How To Pay Off Your Mortgage with the Banks Money

My Home My Castle - My Mortgage

Okay, so we know that our home is our castle, but it is also one of the most expensive item the average American purchases. While we have pride-of-ownership in our home and consider it our greatest asset we should also consider how much it cost us. What are the affects of our mortgage on our overall wealth?

A person who purchases a home and takes a $150,000.00 mortgage at 6% on a 30 year term will end up paying $323,758.80. Think about that for a moment. They will pay the purchase price plus the purchase price again plus another $24,000. Consider the difference in lifestyle between this person and one who owns their home debt free.

Most people when they purchase a home will haggle over $5,000 or whether the carpet will be replaced. This is a trivial amount compare to what you will pay in interest on your mortgage over the next 30 years.

Accelerate Your Payoff
Accelerate Your Payoff

Methods of Payoff

While there are many programs out there that will help you payoff your mortgage so that you can be debt free, most of them center around paying extra. In other words, you end up making more principle payments then what is called for in the mortgage repayment structure resulting in your balance coming down and you saving money in interest over the years.

While it makes sense to do this, when you stop and think about it, the money that is reducing the principle is money coming out of your monthly budget. In other words you have less money for other expenses or things you enjoy doing. This is the reason why most people don't pay extra on their mortgages.

Some of the methods for these accelerated mortgage payoffs include but are not limited to:

  • Rounding your mortgage payment up to the nearest $100
  • Bi monthly payment (making two 1/2 payments a month resulting in 13 full payments a year)

What I want to talk to you about is how to pay off your mortgage using the banks money. In other words reduce your mortgage balance without taking extra money out of your monthly income.

Before I dive into this let me tell you that there are companies out there that will do this for you. I have even provided a link to one of the many. I am not endorsing the company, but just want to let you know should you desire to use one. There is typically a pretty heavy fee associated with these companies so my thought is, why not put their fee toward my mortgage payoff?

Basic Concept

On the above loan example ($150,000/360 mos/6%) your monthly payment will be $899.33 (this represents principal and interest only - not taxes and insurance). On your very first payment (assuming it was paid on time) this payment would be broken down as $149.33 being applied toward the principal and $750.00 being applied toward interest (bank profit).

We understand that wit each payment this breakdown is going to change because interest is calculated on the outstanding balance and when the second payment comes due the balance is $149.33 less than it was on the first payment.

Stop and think for a moment. Even though the monthly payment is $899.33 if I would have paid $1,048.66 instead of the 899.33 which was due ($149.33 extra = one month's principle reduction) I would have reduced by 360 (30 years) payments by two payments instead of one. The reason for this is because I reduced the principle amount twice instead of once.

In a very simplistic term that $149.33 extra payment saved me $750.00 interest which I didn't have to pay. In reality it will save me far more than $750 because my extra reduced balance will be lower throughout my 30 year term thus saving me money every month.

Just think what would happen if I could put an extra payment of $1,000, $2,000 or $5,000 against my mortgage. The interest saving become staggering.

The problem is that most don't have the extra money laying around and if they did they don't want to apply it against their mortgage. So how can I leverage the banks money to pay off my loan?

Your Basic Checking Account

I want you to think about your household checking account and how it works. People are paid differently (weekly, bi-weekly, monthly, commissions), but it really doesn't matter. We all handle our checking accounts the same way.

When we are paid we deposit the check into our checking account and then we pay our bills out of the account. I will give an example using a couple of bills, but you will get the picture. As you go through this try and apply the example to your specific monthly income and expenses:

Paycheck: $1,500.00 on the first of the month

Car payment: ($ 800.00) due on the 5th of the month

Checkbook balance: $ 700.00

Electric Bill ($ 100.00) due on the 10th of the month

Checkbook balance $ 600.00

Deposit Paycheck $1,500.00 on the 15th of the month

Checkbook balance $2,100.00

House payment ($ 899.33) Due on the 1st late on the 15th (this will be important)

Get the picture? Now, let me ask you a question. How much money do you make on the balance sitting in your checking account?

If you have an interest bearing checking account and carry a $25,000 or higher balance you may make .00000035% (just kidding, but it is really really low)

Remember the above breakdown of our mortgage payment? What if I could take my idle money that is sitting in my checking account and have it sit on my mortgage loan?

Remember how much money we could save it I could only apply an extra $149.33?

Let's see how this works

Revolving Line of Credit

The bank has a product called a Revolving Line of Credit. A revolving line of credit works like a checkbook in reverse. You get checks and instead of having a balance that you write checks against you have a line of credit that you write checks against.

When you write a check money is added to what you owe the bank and your are charged interest for using this money. But don't forget the amount of interest you are already paying to the bank for the usage of their money on your home loan.

On a revolving line of credit the interest is calculated on your average daily balance. Therefore, if you have a $500 balance the first five days of the month interest is only being calculated on that $500. If you pay it off then interest stops calculating. If you write a check for $1,000 then interest is calculated on the $1,000.00.

At the end of the month you may have had all different types of balances because there is typically no limit to how many transactions (payments/advances) you make on this line of credit.

Now let me show you how to put this together and put money into your pocket.

Getting Your Mortgage Paid Off

To pay your mortgage off with the banks money requires using your revolving line of credit like your checking account. However, the interest on your revolving line of credit will typically be higher than the interest on your mortgage so you have to pay attention to what you are doing.

Instead of taking your paycheck and depositing your money into your checking account and letting the money sit in the bank (allowing the bank to use it for free) why not make a principle payment on your mortgage (saving thousands of dollars) using your revolving line of credit?

Let's say you get paid $1,500 on the first and the 15th. Your mortgage payment is due on the first, but why pay it on the first. Your payment due on the first of September is paying for the interest in August. Therefore, it doesn't matter if you pay it on the 1st, 5th, 10th or 13th the interest that is deducted from it will be the same on a typical 30 year loan.

Let's say this person making $3,000.00 a month wrote a check from their line of credit for $1,000.00 (bank money) as a principle payment on their mortgage (in my example above that would cover about 6 months principle reduction saving over $4,000 interest immediately and thousands more over the life of the loan).

When they write this $1,000.00 the bank will charge them interest on it, but remember they just got paid $1,500.00. So instead of letting all their money sit in their checking account they take $1,000.00 and pay off the line of credit. Now they are saving money on their mortgage and it is costing them nothing. On the 5th their car payment is due. They may not have the money in their checking account so they pay their car payment with a check from their line of credit.

