All Forum Posts by: Brian Cardwell

 wow, this will never end... you are goi itng to pay it off faster, but then you will have a heloc balance to pay off, which is akin to still having a mortgage... are you gonna open up another heloc on the house to pay the first heloc off?

Fact is, Brie wasn't missing anything! Doubting that HELOCs would be a better "early payoff" strategy, vs just depositing every excess dollar into extra principal-only payments, was well thought out! 

Fact is, providers of HELOCs know that the accompanying "psychology" and "flexibility" will hinder/prevent early payoff, (in favor of re-using them, time and time again, for other purposes)!

Ergo: HELOCs are (mostly) not an early payoff strategy! Back to the numbers, please...

@Enrique Reyes, thank you for confirming my thesis, when you admitted: "Short answer it is much faster to pay off a mortgage making the remainder of $2,000 after making mortgage payment than it is using a HELOC".

Because as I reminded you, the debate on this thread is only about the numbers!

[As you can also see, I did guess that you couldn't resist bring "psychology" and "flexibility" into it - which is a separate debate altogether! The thread title only links "HELOC" with "payoff strategy". Get it?]...

 Weren't you getting everyone excited just a little while ago that this strategy works better than simply saving money from a paycheck?

That isn't what I'm saying at all. The common misconception is that people think they are paying more than the stated interest rate during the first few years because the majority of the payment is going towards interest. I've heard people claim things like 70+% APR because so much of their payment is interest.

A lot of people don't understand that interest is ALWAYS calculated as outstanding principal multiplied by interest rate. 

Sorry for any confusion. 

You can change the values at the top to whatever you want. I just simply kept the HELOC and mortgage the same rates when I uploaded it because some people seem to think HELOCs have magical simple interest and mortgages use "amortized interest" that makes a mortgage frontloaded with interest.

You can plug whatever values into it the top portion you want and it will change the bottom calculations.  The only thing it can't do is calculate for a variable rate or an introductory rate. I haven't figured that part out yet. 

Also, the heloc on my spreadsheet isn't interest only. It doesn't show any minimum payment because you're making your payment each month by the paycheck parking, so no matter what, your payment is covered. At this point it can't account for all assumptions, but I'll keep trying to play with it when I have time to factor in things like intro rates and different draw dates from the LOC.

As for using your HELOC to buy other property later. You can just simply open up a HELOC once you have more equity for that. Or you can open a HELOC right away, use it for the velocity method during its low intro rate if it's lower than your mortgage rate, and then keep it open in case of emergencies until you have the equity to buy another property.

I don't know what to tell you except that you're using your HELOC as a financial discipline tool. It's not a "system".

The 285+ posts on this thread are from experts debunking every version of this theory. Everyone left standing has changed their theory on why this "system" works a hundred times and it's been reduced to "well it's not better than just paying more towards my mortgage every month, but putting it on my HELOC instead forces me to do it.

Even some of the BP staff have weighed in to debunk it.