what is the trick behind paying of your mortgage early with a home equity line of credit?

Question

I have heard of a software program that shows you how to pay off your mortgage a line of credit.

Answer 1

Say you run 4K a month of bills through your checking account you would on average have 2K sitting earning nothing. If you borrowed 4K from your HELOC and paid down the first mortgage you would owe HELOC on average 2K at a slighly higher rate than the first mortgage. This would cause me to want to get out of that debt as fast as I could and make me feel I couldn't go shopping while in HELOC debt so soon I would have the HELOC paid off and could start again.
It might be fun to do but you don't need a program. You could just be on a tight budget and send every cent in to the mortgage company.
Another way is if you have an emergency fund you could use the HELOC for the emergency fund and send that money to the mortgage.
I wouldn't prepay a mortgage unless the rate was awful since you might earn more somewhere else and have more flexiblity with your money.

Answer 2

Ummm...whatever it is, it's a scam. Think about it. Taking a second mortgage out to pay off the first (not that you could get a second mortgage for that amount anyway). You are simply increasing your debt load.

Answer 3

If you want to pay your mortgage off early, just pay extra to the principal every month. Even $10 will make a difference. Just be sure you earmark the extra as principal -- a separate check, noted as principal only, might be a good idea.

Answer 4

First, contrary to other answerers, it doesn't increase your debt. You still have one loan for the same dollar amount.

I did this very thing in order to get an adjustable but lower interest rate, The bank that offered this was charging huge fees for an ARM refinance, but was absorbing all costs with a HELOC.

Answer 5

http://www.tomvoli.com/mortgage-acceleration-without-extra-payments/