Now their line of credit is at $800 for which they will pay interest, but their $1,000 is still working on their mortgage. They continue doing the same thing using the line of credit when their bills come due, but on the 15th they get their second check which they will apply to their line of credit knocking down balance thus reducing their interest charges again.

With the ease of online banking it is easy to transfer money between checking account and line of credit. Because our mortgage is due on the first and late on the 15th and because it doesn't cost me any more to pay it on the first or pay it on the 15th I will wait to make my mortgage payment as late as possible without incurring a late fee. This allows me to keep my line of credit artificially lower for half a month.

What happens? I am using the banks money via my line of credit to reduce my interest charges on my mortgages resulting in thousands of dollars being saved.

There is a balance here that you want to achieve:

You want as much money applied to your mortgage as possible while also keeping the balance on your line of credit as low as possible.

Does this really work?

Absolutely! I am doing this on my mortgage. In my first 12 months of following this strategy I was able to reduce my balance the equivalent of 17 months while paying less than $200 interest on my revolving line of credit.

The biggest thing that is need is a "pay attention" attitude. Watch your balances on your line of credit, checkbook, and prepayment amounts. You can get excited and transfer too much and you end up paying a lot of non-deductible higher rate interest on your line of credit.

The key is to keep the balance of your line of credit below a predefined percentage that you determine. If you keep your line of credit at 50% of your net income then there will be periods of time during the month that you can bring your line of credit to a zero balance making your average daily balance (that your interest is calculated on) a very low amount.

You also don't want your line of credit balance to be too low because they you are losing money that could be sitting on your mortgage. You will get the hang of it as you work it and see your mortgage getting paid off. Typically you will be able to make an additional principle payment every 3-5 months.


Additional Information

This section is being added several months after this Hub was originally created.  The purpose of this paragraph is to bring some clarification to those who read this and are interested in utilizing this program.

Most people that have read and commented on this Hub struggle in understanding this concept because their thinking is towards the principle balance of their loan.  If you borrowed $200,000.00 to purchase your home, you HAVE to pay that $200K back.  You borrowed this amount.  The principle that you borrow is not the problem, it is the interest that costs you so much money! 

If you transfer $5,000 from your home loan to your line of credit, you still owe the $5K, what this program does is uses a float to not have to pay interest on that $5K.  That is where you save the money.  Two things occur when you float the money.  If you do it right you will pay little to know interest on the $5,000, plus there will be additional principle being paid on your mortgage with each payment thus giving you quicker amortization.

By keeping the right amount (based on your income) in the float you are constantly moving money from your mortgage to your line of credit so that you can float it and pay no interest on it.  As you try to understand this don't focus your thinking on the mortgage balance, but on the interest that is being paid on the mortgage balance.  If you get the interest in control the balance will automatically reduce faster.

More by this Author


Comments 77 comments

Robert 2 years ago

If I'm able to float $1,000.00 on a $250,000 mortgage at 4.75 percent, how much interest will I save?


The Rising Glory profile image

The Rising Glory 3 years ago from California Author

@MikeMC - I actually thoroughly enjoyed reading your comments because this was actually the same thought process I had when I was wrapping my head around this. But you, as I were, are wrong. :-)

There is a dynamic that takes place when you start actively trying to pay your mortgage down. Think about the Dave Ramsey debt snowball (if you are familiar with that). He has a person start paying off the smallest bill first and then as the small bills are paid off that payment goes toward the next smallest paying it off quicker. The reason he does this is not only is it systematic but there is an emotion that kicks in that makes a person become more aggressive.

The same dynamic takes place in this. When you start "floating" the money you do everything you can to keep the float active as long as possible. Even to the point of reducing spending in other areas. What the vast majority of people see is that they actually reduce the balance of the float unintentially as time goes on and they are able to make subsequent principal payments, which continues to acellerate the principal reduction. While it is true that your initial principal reduction will probably be the largest, but a person can typically add several hundre/thousand (depending on income level) 2-3 times per year.


MikeMc 3 years ago

Thanks for presenting this idea! I've been STRUGGLING to understand this concept. My difficulty is in the statement you make saying (regarding the negative side of paying down a mortgage in the traditional way), "the money that is reducing the principle is money coming out of your monthly budget. In other words you have less money for other expenses or things you enjoy doing.".

Then you go on to say, "What I want to talk to you about is how to pay off your mortgage using the banks money. In other words reduce your mortgage balance without taking extra money out of your monthly income."

Sounds great! But then you go on to say in comments that any amount on the float has to be repaid (which I get--borrowed principal must be paid back in full). Eventually, anyway.

The problem I see is that an early payoff by doing this continuously can only be done by having extra $$ in your budget to put toward the debt. Otherwise, you only really get one extra principal payment, to the extent of the amount "extra cash" sitting in your account plus up to about 50% of your net income. After that "jumpstart", paying down any extra principal by using your LOC will only build up in principal owed on the LOC UNLESS you have extra cash to put toward either debt. So, what I'm saying is, after the initial positioning of getting your LOC balance to 50% of net income, you might as well make any additional principal payments directly to the mortgage.

To restate, it seems the amount of the bank's money you can leverage is limited to around 50% of one month's net income plus the amount of unused cash in your checking account before additional income must be used to continue an accellerated pay off schedule. I don't see how any additional principal payments can be made, without simply moving debt from the mortgage to the LOC and incurring higher interest payments after a certain point. Am I missing something?


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

Thanks for your comment, Monica! Keep going!


monicamelendez profile image

monicamelendez 4 years ago from Salt Lake City

I'm totally addicted to paying extra on my mortgage and you math here makes sense. I'm fortunate that I can afford to pay quite a bit extra every month. At my current pace it's going going to take my five years to pay off my mortgage. Cross your fingers that things keep going the same direction as they're going!


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Brian - if you want the optimum level of rotation on your loc you should purchase one of the companies software that does this. The mathematics are complicated but these systems are designed to calculate and determine when to pay on your mortgage and when to pay your loc.


Brian Again 4 years ago

I have been re-reading this article and the comments...I am getting it little by little. Yea! Let's say my income is $5000 per month, expenses are $2000 per month and a my loan pmt is $1000 per month due on the 15th. What would be the optimum amount that you would need to put towards the note each month and when would you want to zero out your RLOC?


