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Message
Anyone here tried this credit line theory out?
Posted on 8/30/18 at 2:43 pm
Posted on 8/30/18 at 2:43 pm
I have watched a few videos saying to use a line of credit to pay off a home loan in 1/3 the time.
Without explaining all the details, can anyone eloborate on this theory? Have you tried this? Does it work?
Without explaining all the details, can anyone eloborate on this theory? Have you tried this? Does it work?
6
Posted on 8/30/18 at 3:00 pm to Hunter82378
I just read the very basics of the concept. In theory, it may work in an ideal world. We all know things aren't ideal and this would be super stressful even if you are able to pull it off.
I know I wouldn't try it.
I know I wouldn't try it.
Posted on 8/30/18 at 3:15 pm to rowbear1922
My thoughts exactly. Just wondering if I could get info from someone that has actually tried it. Thanks.
Posted on 8/30/18 at 3:25 pm to Hunter82378
quote:
I have watched a few videos saying to use a line of credit to pay off a home loan in 1/3 the time.
Seems like a risky strategy that offers only minimal benefits vs just paying additional principal earlier on
Posted on 8/30/18 at 3:26 pm to Hunter82378
quote:
My thoughts exactly. Just wondering if I could get info from someone that has actually tried it. Thanks.
Like the article I read stated, as long as it's smooth seas all may be fine but as soon as you get some kind of financial stress (car, home, illness, etc), this theory pretty much goes out the window.
Posted on 8/30/18 at 3:33 pm to Hunter82378
I would LOVE for someone to call the Dave Ramsey show and ask his thoughts about that strategy. He might burst into flames on the air!
You are basically using short term high leverage with the 0 percent interest from a credit card. To make it really work, you gotta have a pretty big difference between your income and your non-housing costs. And if you have that... why not just make extra principal payments directly?
You are basically using short term high leverage with the 0 percent interest from a credit card. To make it really work, you gotta have a pretty big difference between your income and your non-housing costs. And if you have that... why not just make extra principal payments directly?
Posted on 8/30/18 at 4:06 pm to LSUFanHouston
quote:
I would LOVE for someone to call the Dave Ramsey show
i read something about it on his site a while back. could probably find it if you google it.
Posted on 8/30/18 at 4:24 pm to lsujro
If your mortgage is below 5% this is incredibly stupid IMO. If you are talking 8-10%, and you have cheaper LOC's available then maybe. But its simply not worth the risk or your time if your mortgage is 3 and 4%.
ETA: Let's not act like this doesn't take effort either. I mean to constantly get loans and monitor them, pay them off, plus the risk? You could also get a side hustle for an extra 2-3 mortgage payments a year and pay it off in 2/3s the time.
ETA: Let's not act like this doesn't take effort either. I mean to constantly get loans and monitor them, pay them off, plus the risk? You could also get a side hustle for an extra 2-3 mortgage payments a year and pay it off in 2/3s the time.
This post was edited on 8/30/18 at 4:26 pm
Posted on 8/30/18 at 6:41 pm to Hunter82378
The first thing to consider though is that if your mortgage rate is low enough, paying it off early may not be that great a thing to do.
Posted on 8/31/18 at 9:33 am to LSUFanHouston
quote:
I would LOVE for someone to call the Dave Ramsey show and ask his thoughts about that strategy. He might burst into flames on the air! You are basically using short term high leverage with the 0 percent interest from a credit card. To make it really work, you gotta have a pretty big difference between your income and your non-housing costs. And if you have that... why not just make extra principal payments directly?
exactly i thought i was missing something..
i'd think a line a credit would have a higher interest rate than mortages..
(so attempting this method would cost you money...compared to simply making extra principal payments)
Posted on 8/31/18 at 10:59 am to Hunter82378
Biweekly payments and an additional payment a year to principle will knock a 1/3 off.
Posted on 8/31/18 at 11:25 am to mrgreenpants
quote:
i'd think a line a credit would have a higher interest rate than mortages..
they do. especially a unsecured LOC.
Posted on 8/31/18 at 12:19 pm to Hunter82378
I met a guy who had immigrated here from India in the early 80’s. He wanted to open a party city store but he had no credit.
So instead he opened a credit card to start buying supplies (since cc’s were being passed out like candy back then) and he would get another card to pay off the previous card.
Eventually he built enough credit to obtain a loan and pay off the cards. Lol
So instead he opened a credit card to start buying supplies (since cc’s were being passed out like candy back then) and he would get another card to pay off the previous card.
Eventually he built enough credit to obtain a loan and pay off the cards. Lol
This post was edited on 8/31/18 at 12:28 pm
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