re: Any Velocity Banking advocates on here?

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I’ve been learning about VB the past couple of months and I’m really excited to try it at the start of the new year.

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I’ve admittedly am just learning a bit about it myself since I’ve only just bought my first home so it was never relevant.

Now maybe I’m missing something, but from my understanding, assuming that there are no issues with the extra complexity, cash flow, cash reserves, and no unexpected financial setbacks (or extra costs/fees associated with the LOC), this method really only makes financial sense if the HELOC rate is no greater than 25% of the mortgage rate, and for practical purposes, obviously far less.

So if one has a 4% mortgage rate, then anything <= 5% HELOC rate CAN be used to pay off debt more quickly and a lower real rate.

That being said, HELOC loans are variable interest rate loans, typically based off of the prime rate, which is based on the Fed discount rate. And just in the last year, the prime rate has risen from 4.25% to 5.25% and it (like the fed rate) is expected to increase more through 2019.

Therefore, if rates rise by some percentage, then the HELOC rates will typically rise by the same (or very close to) amount. And it seems an increase is widely expected, and another 1% rise would not be unexpected whatsoever. In that case, whatever financial benefits it possesses today, would be less moving forward.

So unless the mortgage rate is high enough that there is enough of a buffer zone that rising HELOC interest rates can continue to rise and still make it financially worthwhile (or I am missing something), 2019 is not going to be the best time for this to work well, and far less useful than it would have been over the last couple of years.