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@dwachira - thanks for stopping by. It really is difficult to understand because it's not the way we've been taught to think. Want to really blow your mind? Check out my HUB about how low interest rates can financially kill you. It's a kick!


dwachira profile image

dwachira 4 years ago from Nairobi, Kenya

Great hub The Rising Glory, although i found it a bit rough to understand the concept, it sheds some light of what really happens in Mortgage world. Voted up and shared


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Lo1019 - Couldn't tell you on the spelling...horrible at language :). All I remember is that "Principal" is the person at the school because they are your "pal."


Lo1019 4 years ago

Thanks for the interesting info! I think I get it ...

One thing:

Isn't it spelled "PRINCIPAL?'


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Jackal - $1,000 out of my savings account onto my mortgage is me having $1,000 less with the benefit of saving interest over the life of my loan on that $1K + quicker liquidation of loan.

$1,000 off my line of credit saves me interest on my mortgage, but did not cost me $1,000 (I borrowed it). I have no payments on this $1K because as I transfer back and forth on my line it covers the minimum payment amt. By placing my unused money on my line I lower the balance of what I pay interest on. So, I may only pay interest on an average balance of $500 instead of the $1,000 yet I receive the full savings on my mortgage.

@Jim - an amazing thing happens. As I float back and forth something subconsciously happens that cause me to try to keep as much extra cash on my line which causes me to actually pay off the advance. This gives me the ability to repeat the process 3-4 times per year.


Jim 4 years ago

Great article - I think it just clicked.

I think this is the bit I struggled with, as well as a number of other people in the comments seem to. In your example of putting $1000 from your line of credit onto your mortgage as a principle only payment - this is something that you are only doing once - correct? This is not something you are doing every month or every few months.

Is that correct?


Jackal3453 4 years ago

I have read and read this article.

I am not understanding how you are doing anything more then just having a one time lowering of the mortgage principle by the float amount.

My question is without paying more each and every year then you would otherwise how does it grow more and more each year (other then the interest on the extra you "floated")

For example I pay $800 a month, $200 to P and $600 to interest. So in the course of a year I pay $9600. Using this method am I still paying $9,600 per year but just floating one monthly payment? How do the additional payments compound over years? If I paid an extra $800 then I just lessened my mortgage 4 payments, how does that increase unless I put more and more in every year? I think I kinda understand but am still not grasping how you reduce anything more then the amount you "float" each month. What am I missing?


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Brian - read the article then read each post, you clearly don't get it. When you read don't think in terms of using money out of your budget to liquidate a debt think in terms of floating free money to pay off a loan.


Brian 4 years ago

Why would you use a RLOC to pay your mortgage note??? If you have extra money in account or get paid more than your expenses, apply that to the mortgage direct instead of to the RLOC. That would save on paying interest twice...on the mortgage and the RLOC. I do not fully understand having the RLOC...why not just pay more on your mortgage?


James 4 years ago

Hi, as a follow to my previous post, and after reading again your article and the full comments thread, I understand better this concept and I'm very grateful for your help illustrating it and the wake up call this article gave me to focus better on finding smart ways like this one to manage better my money and pay the banks less interest and use their money interest free whenever possible.

My issue is that I still don't have a clear idea how to apply this concept with the current setup I have right now with my bank of Nova Scotia here in Canada. My pay cheque is deposited in my chequing account, and my mortgage, my line of credit and credit cards are all with this some institution for simplicity purposes. My mortgage payments are weekly as described below and they come off automatically every Friday from my chequing to the mortgage. I'm if right now the interest I'm paying are calculated weekly or monthly like you mentioned in the thread. I'm not sure if I'm allowed to stop automatic mortgage payment and if my mortgage payment is due for this Friday, if I'm allowed then to pay next Friday without penalty and make this Friday the payment on the line of credit to apply your method of "float".

I guess my confusion in my situation is if it is even your method applies in my case, since I pay on a weekly basis and whether the setup I have is the most optimal to save interest. I wonder if interest paid on a line of credit is better on the long run then that paid on the mortgage even if it is higher as indicated below. If that's the case, could you please let me know if it makes sense to make a lump sum maximum prepayment of $37K from the line of credit to the mortgage of $137 and $7K to the $47K mortgage and if the interest paid on the line of credit in this case is less than that paid on the mortgage. So the question is whether is it better to pay off the mortgage fast and have a line of credit to pay? Also I'm wondering if using my credit cards to use your method is a good approach to have "float" since I have 21 days to pay interest on my credit cards? Sorry for the so many questions and I appreciate your input on how this method works best in my case or if you would suggest another way to pay off my mortgage to save more interest? Thanks


James 4 years ago

@The Rising Glory, the $47K rate of 2.49% is fixed and remaining term is 1 year 6 months and the $135K rate of 2.25% is variable ad remaining term is 1 year 3 months. I set my goal to pay off this in 4 years and I'm wondering if it does make sense to do this and be paying $861/week for the $135K and $300/week for the $47K and whether there is any better strategy and smarter way with the line of credit I have of $95K line of credit @ 3.5%, to follow the "Home-Loan-with-the-Banks-Money" method and save more interest and pay the mortgages in 4 years or better in 2 years knowing that for 2012 the maximum allowed additional prepayment allowed in addition to the regular weekly, without paying a penalty is $37K for $135K and $7K for the $47K? How could I best apply the "Home-Loan-with-the-Banks-Money" in my scenario to pay less interests and get out of debt sooner? Thanks for your help.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@James - If any of those rates are fixed I would pay them off as slow as possible as they are lower than inflation. Every month you are paying off with money that has less value. If they are variable, just don't exceed the limitation for prepayment.


James 4 years ago

Hi, I have a mortgage for $135K @ 2.25% and another one for 48K @ 2.49% and I have a $95K line of credit @ 3.5% available for me. The maximum prepayment allowed without penalty I have on the $135K is $37K and for the $47K the maximum allowed is $7K. I'm trying to figure out if it makes sense and I'll be getting ahead financially if I pay the maximum allowed for my 2 mortgages from the available line of credit? Thanks for your help!


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Hello - great illustration of not getting it. Thanks!


Hello 4 years ago

All you are doing is making $1000 lumpsum payment per month. Of course it'll reduce the amortization period.

