In the first part, I have covered the strategy called velocity banking or in other words
the first lien HELOC.
Moreover, I highlighted some tricks the banks do to make you pay more “sometimes
make you go to square one after few years from your high commitment”.
Then, I concluded the article with a practical example using a simple example to
show you the original loan value and then after adding the amortization and fixed
interest moreover other charges such as insurance for the loan, what’s the total
amount you will pay by the end of period!!!
In this part I will cover the following:
A comparison between velocity banking, bi-weekly payments, and
extra monthly payments. | Some terms you need to check out when
you apply for HELOC. | Conclusion.
Before I start we need to agree on the headlines, our target in this target is directed
to cut the excessive amounts of interest & other charges, and a lot of borrowers tend
to use whether bi-weekly payments or extra monthly payments.
What’s the difference?
Bi-weekly payments mean that you schedule to pay a certain amount twice a month,
so we have 12 months and in the bank system your record is that by the end of each
year, you actually pay 24 payments and that gives you a great credit year by year so
you will find yourself completed the total amount whether related to the actual
principle that you pay or the other charges.
On the other hand, the extra payments, are more like excessive, random payments
you add to the mortgage. personally, I don’t like this way of covering for just one
reason, is the bank as an institution acts out spontaneously with its clients, definitely
Banks set terms guidelines and a full support team to make sure their clients
acknowledge those terms. So your payments need to be based on a plan.
Talk their talk, to save your pocket
Let’s move to the first-lien HELOC “there is a second version of this strategy with
more flexible access and many risks for the banks, I might explain it in a full new
article later”. How First lien HELOC can shrink your total mortgage value?
It needs a big discipline in the heart, as your overall target is to add a total big
amount to your principal loan. And it requires to use your credit card, and a tight
agenda to count the months of payments, not to mention that you will use your whole
salary in a monthly payment for the mortgage. However, some people use their
savings rather than their credit cards.
As they avoid pay off a debt with a debt, to cut off the risks.
Whatever your way, please put a lot of commitment into it.
Another point I want to highlight it here, which is the insurance charges that the bank
adds to your monthly payment.
Did you know that you have the right to remove the private mortgage
insurance once your balance drops below 80% of the home’s appraised
value? That’s more money you can use every month to pay off your
You can also contact your bank for more guidelines on that part!!
Set a plan, make in a few days many calls and scan many articles to get to a heart of
strategy and stick to it to pay your mortgage, there are a lot of techniques and ways.
Also, LinkedIn is a great platform in reaching to experts!