Pay Off Your Mortgage Fast: Expert Reacts to Graham Stephan
Paying Off Your Mortgage Fast… Today, I’m going to react to Graham Stephan and why he is incorrect on our strategy of using a HELOC to Pay off Your Mortgage. This strategy has many names like Velocity Banking, Mortgage Acceleration, Replace Your Mortgage, Debt Acceleration, the Pill Method, Sweep Strategy… But the REAL name to this strategy is Accelerated Banking. We agree with 99.999% of what Graham says but this is that 0.001% that we disagree with. I’ll explain why Graham is wrong and why he misrepresented the strategy as well as why you SHOULD use a HELOC to pay off your mortgage.
Graham’s Original Video:
Graham Stephan’s YouTube Channel:
(Go subscribe to his channel as well!)
Our Original Video: How to Pay off Your Mortgage in 5-7 Years (on Average):
Paying Extra Vs. Using a HELOC:
Why NEVER to Refinance Your Mortgage:
Our HELOC Calculator:
Results Disclaimer: The results of using a HELOC to pay down the mortgage shown on this video are actual results from actual clients of the Kwak Brothers. However, the results are not guaranteed and such results are atypical. Payoff results or any outcome solely depend on the user’s own past experience, motivation level, work ethics, and effort.
Okay, so what is a HELOC in the first place? A HELOC is an acronym that stands for Home Equity Line of Credit. It essentially works like a credit card but is backed by the equity of your house. It’s technically a form of a mortgage but it’s a revolving credit line. A HELOC is often used to renovate homes, invest in other projects, but it can also be used to pay off your mortgage.
Graham Stephan’s video is actually old and it’s been out for a year. I was a big fan of Graham, until this video… (Just kidding!) But in all seriousness, here are the points that he’s wrong about using a HELOC to pay off your mortgage. Keep in mind, Graham is ONLY referring to 2nd lien position HELOCs and it appears that he doesn’t know about 1st lien position HELOC and the fact that it exists.
Here are some of the Highlights of this video:
1. Higher Interest Rate
Well, with a 2nd lien HELOC, you will most likely find the rates to be higher than your typical fixed 30-year mortgage. However, even with this fact, the strategy proves that a higher interest rate on the HELOC has little to no bearing on the effect of the pay off period. That’s because we’re focused on paying off the principal balance as fast as we can. Also, the balance we’re carrying on the 2nd lien HELOC is very low at a given time, therefore – the net interest amount is low too. But we haven’t even discussed the idea of a 1st lien HELOC which has comparable interest rates to the traditional 30 year mortgage.
2. Variable Interest Rate
Graham refers to HELOCs having a variable interest rate. What’s interesting is that most of the HELOC account that we refer to use what’s called a LIBOR as an index. (soon to be replaced) The LIBOR actually went down this month. Plus, you can lock the rate on certain HELOCs so therefore, this is also debunked.
3. HELOC Tax Write-Off
It’s true that you can’t write off the interest on the 2nd lien position HELOC but you CAN on a 1st lien position.
4. I’m still a fan of Graham…
😃 Thanks for Subscribing & Liking our Video
🔊 Our Podcast Channels:
📻First Deal Experience:
GET SOCIAL WITH US:
📧 Hire the Kwak Brothers to Speak: firstname.lastname@example.org
#grahamstephan #heloc #mortgage
—DISCLAIMER— The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.