Rememer, the return you're getting on lump sum toward the mortgage is the mortgage interest rate. In this case, you're making 6% on the lump sum till the mortgage is completely pay off.

You earn the return as time passes by, you don't get an instant thousands $ saving by paying off $1000 principle.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Felipe - this will work with any size of debt. Under your circumstances I would work toward a payoff instead of fully paying off. Make a $3,000 principle payment to your $8,000 debt and then when you LOC debt is lower make another principle payment while you continue to make your monthly payment on the outstanding debt. Just play around with the math until you come up with the right numbers.


Felipe 4 years ago

Do you have to make a certain amount of money for this to work...what I have a question about is if you have $8000 of debt and you use your loc to pay it off but only make for example $2500 a month how will this math work in order to keep your oc low every month.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Jonathan/Bill: Don't over think the process. It is really just basic math.

1. I want to keep my LOC as artificially low as possible. What is "artificial" about it? I owe my mortgage company $800 on the 1st, but instead of giving it to them I let the $800 sit on my LOC until the 15th. While it is sitting on my LOC less interest is being charged.

Case in point. Right now I have nearly $8,000 in pending payments that need to be paid, but are not due yet. My current LOC balance is $151.00. These payments won't post to my LOC staggering between next week and about the 20th of the month. Thus I am not being charged for the principle payments I used on my LOC to pay down my mortgage balance.

2. I never have an actual monthly payment due on my LOC. Reason, is because of the way that I use it. All I have to do is deposit my paycheck onto my LOC as a payment then write a check against it. The monthly payment the bank wants is satisfied and I immediately have use of my money again.

Keep reading and re watch the video. Don't try and make this fit your current understanding try to understand what is being said.


Bill 4 years ago

Thanks for the post! Glad to save some money this way, but I am afraid I don't see how do you not pay more out of your monthly budget. I feel like at the end of the day you will end up paying for the extra $150 that you paid on your $1000 payment, don't you? At the end of the day, how many payments towards your mortgage do you make in a year period and how many of them are over your minimum due?

Thank you


Jonathan 4 years ago

Thank you for the quick response! Honestly I am still a bit confused but that is due to my 'standard' thinking. I guess I am not seeing why does it make a difference if you pay on 1st vs 15th? Is this because you don't want to keep high balance on LOC? And how are you reducing your overall interest on your mortgage? I will have to re-read this article and your comments below few more times to finally sink in. If you have the time/desire, can you provide me a full 2 month process of your payments so I can see where are you saving on the mortgage. I am not concerned about the extra bills, just your transactions between the LOC and the mortgage. I am also fine on the LOC interest that I pay. I just don't see how you save on the interest of mortgage. This is what dazzles me.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Jonathan: Thanks for stopping by and participating in the discussion. Below I will try to hit all your questions:

1. You don't want to become your own LOC in this scenario because it defeats the whole purpose. The purpose is to leverage the banks money. If you are using your own money you aren't gaining the time value/interest calculations on the use of the money - the float.

The only way this would work is in using the Infinite Banking concept where YOUR money is still earning it's rate of return while you are using it.

2. Depending on your mortgage, most mortgages calculate the interest on the prior month. My mortgage: Due on the 1st and late on the 16th. Whether I pay on the 1st, 5th, 10th, or 15th the interest is pay is for the month of March. I never pay on the 1st. I pay on the 15th as it cost me exactly the same. That payment stays on my LOC where I am saving the interest or creating the float.

3. No, you don't want to make your LOC go negative because then you are giving the bank free use of your money. Not smart.

Finally, the other questions...your thinking is trying to do what most people do, how do I avoid paying any interest on my LOC. You WILL pay interest on your LOC. But the rate of interest you pay will be much less than the interest saved. Your savings, thus the increased liquidation of your loan is the net difference.

For easy math let's say your LOC carries a 10% interest rate. You take take the $5,000 from your savings and place it on your mortgage along with $5,000 from a line of credit. You will lose $4.16 in taxable interest that you would have received. Let's say you have 25 years left on your mortgage. Every month for the next 25 years your are saving some amount of money because your mortgage is $10,000 less and every month more of your payment goes toward principle. This means every month you are shortening the remaining term of your loan.

But you have $5,000 outstanding on your LOC at 10%. This would create a $41.66 interest charge. So your total cost is $41.66 + $4.16 = 45.82.

But what if you didn't make your mortgage payment until the 15th and instead on the 1st made an $800 payment on your LOC? This reduces your LOC to $4,200 balance on the 1st - 15th. On the 15th you make your mortgage payment so your balance is $5,000 from the 16th to the end of the month.

In this scenario your average balance for the month was $4,600 on which you will pay $38.33. You saved $3.33 in the float. Or, you had use of $400 for the month that you did not pay interest on it, yet that $400 was still saving you interest on your mortgage payment.

Now, what if you floated everything on your LOC? All of your paycheck, your car payments, etc. You increase the float thus increase the savings.

Finally, where your checking, savings, LOC are housed is irrelevant. My mortgage, checking, and LOC are all at different institutions. To me it is better because when I pay a bill with an access check I get couple more days float while things are clearing. If everything is through the same institution then transfers are immediate.


Jonathan 4 years ago

Sorry 2 more questions:

1 - can I move my 5k in the LOC account to make it negative 5k? That way I will never have to worry about interest there? Or the bank won't let that to happen?

2 - in your example in the article, you mention that you wait for your monthly payment to go on the 15th. Initially you paid $1000 towards the principal, then your $899 payment you make on the 15th. What happens to your LOC between the 15th and the next month? And where do you get the new $1,000 to make another principal payment?


Jonathan 4 years ago

The Rising Glory,

Great article, I think I am getting it finally after reading it 3 times and going through that you tube video but was wondering if it really applies for my scenario and whether I have to change checking accounts for that to work.

My mortgage and checking are through 2 different banks. I also have $5,000 in online savings with 1% interest. Horrible but still there if I really need it. I was wondering how can make that 5k work without the LOC. Basically I will be my own LOC.

Let me run this by you to make sure I understand your idea: today my mortgage went through $800. $600 or so was interest. If I make a $5,000 payment to my mortgage tomorrow it will go through the principal and I will move around 2 years ahead. When 1st of may comes around, the bank will send me another bill however and that will be the end of my 5k unless I withdraw them from there? Is that right? Is this where I am missing this portion, basically the LOC should be with my mortgage bank and I should be able to transfer the funds between the mortgage account and the LOC, right?

