelievable? I
would tell you right now, but it is getting late and I am tired.
You will have to call or email me for more info on this.......