velocity Banking - Replacing half of your mortgage

[Peter Morgan]

Hello,

Lately I got intrigued by the velocity banking videos on the YouTube and interested to hear if anyone had major success with this strategy. I got particularly interested with the strategy of replacing your entire mortgage with a heloc in first position, as this allows to offset your mortgage balance with your checking/savings account balance and thus reduce your monthly mortgage interest. I think this strategy works perfectly well especially for people who have lots cash sitting idly in a savings account. I have been toying with this idea for quite sometime now instead of replacing entire mortgage why not replace half of your mortgage with a HELOC and another half with a traditional mortgage that way it will be best of both the worlds given the conventional mortgages are so low.i am Interested to hear the views of experienced BP members

Thanks

Peter

[Robert A. Coloma]

@ Peter Morgan it's an amazing strategy. I have my Primary for 2 years now and about a year for my rental property both are in 1st Lien HELOC.

What is your objective? Cashflow and/or paying off your mortgage in the next 5-7 years?

Advantage of a HELOC is it is an open end loan vs close end loan for a traditional mortgage.(you can research it). This method will eventually gives you the availability of funds. This will help you purchase more investment properties. (If that's your plan )

2nd is that your payment is calculated  base on your daily average balance vs amortize 15-30 years. This strategy will help you pay off your debt sooner.

3rd is the cost. HELOC charge almost nothing except the title fee no closing cost no points, appraisal (depends the amount of line you are getting) vs traditional loan with explicit closing cost, points, other fees that added to your existing loan.

Note: not all people who works in the bank understand/know 1st lien HELOC. You have to ask the right question .

Hope this help !