"Nothing but heaven itself is better than a friend who is really a friend."Plautus
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Home Equity Lines of Credit
Alright, you've been a homeowner for some 10 years now, and you've decided it's time for improvement and expansion. What is the best way to obtain the funding for home improvement projects? A home equity line of credit is often the most feasible and ...
Home Equity Line Of Credit Or Second Mortgage Loan Online - Things To Do With Your Homes Equity
If you are wanting to get a home equity loan, rates are still low enough that you may want to make use of that equity in your home. Do you need some ideas on what you could do to multiply your equity or make some extra money off of the capital that could ...
Lowering Credit Card Debt - 3 Tips To Eliminating Credit Card Debt
Eliminating your credit card debt is as simple as switching lenders. By finding better interest rates, you can shave off years from your payment schedule and save thousands of dollars in interest charges. With these three tips, even with the same monthly ...
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How a Simple Plan with a Common, Yet Overlooked Home Loan Can Save You Hundreds of Thousands of Dollars Without Changing Your Budget By a Single Penny!
Hello, Top Guns!
You will laugh at the simplicity of this plan, and, at the same time, think what a great idea it is. It was a real light-bulb-going-off-in-my-head type of feeling for me.
So here it is:
"Replace Your Checking Account with A Home Equity Line Of Credit and You Will Save (Or Make) A Ton of Money."
That is all you really need to know, but let me give you the how and why of it so you can understand.
A Home Equity Line Of Credit (HELOC) has 2 unique features that no other home loan offers that make this possible. They are:
1. It is a Revolving Account--
Just like a checking account or a credit card. That means you can deposit money into it and take it out when you need it. That is why you get a debit card and checks when you open a HELOC.
2. Interest Compounds Daily Instead Of Monthly--
While this may sound like a negative, it is really a benefit. I will explain below.
Say you just got paid at work. You go to the bank as you normally would to deposit your check, but you deposit it into your HELOC instead of your checking account. You go to the store to buy some groceries. You pay them with you debit card or checks, but you use the ones tied to your HELOC instead of your checking account.
It is exactly how you do it now, except it is sourced from your HELOC, not your checking account.
I know what you are thinking; "Well great Nick, but how the heck is it going to save me money?"
Do you remember how I said the interest compounds daily? Go grab your bank statement from your checking account. Do you see were it tells you what your starting and ending balance is? You will also see something that says "Average Daily Balance." That means with all of the deposits and withdrawals, this is the average amount you had in the account. If you park this money into you HELOC it will lower the balance of your loan, thus lowering your payment. Because it compounds daily, it does not matter if you are constantly making deposits and withdrawals, you still benefit. Any amount you deposit into the HELOC above your basic interest goes 100% to lowering the principal balance. Let us work with some hard number so you can see it in action.
Say you have a $150,000 HELOC at 8%. This would make your full payment $1,100, with $1,000 of that going toward interest. Therefore, a whopping $100 goes toward principal. You also have an average daily balance in your checking account is $10,000. You park the $10,000 into your HELOC, making the balance $140,000. That would lower the interest part of your payment to $933, a savings of $67. Therefore, of your $1,100 payment, $167 goes toward principal instead of $100. For some of you that might not sound like much, so let me put it in these terms:
You will save $140,040 in interest on this $150,000 loan!
You would have it paid off in 20 years instead of 30. That is 120 less payments times $1,167 per month. Imagine the drop in your stress level because of the lack of money worries! The funny part of it is the fact you can save actually more, A LOT MORE! I did not even talk about the tax strategies involved, or the way how this $140,040 savings can actually be a $509,000 gain! Does that sound interesting, if not almost unbelievable? I would tell you right now, but it is getting late and I am tired. You will have to call or email me for more info on this.......
About the Author
With Over $100,000,000 in Home Loans Funded per Year, Nick Krehnke, is truly an "Expert's Expert" in the area of Home Finance and Investing. He is also the author of "How to Retire Rich with Real Estate..by owning Just One Home" Get a Free Custom Report from his website at http://www.Home-Loans-By-Nick.com
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ID thieves target home equity linesIndiaPost.com, CA - Nov 25, 2008Even if you've never used a home equity line of credit, or HELOC, it's a good idea to check your three credit reports (Equifax, Experian and TransUnion) to ... |
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