Thank you in advance.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Felipe3Sepulveda - yes, the companies like UFF use computer software systems. Most of them have promo videos that you can look at but since their software is proprietary I am not sure if you can access for demonstration purposes. You would have to check with each company on their fees, but in the end you will save a multitude of money compared to the fee. I know the video I posted has a monthly fee instead of a lump sum fee so theirs might be more manageable.


Felipe3Sepulveda profile image

Felipe3Sepulveda 4 years ago

Is there software to give to my parents to help them through this process? What are the fees allocated to UFF? and what is the contact info to your reputable agent?


Felipe S 4 years ago

Mike is there some type of computer program that I can show my parents to use to ease this process for them? I know you were saying you knew a reputable person for UFF but what is the fee? and do you know first hand of people with success with the program?


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

For those who still have a difficult time grasping this concept, there has been a You Tube video put together where a person is explaining it in similar fashion. You can view the video at: http://www.youtube.com/watch?v=VIsN2RbTVtM&feature...

This video is a sales pitch to join an MLM company, which I am NOT recommending. There is a fee to use their software and frankly I don't think you need it. However, if you are interested in learning about this company contact me and I will put you in contact with a reputable person.


Maureen 4 years ago

I GET IT! YES! Took me a few days to wrap my head around it but it is wrapped now. What an excellent concept thanks for sharing. I am 57 years old and have a 12 year mortgage sitting in front of me and I want to pay it in 5 so this just might be the way to do it. I have a line of credit but it is not revolving but by the way you describe this method I can see how it would work and you are right lots of us live paycheck to paycheck and don't have the extra money to pay it down so we needed something like this. Thank you again and I look forward to reading more of your ideas.


The Rising Glory profile image

The Rising Glory 4 years ago from California Author

@Maureen - "grace period" is not the key. Interest being calculated on on an "average daily balance" is the key. Most like your line of credit is calculated this way.


Maureen 4 years ago

I love the concept, however, after checking with my bank I realize there is no grace period when I take money off my line of credit or credit cards and therefore cannot "float" the way you describe. Any suggestions?


Jai Catalano 4 years ago

Sounds great but a lot of work and strategy.


The Rising Glory profile image

The Rising Glory 5 years ago from California Author

@check2check: The guy that was trying to sell you program probably had a computer program that managed the transfers between the loc and your account. You don't do this every month, you do as the balance on the loc permits, which is what this persons program does. I do it without the program.


Check2check 5 years ago

Hi, rising glory, thanks for the info. This concept was brought to my awareness by a gentleman that wanted $3,500 to set me up on a similar plan. I was skeptic and not at all interested at what seemed to be a costly piece of advise. I am not sure I completely get the whole picture yet. First off, In your example, this person did this every month would they have a balance of $12,000 owed to the loc? If this were so then I could see the $150000 mortgage dwindling in 5 to 7 yrs. But now one would accumulate a balance of approximately $84,000 on the loc plus interest.I understand how that would save you years of interest, yet now I would be paying interest on the loc until it's paid off? Another question, say I had $20000 capital would it be better to be my own line of credit? But this would dwindle my emergency fund in less then 2 yrs. Maybe I'm more lost then I had thought , Ahh I will figure it out, guess I will just read more info or maybe buy a book. Which reading material would you recommend that best describes your example situation, and where A person in this situation stands to be in a short future? Thanks again hope I made sense


The Rising Glory profile image

The Rising Glory 5 years ago from California Author

@Loan Ranger: Actually the program that I talk about here was based off what is more common in places like the UK and I think Australia also. Great points that you make, thanks for contributing!!!!


The Loan Arranger profile image

The Loan Arranger 5 years ago

In the UK I have an Offset Mortgage Current Account. Instead of earning interest on my current (checking) account, I don't pay mortgage interest on any money I have in my current account. So the more money I have in my current account, the more interest I save, which comes off the capital balance each month, saving even more interest over the term of the mortgage.

To maximise this, I use a credit card to pay for everything I can throughout the month, and then clear the credit card at the end of each month so I don't pay interest on the card. This maximises the amount of time all my money stays in my account each month, thus maximising the interest saved.

On top of that, I have an Amex credit card which pays me a cash back of 5% on everything I spend. How fab is that? I buy as much as I can through the month on the cash back card, earning 5% back, and I am also saving interest on my mortgage at the same time. Just by doing that, I have saved nearly £8,000 in interest in the last 4 years.

This stuff works - you just need to apply yourself and lose the 'I can't be bothered' attitude that some people adopt when it comes to finances.


Melody 5 years ago

I understand this process. People are not realizing that the savings are in the interest being paid, not the priciple. You get charged on the principle you have left so why not pay it early? I'm so excited about this idea and I will discuss it with my hubby. Thank you for posting this and I will let you know how it works!


The Rising Glory profile image

The Rising Glory 5 years ago from California Author

@Sabi - yes either way the $5K in your example has to be paid back. The difficulty people have with this concept comes from tradition thinking. Bottom line, if you borrowed $200K you have to pay back $200K. There is not a way that I know of to "not pay" back principle. However, the cost to your wealth is not the principle you pay, but the interest you pay. This whole structure is reducing interest cost through the utilization of floating money interest free. If I am able to save $50K in interest over the course of my loan that $50K becomes principle reduction resulting in a quicker payoff of my mortgage.


Sabi Delco 5 years ago

I like the concept. However, what I can't seem to figure out is how much extra cash goes towards paying the LOC on a yearly basis. I am a cash flow guy, so, let's say that I use the LOC to pay $5000 per year of additional principal payment however I sill have to end up repaying the LOC $5000 or part there of. I am right in assuming that whoever is doing this has additional $5000 at their disposable to pay their LOC in addition to making their regular payment. Am I right in understanding that this approach pays the mortgage and reduces the principal as quickly as possible and still have to come up with that extra $5000 per year to make that additional LOC payment.


