Why is paying off home mortgages with HELOC not more popular?

You need to explain your point of view on this.

You must have a positive cash flow—that is, your monthly income exceeds your expenses—the more the better.

In select months, you put your entire paycheck towards your mortgage.

You need a credit card, one that will give you “free money” (a grace period) for up to 45 days.

In the months when you put your entire paycheck towards your mortgage, you put the rest of your expenses on your credit card.

You add a HELOC to your home, preferably one with a debit card.

After the end of the credit card grace period, you transfer your entire credit card balance to the HELOC.

With your next paycheck, you pay off your HELOC balance, instead of your mortgage.
The next paycheck—after the one that pays off the HELOC—is once again applied to your mortgage.

Repeat the cycle again and again.
Confused? Let’s work out an example.

Say you have a $200,000 mortgage, and your net paycheck is $5,000 per month. One month, you apply your whole paycheck to the mortgage. This immediately lowers the mortgage balance to $195,000. That month, you pay your non-housing living expenses, say $2,000, using your credit card.

Then, you pay your mortgage payment, say $1,000, using your HELOC. You also pay your credit card balance with your HELOC. At the end of the month, you owe $3,000 on the HELOC and $195,000 on the mortgage, but your credit card has a zero balance.

The next month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment and $2,000 for living expenses. The remaining $2,000 reducing the HELOC to $1,000.

In the third month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment, $2,000 for living expenses, and $1,000 to zero-out the HELOC.

That leaves you with an extra $1,000, which you carry over to the fourth month. And in the fourth month, you repeat the original cycle of paying your entire $5,000 paycheck toward the mortgage, lowering it to $190,000.

If you are successful in managing this strategy, you should be able to manage four $5,000 payments toward your mortgage each year, above and beyond your regular monthly mortgage payments. That means paying an extra $20,000 of mortgage principal each year.

At that rate, your mortgage will be paid in full after substantially less than 10 years (remembering that the regular mortgage payments that you are continuing to make will also reduce the mortgage balance in increasing increments).

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The interest is so heavily front loaded

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If you are successful in managing this strategy, you should be able to manage four $5,000 payments toward your mortgage each year, above and beyond your regular monthly mortgage payments. That means paying an extra $20,000 of mortgage principal each year.

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Why did you need this complicated strategy to just pay extra principle towards your loan?

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You must have a positive cash flow—that is, your monthly income exceeds your expenses—the more the better.

In select months, you put your entire paycheck towards your mortgage.

You need a credit card, one that will give you “free money” (a grace period) for up to 45 days.

In the months when you put your entire paycheck towards your mortgage, you put the rest of your expenses on your credit card.

You add a HELOC to your home, preferably one with a debit card.

After the end of the credit card grace period, you transfer your entire credit card balance to the HELOC.

With your next paycheck, you pay off your HELOC balance, instead of your mortgage.
The next paycheck—after the one that pays off the HELOC—is once again applied to your mortgage.

Repeat the cycle again and again.
Confused? Let’s work out an example.

Say you have a $200,000 mortgage, and your net paycheck is $5,000 per month. One month, you apply your whole paycheck to the mortgage. This immediately lowers the mortgage balance to $195,000. That month, you pay your non-housing living expenses, say $2,000, using your credit card.

Then, you pay your mortgage payment, say $1,000, using your HELOC. You also pay your credit card balance with your HELOC. At the end of the month, you owe $3,000 on the HELOC and $195,000 on the mortgage, but your credit card has a zero balance.

The next month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment and $2,000 for living expenses. The remaining $2,000 reducing the HELOC to $1,000.

In the third month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment, $2,000 for living expenses, and $1,000 to zero-out the HELOC.

That leaves you with an extra $1,000, which you carry over to the fourth month. And in the fourth month, you repeat the original cycle of paying your entire $5,000 paycheck toward the mortgage, lowering it to $190,000.

If you are successful in managing this strategy, you should be able to manage four $5,000 payments toward your mortgage each year, above and beyond your regular monthly mortgage payments. That means paying an extra $20,000 of mortgage principal each year.

At that rate, your mortgage will be paid in full after substantially less than 10 years (remembering that the regular mortgage payments that you are continuing to make will also reduce the mortgage balance in increasing increments).

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Or you could just make extra payments on your principle

I mean...it’s basically ‘fat camp’ for mortgages.

If you’re disciplined, you don’t go to fat camp.

Fat camp

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I mean...it’s basically ‘fat camp’ for mortgages.

If you’re disciplined, you don’t go to fat camp.

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But if you’re not disciplined with money, you aren’t going through this trouble.



Upset that interest is 80% of your first month’s mortgage payment? Great news. Matching the 20% that is currently representing the principal payment (which means you will pay SLIGHTLY more each month, typically by a few dollars) cuts fifteen years of a traditional 30y mortgage.
That’s a way simpler and easier way to save a ton of time. All you need is an amortization table which is usually made available to you by your mortgage provider but could be easily calculated by a number of free tools online. There are also many “what if” tools (I will admit, I think the one inside of Quicken is probably the best, though subscribing to quicken instead of purchasing it pissed me off so much that I hate to admit it) that will show you the impact of a one-time lump payment vs a monthly increase of X on the time and interest accrued.


It’s, again, why I argue this strategy is, indeed, often effective at shaving time off a mortgage, but it has alternatives that are far simpler and as/more effective, making it not for this “dumb” guy.

If you're savvy enough financially to come up with that plan and make it work for you, your mortgage, if you even have one, is petty cash to you. If you're not savvy enough, you'll eventually fall behind and find yourself staring up out of a hole.