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"How To Pay Off Your Home Loan 10 Years Sooner Without Spending One Penny In Extra Payments"
"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 Friends.
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
really 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 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…….
With Over $100,000,000 in Home
Loans Funded per Year, Nick Krehnke, is truly an "Expert's
Expert" in the area of Home Finance and Investing. He is
also the author of "How to Retire Rich with Real Estate, By
Owning Just One Home"
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