How To Pay Off Your Home In 5-7 Years On Your Current Income

How To Pay Off Your Home In 5-7 Years On Your Current Income

When sharing with other homeowners that they can pay off their mortgage in five to seven years using just their present income, their guard typically goes up since this is all new to them. I can’t blame them for that. Mine did too.

How To Pay Off Your Home In 5-7 Years On Your Current Income

How To Pay Off Your Home In 5-7 Years On Your Current Income

How To Pay Off Your Home In 5-7 Years On Your Current Income

Before I get into the details on how to do it, let me share a little about my background so that you know that I do have credibility regarding this topic. I self-identify as a ‚Äúrecovering” mortgage banker.

I say recovering because for fourteen years, I have worked in the banking industry selling a variety of mortgages before coming across using home equity lines of credit instead of mortgages to pay a home off quickly.

This whole business of teaching people how to pay off their home quicker came by pure accident. I had no intention of doing anything else but mortgages. I was making an incredible living helping lots of people buy a home. I was on a call with a mentor one day because I wanted him to introduce me to his wealthy clients. I got paid on loan volume so the bigger the loan the better. However, he informed me that his clients didn’t get mortgages on their homes. They didn’t pay cash either. What they did was they used a home equity line of credit instead.

The Problem With Traditional Mortgages

While on the surface this sounded like a crazy way to buy a house, after conducting a ton of research about this concept, it made sense. It was just math.

Interest on a mortgage is front loaded. In 18.5 years, most of the payments made will go towards interest. Banks are well aware that the average family will make a change every five to seven years so the cycle starts over again. If you are curious how loan originators are paid so well, all one needs to do is follow the money.

My wife and I wanted to test this method out ourselves so we refinanced our home into a HELOC. It worked exactly as I thought it would because it is just math. We are 13 months away from paying off our home as of this writing.

How A Home Equity Line Of Credit Works

On a HELOC, the interest in calculated by the average daily balance. The more money that is deposited in the account, the lower balance goes and less interest paid out. Let’s look at some of the benefits with a HELOC.

1.You have access to the money anytime that you want verses a mortgage, once you pay, you can’t get that money back unless you refinance or sell.

Let’s say life happens and you have car problems which need to be fixed as soon as possible. The cost is $1,500. The mortgage payment you just sent in could of come in handy right now but you don’t have access to it anymore because a mortgage is a closed end loan. With a HELOC, it is open ended so money can come and go when needed as in this case. You simply use your debit card and get your car fixed.

2. With most HELOC’s, closing costs as well as mortgage insurance do not come into play. A mortgage can have both.

3. With a home equity line of credit, more money gets applied to the loan balance while with a mortgage, most would go towards interest.

Getting approved for an interest only HELOC is what we teach our clients. Of course we do not teach them to just make interest only payments though because they would never pay their home off. Let’s use the example of a $142,000 HELOC. The interest only payment would be around $420 a month. Whatever income that is put into the account over the $420 is applied towards the principle. Compare that to a mortgage where most of the payment at the beginning is being applied towards interest.

Why HELOC’s Are Not Offered As Often As Other Home Loans

The truth? Money.

When you read your loan documents, you will uncover that you are basuically paying for multiple homes. One for the bank and one for you.

Another big problem is loan originators do not usually make a commision on a HELOC because there is less money to be made by the bank. It they are lucky they make $750. If a mortgage lender has the option to make thousands on a mortgage instead of $750 on a HELOC, what do you think they will choose? We know what will happen because thousands of people are signing up for a mortgage every single day. If a homeowner does the math though, they will see that a HELOC will win out over a mortgage every time.

One of the biggest reasons why we started teaching homeowners how to pay off their home in 5-7 years is simply because many loan officers don’t bother trying to educate themselves on using a HELOC. Why? They don’t have any plans to offer it to their clients. Sadly, this leads to homeowners obtaining the wrong type of loan. We have had some decide not to take our course. They attempt to go get a HELOC on their own which is fine except for some end up with the wrong loan such as a home equity loan and not a HELOC. It is sad because all of this could be avoided with the proper education.

How To Pay Off Your Home In 5-7 Years On Your Current Income

It actually almost happened to my business partners dad before we called the bank while his dad was sitting there with the loan officer. We had to educate the loan officer on her own product. It was sad and scary because this is costing homeowners tens of thousands of dollars.

Before I close out this article, I want to make sure that you know that this is just math. It isn’t magic. After obtaining the correct home loan along with living their current lifestyle, most clients are shocked at how fast their balance goes down.

Michael Lush is co-author of the book Replace Your Mortgage. He teaches homeowners a proven 6 step method for paying off their home In 5-7 years using just their current income . You can request a free copy of his book by visiting his website. –¬†Pay off your home in 5-7 years on your current income.


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