Paying off a mortgage very quickly

[Gulliver R.]

BP,

http://www.claytonmorris.com/blog/2015/7/20/how-to...

The link above talks about paying off a mortgage in a matter of roughly 5 years+/-. After reading it, I was still skeptical. Any mortgage professionals or anyone who has heard of this strategy before care to shed some light on if it is legit, and if so, does it work?

Thank you,

G

[Michael Moheng]

From my understanding the way you save with a heloc is you save on interest charges by making a large lump payment on the principle of your mortgage while still paying your normal monthly payments. As for what to do in an emergency such as auto or house repairs you either save room on the heloc to cover say a 10k cushion or keep a side credit account specifically for that purpose that you can pay with the heloc after the crisis has been taken care of. 

The magic happens with this strategy by having room for emergencies while still leveraging your funds to clear all of your debt. 

[Account Closed]

@Gulliver R.   Of course, they make it sound much easier than it is.

Before you do that "trick" payoff credit card debt, and car loans and any other higher interest rate loans you have.

[Colton S.]

I'm trying to follow what they're saying, but it doesn't really compute as to how you're actually paying the balance off. Effectively you're putting 100% of your income towards the HELOC and using that to fund your life, mortgage. Doesn't that mean you'll end up with a mortgage of $0, and a HELOC of slightly less than what you're house is worth?

[Wayne Brooks]

This has been discussed here before......there is no magic to the heloc.  You pay your mtg off early because you are paying Extra amounts toward your principle, period....you can do this without using the heloc.

[Gulliver R.]

if my paychecks from work can indeed be direct deposited to my HELOC (which will pay down the HELOC balance back down to $0), then I can see the value to this method. Otherwise if that was NOT the case, then it is the same as paying down the principal from your checking account.

So the question begs: can paychecks from W2 work be direct deposited to a HELOC account, which can pay down the loan back to $0?

[Justin Fox]

If you don't have the discipline to set aside funds to pay down the mortgage, getting a $30,000+ credit card probably isn't going to make your life easier. Not only are you just paying extra to the principal, you'd have to charge unexpected auto repairs, home repair and etc since all your cash (including savings) would be tied up in the HELOC (if not now, eventually).

Are there origination fees?

What happens when life isn't all roses and you're stuck with a balance after the draw period?  

What happens if the prime rate goes up as you hold a 10,000+ balance?

I'll keep making money with the money I don't stuff into my equity. 

[Michael Moheng]

From my understanding the way you save with a heloc is you save on interest charges by making a large lump payment on the principle of your mortgage while still paying your normal monthly payments. As for what to do in an emergency such as auto or house repairs you either save room on the heloc to cover say a 10k cushion or keep a side credit account specifically for that purpose that you can pay with the heloc after the crisis has been taken care of. 

The magic happens with this strategy by having room for emergencies while still leveraging your funds to clear all of your debt.