Mortgage Reduction A Equity Line of Credit Secret to A Debt Free Lifestyle by Eric Tupaz
The difference between a home equity line of credit HELOC a traditional home equity loan could save you thousands of dollars slash 13 years from your mortgage
You probably would say there isnt much difference between a traditional credit card an American Express Card since you think they serve the same purpose
The difference is actually quite significant.
A traditional credit card such as a Visa or MasterCard charges you a high interest rate but you're allowed to pay only the minimum balance at the end of each month. With an American Express card on the other hand you have to pay the balance in full at the end of each month otherwise there will be huge charges for the outstanding balance interest.
The purpose of the American Express card is to allow you to fund your purchases for 30 days but settle your balance immediately when it due.
So even when they are both credit cards they actually have different functionalities. If you fail to plan your cash flow efficiently not paying off your American Express credits would most likely get you into trouble.
The same applies to any HELOC a home equity loan. Not knowing the difference could cost you thousands of dollars in extra interest payments. & one of them could help you slash at least 13 years off your mortgage if you would know how to use it.
Lets start.
You can secure a HELOC mortgage line of credit by means of your home. You can take this as another mortgage. HELOC is known to have a variable interest rate.
It adjusts according to the prhyme interest rate. So if the prhyme interest rate goes up generally speaking your HELOC interest rate will go up.
So if your prhyme interest rate falls you will get decreased HELOC interest rates as well. Depending on your present financial status you will even be entitled to enjoy lower interest rates for HELOC which will be a few points lower than your prhyme rate.
Your outstanding HELOC balance will serve as basis for calculating your HELOC mortgage interest rate. So your interest rate will be computed per day if you make multiple remittances within the month. The result of the computation will be the interest rate that will be applied to your mortgage account.
This is the characteristic of the variable method of calculating interest. It is called as such because the interest that you will be paying will change daily.
This is enough to make you realize that making use of the method is completely to your advantage.
With the HELOC mortgage you can always pay down the HELOC borrow from it any time. As long as you don't exceed your HELOC limit you can generally use it to keep borrowing money.
Although the traditional home equity loan is quite similar to the HELOC there are two characteristics that establish the difference.
One home equity loan accounts are fixed. It operates on a specific period there are fixed interest rates the amount that you will be paying per month will be the same. Even if your prhyme interest goes down the rate that you will be paying will not change. This can be considered as a 30 year fixed loan plan.
Second you are not allowed to borrow from you equity loan any time. You may only do so by making sure that you have enough equity refinancing your home equity loan account.
Using the traditional home equity loan is only advisable if when you require lump sum payments are planning to make multiple payments per month. This way you will be able to pay back interest pay extra towards your principal balance at the same time.
All in all the traditional home equity loan is permanent does not change. The interest rate the amount of your loan the home equity loan payment stays the same you are supposed to be paying your dues throughout your loan period.
The HELOC loan is variable. The interest rate as well as the amount you borrow can change over the repayment term of the loan.
Both have their own advantages disadvantages.
The one significant advantage of the HELOC that no one talks about is that you can use it as a mortgage checking account.
This indicates that HELOC works exactly like your regular checking account. You can deposit your pay check into it use it to pay bills even make electronic transactions every month.
And heres one more thing that other people do not tell you.
Your HELOC used as a checking account would get you savings worth thousands of dollars would can help you slash 13 years off your mortgage balance achieve a mortgage reduction strategy faster.
In fact you will be able to get $63,000 worth of savings without spending more or changing your financial lifestyle.
Because interest rates will vary you will be able to withdraw deposit money anytime the HELOC is certainly one effective strategy that you can use in order to pay off your mortgage early achieving a mortgage reduction strategy faster.
to get all the latest tips strategies tactics about mortgage reduction software eqxl. com Calculator MortgageReductionCalculator be sure to visit us at mortgage reduction eqxl. com Calculator MortgageReductionCalculator Mortgage Reduction A Equity Line of Credit Secret to A Debt Free Lifestyle
