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Using a HELOC to pay off mortgage sooner
Posted on 3/10/22 at 11:17 am
Posted on 3/10/22 at 11:17 am
I ran across a few videos about about using a HELOC as a strategy to pay off mortgage sooner. I understand the concept, as the daily interest and open ended aspect saves you a ton on interest, but wanted to see if anyone else has done it and would recommend it. Also, with rates going up, is it worth it?
I have a house that is worth about $550k and owe $160k on it. I pay roughly an extra $500 per month on my mortage payment and should have it paid off in ten years at my current rate. Interest is 2.5% on a 15 year.
I have a house that is worth about $550k and owe $160k on it. I pay roughly an extra $500 per month on my mortage payment and should have it paid off in ten years at my current rate. Interest is 2.5% on a 15 year.
11
Posted on 3/10/22 at 11:37 am to saints5021
quote:
ten years at my current rate. Interest is 2.5% on a 15 year.
Why pay this off early? The real cost to pay this back is shrinking each day at an accelerated rate. (You owe them the same amount of dollars, but those dollars are worth less and less). Stretch it out
Posted on 3/10/22 at 11:48 am to saints5021
your current rate is 2.5% and you think you can get a better rate on a HELOC and keep it lower for 10 years?
Posted on 3/10/22 at 12:03 pm to saints5021
A cost which people fail to consider when refinancing or putting a HELOC in place, [deleted for clarity], documents are filed with the clerk of court which shares the information with the tax assessor. This means if the house is worth more than the current assessment, it is likely that your property tax bill will increase because of refinancing.
This post was edited on 3/10/22 at 1:03 pm
Posted on 3/10/22 at 12:04 pm to saints5021
I have 2.8% and about another 28 years to go. It’s going to be paid off when we are dead. 
Posted on 3/10/22 at 12:05 pm to saints5021
It’s called velocity banking and I have read a good bit about it.. I don’t think there is much benefit to it. Especially when you are already paying extra on your mortgage.
However, I do leverage my HELOC to invest in the stock market. Not something I would have really ever thought about doing before I stumbled upon the concept of velocity banking.
However, I do leverage my HELOC to invest in the stock market. Not something I would have really ever thought about doing before I stumbled upon the concept of velocity banking.
Posted on 3/10/22 at 12:05 pm to saints5021
quote:
I pay roughly an extra $500 per month on my mortage payment and should have it paid off in ten years at my current rate. Interest is 2.5% on a 15 year.
It's your call, but why would you pay off early with a 2.5% rate? You will never get something that good again.
Posted on 3/10/22 at 12:12 pm to saints5021
The HELOC I took out last year for $35k (7 yrs @ 4.5% apr) cost me $500 for an appraisal.
You aren't getting a rate better than 2.5%.
You aren't getting a rate better than 2.5%.
Posted on 3/10/22 at 12:48 pm to Xanthus
This is incorrect in Louisiana. The only thing filed with the clerk of court is the heloc agreement. The appraisal is not filed nor is any value assigned to the property in the record filed.
This post was edited on 3/10/22 at 12:55 pm
Posted on 3/10/22 at 1:00 pm to lighter345
Didn't say the appraisals are filed. The documents are filed. Tax assessor is alerted of the new mortgage which triggers reassessment.
Posted on 3/10/22 at 1:03 pm to saints5021
Didn't somebody else pose this exact same question in here a month or two ago? If not, I've having a major case of deja vu.
Posted on 3/10/22 at 1:27 pm to jfw3535
Possibly, I just came across velocity banking and was just interested in learning more about it.
Posted on 3/10/22 at 1:44 pm to Xanthus
quote:
Didn't say the appraisals are filed. The documents are filed. Tax assessor is alerted of the new mortgage which triggers reassessment.
Im pretty sure that everyone gets "reassessed" every year.
Do you ever pay the same property tax year over year?
Posted on 3/10/22 at 1:47 pm to saints5021
The only benefit as i see it is if you have an extremely large amount of cash in checking/savings, then you can apply that to the HELOC (which allows you to effectively pay down the mortgage faster) while still having the heloc to manage monthly expenses like a checking account.
So it is a way to use dormant funds better. There are hundreds of ways to use dormant funds better. The HELOC isnt necessarily better.
So it is a way to use dormant funds better. There are hundreds of ways to use dormant funds better. The HELOC isnt necessarily better.
Posted on 3/10/22 at 3:27 pm to meansonny
I feel like I’ve watched every velocity banking video on YouTube and still don’t understand the concept…
I just pay extra monthly on my mortgage. Started with a 30 year in 2015, refi to 15 in October 21, hoping to pay it off by 2026
I just pay extra monthly on my mortgage. Started with a 30 year in 2015, refi to 15 in October 21, hoping to pay it off by 2026
This post was edited on 3/10/22 at 3:29 pm
Posted on 3/10/22 at 4:22 pm to dltigers3
Subtract $30k (money is savings/checking/money market) as an upfront principal payment and then make mortgage payments as normal. Also, you benefit from daily averages as your paycheck can be instantly factored in upon deposit.
All it does is better use dormant "cash" to apply on the first mortgage.
There are a million things you can do with cash. You can do velocity banking to an investment portfolio. If you hate your low interest mortgage, it may benefit you depending upon the amount of cash you carry
All it does is better use dormant "cash" to apply on the first mortgage.
There are a million things you can do with cash. You can do velocity banking to an investment portfolio. If you hate your low interest mortgage, it may benefit you depending upon the amount of cash you carry
Posted on 3/10/22 at 5:12 pm to Xanthus
My assessed value in EBR Parish changes every few years, not every year.
Posted on 3/10/22 at 5:32 pm to saints5021
I would pay that off in 15 years. In fact I went 30 years at interest rate low point in 2021.
Investing the difference from our previous financing rate ($8k per year) and effectively keeping same note (new monthly note + $700 / mo to invest)
Beating 2.5% was piece of cake in 2021.
Of course, 2022 not so much. But we are in it with long term focus.
Investing the difference from our previous financing rate ($8k per year) and effectively keeping same note (new monthly note + $700 / mo to invest)
Beating 2.5% was piece of cake in 2021.
Of course, 2022 not so much. But we are in it with long term focus.
Posted on 3/11/22 at 1:30 am to meansonny
quote:
Im pretty sure that everyone gets "reassessed" every year.
Do you ever pay the same property tax year over year?
In Louisiana, reassessments are every four years. And only that time if there is enough comps around to make it statistically valid.
I know people in some older, stable neighborhoods that haven't been reassessed for over a decade.
Posted on 3/11/22 at 1:32 am to dltigers3
quote:
I feel like I’ve watched every velocity banking video on YouTube and still don’t understand the concept…
I'm not going to say it's a scam, but...
A lot of "get rick quick" types pump this on the internet.
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