Miguel 6 years ago

I would like to know when you use your line of credit and you and your spouses names are on it. Why then is the bank denying me access to were the funds transferred to and for what purpose. They transferred to accounts in my now ex wife's name and they said the courts would have to subpoena,for they are not turning them over to me. Also there are other properties she co-owned as joint tenant with her mother that was not divulged in our Divorce. I have all the evidence to show and have been to the Federal authorities but were told that they were not much interested and if they investigated they would not tell me. Also since I have also uncovered Freddy Mac, money coming out of an Investment fund in my ex's name paying down the mortgages on both of our homes. And the money has my name attached without my knowledge till the Divorce began. And the mortgage loan originator omitted information on our refinances that the mortgages were paid down during different refinances on both properties.This was her mother and then her mother got my ex a job at the same bank. The bank has ignored my request for pay-off letters and full documentation of loans.The statements on the mortgage loan account are not showing the extra money being applied. How can I find out? Over 20,000 was applied to one home over 3 different loans. And the other 28,000 was applied over several loans. Now mind you I made early withdrawal from my retirement account to make Mortgages for my wife at the time lied to me saying we could not make our bills. Also large sums of money were coming out of our equity line of credit.85,000 then 40,000 and another 45,000 and another spread over three months going into a custom management account in her and her mothers name. All records were on my subpoena that was denied by the bank.My ex got the homes in the divorce per the mediation agreement and she assumed all credit card debt of 85,000. They are now arguing the credit debt and the courts are allowing them ignoring the mediation contract that are binding by the courts. Where do I get help with insufficient funds to turn them in for prosecution and to whom? the FBI nothing, Office of the Inspector General told me to shut my mouth and go on with my life unless I wanted to be put in front of a twelve panel jury. After he told me about a 60,000 HUD loan in my name I know nothing about and who took advantage of it 13 years ago. Taken advantage of where do you turn for help with no money to fight? And why is the system courts and monetary system trying to keep me from bringing this out for all to see? Miguel


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

@Amit - the key to your question is in the float. Using your $1,000 example with the loc I have the $1,000 to make the principle payment where I may not have the cash to make a principle payment.

Yes, you will eventually pay back the loc, but you will be amazed at how much you can principally reduce your mortgage while floating the balance for little to no cost.


Amit 6 years ago

Hi

I thought i got a grasp of this theory but got a little confused again. You mentioned that we will use banks money to pay off the mortgage.

Say i take 1000$ from LOC and make a payment towards my mortgage principle. Now immediately (or in a few days time depending on the balance in checking) i can payback the 1000$ from my checking account to LOC to reduce any interest on the LOC borrowed money.

Question) Why would i NOT pay from Checking to my Mortgage Principle directly instead of :

Withdraw from LOC

Pay the Mortgage Principle

Payback to LOC from Checking.

Ir-respective of anything, i will HAVE to pay back to LOC at the end of the day. If i have money in my checking account, then I should definitely directly pay directly to mortgage principle. If im a low income worker, which has less cash on hand, then it might make sense to use the LOC and pay a little interest on it.

Right?


HomeBuyerHelp 6 years ago

Well said! Great article.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

@Brian, They are getting harder to come by but they are still around. Personally, I have a personal unsecured line of credit. Rate is variable...something over something, it's been awhile now so I don't remember the index it's tied to. Anyway the rate has hovered around 6%. You just have to do some leg work. My line is through a local bank, you know the kind that only has a couple of branches in your local area.


Brian 6 years ago

So how do you establish a Revolving Line of Credit? My bank and mortgage company don't offer "line of credit" except taking it as a "home equity line of credit"...that's bleeding the wrong way. The only revolving line of credit I can find is through a small business account. Is there a way to do this without creating a shell business? Love to give this a try, but need just a little more guidance on the mechanics.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

In this article it explains how to utilize this method, which you can do in your situation. The refinance from 15 to 30 will cost you dearly over time, but as you mention "cash flow" is the key ingredient for you at this point. I would focus on getting my cash flow consistent before I concerned myself with debt reduction. Once the cash flow is there you can then go full steam to get the other debt liquidated.

If it were me I would figure out how to dump the car. With the numbers you gave you are going to pay over $12K to pay off a $9K balance on a non-asset. Read my Hub found at: http://hubpages.com/money/Buy-a-Car-Right

Your rates on your loans are decent and will work nicely in the type of program I have laid out, but being unemployed brings in other factors not listed in this piece.

You don't want to commit too much of your money into debt reduction at this point because of your cash flow problems. You could create other problems if you are not careful. Worst-case scenario, let's say you loose your home...well if that happens who wants to have paid down the balance another $1,000? So I say: 1. Get out from under the car loan, 2. Get by until you get a job 3. Once those are in line utilize this strategy.


I hate debt 6 years ago

I found your page after being up late one night watching one of those "mortgage millionaire" shows when they slipped and mentioned how to pay off your mortgage leveraging the bank's money in 5-7 years with no additional payment. As a past loan officer this intrigued me and brought me to this sight. presently unemployed for 13 months.

Here is my situation and would love to get your strategy.

Car payment $239/mo 4.5 years left, $9000 balance.

Refinanced from 15 year to 30 year to lower payment do to unemployment. This is killing me seeing the interest I am now paying. 29 years left. 5.625% $132000

Equity line $26,000 7% interest. *** I have an additional $135,000 on the same line.

Here is what I need from you. How can I get to pay off and loans as soon as possible of these three loans? Should I go lowest to highest? Should I use the additional equity line to pay down to an optimal amount on the fixed loans? ie the car loan and home loan?

I would love to pay off the car asap do to present cash flow situation.

I know others have similar situations with unemployment at 10%, 100% for me and any help to pay some bills quickly for cash flow and then to get debt5 out of the way would be of great help. I may be able to put a few bucks but not much toward paying these loans off.

I wait with great excitement on your thoughts.

Thank you in advance.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

Crammous, thanks for the comment, but I don't use a spreadsheet for this...don't have it broken down this way, but the mathematics are pretty self explanatory


crammous 6 years ago

Rising Glory, I think we could all use your examples in clear mathematical spreadsheet example form, detailing the comparison of your LOC method with the non-LOC method (including extra principal payments say on the 1st), and how the savings come through clearly demonstrated, mathematically, side by side, not using language like "float". Please explain the following with spreadsheet mathematical precision:

"Remember that the full $1,000 is saving me money on my mortgage for the full 30 days, but I only paid interest on $750.00. Therefore I have used $250 free during the month."

Please make the spreadsheet downloadable and virus free :).


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

I would start where I am. If you don't have any room on your HELOC you will still reduce your interest charges if you leave excess cash sitting on your HELOC instead of sitting in a checking account.

