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Old 05-31-2018, 03:04 AM
 
Location: Illinois USA
291 posts, read 148,354 times
Reputation: 211

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I have no experience when it comes to the real estate market. In doing my due diligence and trying to learn as much as possible, I have come across a company called "Replace Your Mortgage". I am curious if anyone else has worked with this company and could provide their experience or thoughts in general about the company's HELOC strategy.

When it seems to good to be true it usually is, but this strategy does make a lot of sense at least on paper. Yes, when following this strategy the individual must be very diligent in keeping up with the cash flow required, but if they do, I do see how it makes sense even with the variable interest rate associated with the HELOC.
if they close the heloc line or call it due for any reason and you can not pay the heloc , can they forclouse on your house ?
Any thoughts/suggestions?
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Old 05-31-2018, 06:51 AM
 
Location: Raleigh NC
7,781 posts, read 6,132,755 times
Reputation: 6905
I think you need to tell us a little bit more about how it works.
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Old 05-31-2018, 11:36 AM
 
595 posts, read 377,457 times
Reputation: 1021
One would be replacing debt with debt. Reading the linked article gave me a headache. In "theory," it could work for a very disciplined person, for the majority, it doesn't seem feasible, IMO.

https://www.doughroller.net/mortgage...-with-a-heloc/

The “Cliff’s Notes” Version of the Strategy
The “method” of paying off your mortgage early using a HELOC is more than a little complicated. You can read the full version of the strategy here, but here’s a summary of how it works:

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.
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Old 05-31-2018, 12:23 PM
 
930 posts, read 405,684 times
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That sounds awful and overly complicated for very little benefit.
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Old 05-31-2018, 01:02 PM
 
10,274 posts, read 6,515,435 times
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Sounds stupid I found their site and has an example how you can save $200K over 30 year with them but it does not say how many years you have to pay them or the difference in the payments.

My guess is your Principal and interest payment will at least triple.

You can do it yourself buy using paying 3 times as much your principal and interest payment and figure out how much to be done with your mortgage in 7 years free with an advanced payemnt mortgage calculator online.
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Old 05-31-2018, 02:51 PM
 
Location: Raleigh NC
7,781 posts, read 6,132,755 times
Reputation: 6905
Quote:
Originally Posted by photogal9 View Post
One would be replacing debt with debt. Reading the linked article gave me a headache. In "theory," it could work for a very disciplined person, for the majority, it doesn't seem feasible, IMO.

https://www.doughroller.net/mortgage...-with-a-heloc/

The “Cliff’s Notes” Version of the Strategy
The “method” of paying off your mortgage early using a HELOC is more than a little complicated. You can read the full version of the strategy here, but here’s a summary of how it works:

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.
that's pretty idiotic, because even if you way overpay your mortgage June 1, they still want their regular payment July 1 ... and you have to borrow that from your HELOC too.
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Old 05-31-2018, 10:02 PM
 
Location: Illinois USA
291 posts, read 148,354 times
Reputation: 211
Quote:
There Are Better Ways to Pay Off Your Mortgage Early
There are less complicated ways to pay off your mortgage early, and they will generally give you more control over the process.

Make extra principal payments. You can choose to pay a certain amount of extra principal to your regular monthly payments. It could be $100 per month, or be something less formal, like paying an extra $1,000 each year. Not only will this reduce the term of your mortgage, but it will also give you complete control of the process along the way. You can make extra payments either higher or lower, depending upon your financial situation at the time.

Make one extra payment each year. By making just one extra payment per year, you can reduce a 30 year mortgage down to 26 years. This is the same effect as a biweekly mortgage payment arrangement, since a biweekly mortgage effectively creates 13 payments per year.

Pay your mortgage based on a shorter term. If you have a 30-year mortgage, you can make payments based on a 20-year term, chopping a full decade off the loan.

Create a “sinking fund.” This is actually a concept from the business world. Companies often set up what are known as sinking funds for the purpose of retiring specific debts. It’s a matter of adding money to a dedicated savings account, until the balance is sufficient to pay off the loan completely. You can do the same thing to pay off your mortgage. It has the advantage of giving you control of the money until you’re ready to completely pay off the mortgage.

Refinance to a lower rate. We should also mention that refinancing an existing mortgage to a lower interest rate can save a lot of money
.

from same link above , alternative ways to HELOC
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Old 06-01-2018, 10:43 AM
 
4,544 posts, read 11,553,746 times
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Quote:
Originally Posted by Dad01 View Post
.

from same link above , alternative ways to HELOC
Just stick with a regular mortgage and call it a day.
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Old 06-01-2018, 10:48 AM
 
Location: The Berk in Denver, CO USA
13,123 posts, read 18,744,834 times
Reputation: 20435
Quote:
Originally Posted by TimtheGuy View Post
Just stick with a regular mortgage and call it a day.
Don't call it day.
Take the extra money and buy this bridge that I have for sale. It has excellent cash flow.
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Old 06-01-2018, 10:55 AM
 
Location: Florida -
8,248 posts, read 10,010,784 times
Reputation: 15120
Just a HELOC sidelight. I got a HELOC about a year ago to avoid pulling taxable deferred income for a specific purpose (helping daughter with new home purchase).

Although I have an 800+ credit score, no debt and 100-percent property equity (and only wanted about 20-percent), I found that getting a new HELOC more cumbersome and difficult than even a new mortgage. In fact, I spoke with several companies who no longer do HELOC's and kept trying to push me into a mortgage, which I did not want. Today's HELOC banking approach is far different than I remember many years ago when one could easily get a HELOC with nominal equity and a signature.
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