How to pay off a 30 year home mortgage in 5-7 years
I wanted to share one of my favorite strategies and that is the Debt acceleration strategy that allows to pay off a home mortgage, auto loans, student loans… without having to send double payments to the bank or change current income. This strategy is known as Velocity Banking and in this video I will demonstrate how Velocity Banking can be used to pay off a 30 year home mortgage in just 5-7 years.
First, I create scenario of someone’s financial situation by taking an average household income in the United States combined with some popular monthly expenses, 4 of them being:
Home loan (mortgage)
Minimum payments on credit cards
Once the expenses are identified and compared to the net monthly income I demonstrate the importance of cash flow and why having a positive cash flow is the goal. Then I want to identify the difference between a loan and a line of credit because understanding the difference between the two is where the strategy lies. I do this by explaining how the interest is calculated for a loan vs. a line of credit (credit card). Then I share an amortization schedule to demonstrate how monthly payments on a mortgage are dispersed between interest and principal paydown. I go on to identify the main reason why people now a days more than before are having a harder time paying off their home mortgage and the main reason is due to refinancing! I share an app called “Karl’s Mortgage Calculator” that does a good job of showing the high amount of interest that the bank charges on the home mortgage and how over the lifetime of the loan a person can sometimes pay more interest than their home price.
The secret to paying off a home mortgage in 5 years lies in utilizing line of credits. And the strategy of Velocity Banking really kicks into play at this stage because it required to bypass the accustomed system of depositing monthly income into a checking and a savings account and rather taking the entire monthly income and putting it all towards the line of credit. What this does is it creates cash flow and allows to pay off any present balance on the credit card with speed. Then use the credit card to pay the remaining monthly expenses. Once the credit card balance has been paid off, that line of credit is applied towards principle paydown on the home mortgage, then the same technique is utilized to get that balance down to zero. This technique is repeated for 5 years until the principal of the home is paid off. Taking the time to learn and understand this strategy will result in thousands of dollars in savings otherwise to be spent on interest.
KARL’S MORTGAGE CALCULATOR APP:
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DISCLAIMER: Please consult with a professional prior to engaging in any financial strategies. Not everyone will experience 100% success rate by using this strategy as it requires a commitment to keep applying this strategy over time until the desired result is achieved. I (Laura Pitkute) do not promise or guarantee any specific outcomes and/or results from the use of this strategy.