If you have a small amount of room on your HELOC then just use what you can. The key in this is how long you leave excess cash on the HELOC.

Example: If your car payment is due on the 20th, don't pay it on the 10th. Let the money sit on the HELOC. If your 1st mortgage is due on the first and a penalty is charged on the 16th then don't pay it till the 15th and let the mortgage payment sit on your HELOC.


tcm565 6 years ago

OK. I'm new to this and I'm trying to get my head wrapped around it. You know we are taught all our lives one way.....

I do have a question. I have a 241000 mtg with a HELOC already of 17500. I have 23 years left to pay the mtg. Should I try to pay off the HELOC and start with an "empty" balance or can I start now? Oh, and I am one of the few that get paid once a month. YEA! and I am one of the ones mentioned that do live paycheck to pay check.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

Hello Barb, This method will work on any fully amortized loan. I've even used it on auto loans. Obviously, the larger and longer the term of the loan the greater the potential savings will be.


barb 6 years ago

is this method only useful for conventional 30yr mortgages or can you reap financial advantage even for 15yr mortgage? would this method be worth using?


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

Mike, thanks for the input even though it is riddled with errors. If you really want to live risky then put your money in a retirement account. For most, they are now only break even after huge losses. The market now, from a fundamental standpoint, is WAY over priced and has no basis to be at it's current levels. From a technical standpoint it appears to be making a top and ready for at the very least an intermediate pullback. In other words, those who have over the past nine months only achieved break-even are getting ready for another roller coaster ride down.

Your final analysis is also incorrect because the person you refer to who lives paycheck to paycheck will never have the ability to reduce their payment as described without the utilizing this or a similar approach to rapid reduction.

Become a 3 percenter! 3% of the population control the wealth. The rest do the same things the other 97% do and think they are going to get ahead.


Miles 6 years ago

This is a risky and unnecessary method to take. It would be effective for folks that are relying on or living check to check. But, these same folks should probably put money away in other areas like emergency or retirement funds instead of risking it with additional lines of credit.

Floating money with credit while waiting for checks only increases risk, while they still end up having to use their own money pay down the extra principal. Only now we are manufacturing "savings" from using a line of credit we didn't even have to use.

Example: I get my first check, instead of paying the payment on the first I pay 1000 towards principal.

2nd check - i make the regular payment now just before its late.

I get the same benefit as I would have with the LOC with no risk. In either case, I'm not going to have more "free" spending money during the month because it would have to either go to the LOC or straight to the principal payment.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

This works if your mortgage is a revolving line....this is a much easier method then as I described. The problem for so many is that they are negative (mortgage higher than value) and can't obtain a revolving mortgage loan.


mortgage reduce 6 years ago

how bout we cut out the middle step here (the LOC) and just deposit our paychecks straight into the bank's account where our mortgage is? For example, our mortgage is through a bank where we can actually get a credit or debit card on the same account where the money sits. So all that money sitting there while not being used is compounding interest down each month just as you've said here with the transferring back and forth with the loc, etc.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

If I understand you right then I disagree. If "you" have the additional money then "you" are paying down your mortgage with "your" money. I am using money that I don't have (banks money) and floating it so that I am reducing my balance and profiting off the float.


CO 6 years ago

Thanks for the explanation. I think the key thing I was missing here is that you make a mortgage payment that is larger than your scheduled payment and get more out of that payment by leveraging the LOC and timing of the payment.

The assumption is that you have additional money in your budget to put towards early principal payments. You could achieve a similar result by simply making additional principal payments, but the LOC method is a way to maximize the savings.

I got confused when I read “The problem is that most don't have the extra money laying around and if they did they don't want to apply it against their mortgage. So how can I leverage the banks money to pay off my loan?”.

Thanks.


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

First of all CO, a personal line of credit or equity will work. I personally use a personal line of credit.

On the other side of your question don't get bogged down on the example, but catch the concept. Let me explain another way. If I have a line of credit that charges on the "average daily balance" (that is key) then my goal is that I want to keep my "average" artificially low. What I mean by artificially low is that instead of letting $$$ sit in my checking account that I don't need for 2 weeks then I park it on the line of credit so that my average daily balance is lower even though the advance I made on my mortgage is still saving me interest.

Example: If you have a $200K mortgage at 6% interest. On your first payment you will pay $1,000 in interest and $199.10 towards the principle.

If I make a $1,000 principle payment I have advanced my loan five months because that $1,000 principle payment is taking care of five $199.10's (the first five payments)(I realize this number changes a few penny's each month).

So when you are making your 2nd payment it is really like making your 6th payment meaning that on your second payment $204.13 will go toward principle. (that extra $5 is like an extra $60 principle payment, but it didn't cost you anything) You are now reducing the principle of your mortgage at an accelerated rate because you wouldn't have reached that point until after you had made $5,995.50 worth of payments (5x1,199.10). Therefore right up front I have saved several thousand dollars, but the increased reduction will continue to grow over the years ahead.

On the line of credit side. Let's say we are paying 10% on the personal line of credit. The interest for one month assuming that I have $1,000 balance from the 1st to the 30th will be a little over $8.00. I also have created another payment in my household budget that I don't want. So my objective is to eliminate any monthly payments on my personal line of credit and to also not pay interest on the banks money. In addition I don't want to reduce my disposable income as you described.

For easy figuring let's say that I have a car payment of $500 that is due on the 15th, my budget is such that I need all of my disposable income, I am only paid once a month, and all of my other bills are paid on the first (that is not typical as we have a variety of bills paid throughout the month like groceries, etc that can help lower our average daily balance)

The money that is allocated will now be applied to my line of credit making my line of credit balance $500 (instead of $1,000) from the 1st to the 15th. There is also no payment that is now due because my balance is zero.

Because my budget is such that I have limited disposable income I then make my car payment on the 15th bringing my line of credit balance back to the $1,000.00.

When the bank calculates the interest on my loan I had a $500 balance for 15 days and a $1,000 balance for 15 days making my average balance for the month $750.00, which is what my interest is calculated on. Interest charge is now $5 instead of $8.

Remember that the full $1,000 is saving me money on my mortgage for the full 30 days, but I only paid interest on $750.00. Therefore I have used $250 free during the month.

Most people are not paid once a month and most can make larger principle payments keeping the spread between the mortgage reduction and the artificial balance greater. Then multiply the different of this spread over a 5 or 10 year period and the amount of savings (using free money) is staggering.

The key is how much can you put on your mortgage and how low can you keep the line of credit with the float. By timing your income payments to your line of credit at the right time of the month you will also never have a "monthly payment" that is due because the income you put on your line will satisfy any upcoming payments.

Make sense?


CO 6 years ago

Hi,

Thank you for your post. This has definitely got me thinking. However, there is something I am failing to understand and I was hoping you can help clear it up. If I understand the example correctly, the break down is as follows:

1st of the month

- Make $1,000 principal payment on mortgage from the line of credit

- Receive $1,500 paycheck into checking account

- Make $1,000 payment from checking account into line of credit

- Net Result: +$500 checking; $0 line of credit; +$1,000 mortgage

5th of the month

- Make $800 car payment from the line of credit

- Net Result: +$500 checking; -$800 line of credit; +$1,000 mortgage

15th of the month

- Receive $1,500 paycheck into checking account

- Make $800 payment from checking account into line of credit

- Net Result: +$1,200 checking; $0 line of credit; +$1,000 mortgage

If I got this right, then your monthly disposable income as of the 15th is $1,200. It would have been $2,200 if you had not made the additional $1,000 principal payment from the LOC and the paid it off from your paycheck. You have $1,000 less disposable income at this point. What do I not understand here (I don’t fully grasp the concept of the float)?

When is the mortgage payment made under this example and how are the balances affected?

Do you have to have a Home Equity Line of Credit or will a regular unsecured line of credit work the same?

Thank you in advance!

-CO


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

Real Estate is cyclical - what goes down will also go up. Of course one could always choose not to pay, but then you will lose the property and your credit. Not smart!


sobhit 6 years ago

Real estate market has crashed..no need to pay loan :)


The Rising Glory profile image

The Rising Glory 6 years ago from California Author

Good question jeremy because I think many would think along the same line. You are correct in that you are not "inheriting" the money. The basis of this statement is where most fail in the area of money. They think they have to possess in order to gain. While you can save a lot of money making double payments the extra payments are coming out of your household budget resulting in YOU paying the money back. The key here is leverage which you've missed. The savings is in the "float."

Simple illustration. I make a $1,000 principle payment on my line of credit. That money has not affected my monthly budget. Then as I receiving income, realizing I don't spend all of my income immediately, I let it sit on my line of credit till I need it instead of it sitting in my checking account doing nothing. At the end of the month due to my transfers in and transfers out let's say I have an average daily balance of $500. That means even though I used $1,000 and will compound my savings on my mortgage with the full $1,000 I am only paying interest on $500. Net result is using $500 for free.

As I stated, in one years time I paid down my mortgage the equivalent of 18 months which is roughly $33,000 of interest savings. The interest paid on the line of credit in the same year was less than $200.

Not understanding leverage is killing people financially.


jeremy.b.bowers@gmail.com 6 years ago

I don't understand how you would be using the "Banks money with the scheme" You don't inherit anything from the Bank except savings on interest that you would have paid over the coarse of the loan, and besides you can accomplish the same savings by making double payments per month. If you use $1000 of LOC to make a payment on your loan, then you have to make a $1000 payment to pay off your LOC at the end of the month, so why not just pay the $1000 straight from your checking account and be done with it? Using the LOC just makes your finances more difficult to manage and theres no benefit to using one. I think that you guys have seriously messed up your logic somewhere, money in =money out and by adding an LOC you've just added more interest that steals from your money in.


Burt W. Flaxton 6 years ago

I know this pretty method to repay home mortgage loan and it proved it works. The only problem is that no more people are aware of this possibility to save a lot of money. Thanks for this Hub, it contributes to solve this problem, especially in an economic crisis context.


The Rising Glory profile image

The Rising Glory 7 years ago from California Author

Hey Mike,

I don't disagree with you at all. This does "fly in the face" of conventional thinking, and your are right about fractional reserve banking!!! The point of my blog is to get people thinking...There is a reason why most are broke and it doesn't take rocket science to understand how to change the momentum back into your favor.


MikeNV profile image

MikeNV 7 years ago from Henderson, NV

It's a method of using credit float to your advantage. The average person can hardly balance their checkbook so this flies in the face of their ability to manage the scheme. But I can see the advantages. Same way with using credit card float. I can almost get a full 60 days out of my cards by using them in the first few days after paying off a balance.

Banks don't really have money. Fractional reserve banking will be the ultimate collapse of he American Economy. It's already happening. It's mortgages and banks that keep the people slaves to the wealthy. And so many people are so clueless as to how the "system" works that they could never pull your method off. But it's a very practical and smart way to manage mortgage payments for those who can.

Too bad the actual interest paid on accounts is so low these days. And the fees are getting crazy. My bank upped my checking fee on my business 5X unless I upped my balance to a ridiculous amount. I expect more of these fees to be introduced as the consolidation of the banking industry takes place.


The Rising Glory profile image

The Rising Glory 7 years ago from California Author

Addison, you are right. I found out that I was very limited in trying to get things done when I limited myself to what I possessed. There is plenty of money out there and when you can use Other Peoples Money (OPM) then all the limits are taken off.

KCC, don't let the credit issue hinder you. If you only have a few years left on your mortgage then you should have equity in your home. You can get a secured line of credit. Your rate may be higher, which means you will want to pay closer attention, but I have ran numbers at 7% and 19% and the difference is minimal if you know what you are doing.


Addison profile image

Addison 7 years ago

You have a lot of interesting concepts about using OPM - especially the banks - and it just makes sense once you've set it up right and feel comfortable with online banking.


KCC Big Country profile image

KCC Big Country 7 years ago from Central Texas

Another great hub! I am sold on this method and have been for over year. I found a site that offers the software to calculate this for you that is free to play with the demo, but only $30 to buy. It's well worth it if you're going to do it yourself. I have emailed with this gentleman a number of times and he's super nice. http://hubpages.com/hub/Finally-Be-Debt-Free

Due to a number of life circumstances (divorce, death of a child, etc.) I allowed myself to let my finances become disorganized. I'm now going to find it difficult to get the line of credit, but I'm determined to do it. Someone out there will surely believe in me enough to set up a $5000-$10,000 line of credit. I'm only a couple of years away from paying off my 15 yr mortgage, but there are still tons of advantages to doing this system. I have tried to explain it to my friends with new mortgages and they just don't get it yet.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working