Should You Pay Off Your Mortgage Early with a HELOC?


#1

Any thought?


#2

The video already went thru all the cons and those are far more convincing to me than the pros. Personally I don’t think you should keep a lot of reserves money in savings account. You can either 1) have some high balance credit cards where you can draw cash from; or 2) draw cash from your margins stock account. So you can potentially dump all your reserves money into paying your mortgage off.

More fundamentally why do you want to pay off your mortgage? Mortgages are the best type of loan. You should get more of it.


#3

Mortgage is only good if the rent can negate the monthly payments… so having a mortgage on your primary residence is actually poison to your cash flow.


#4

Mortgage rate is around 4%. You should only pay off your mortgage if you can’t find any investment opportunity that yields more than that.

How about I take over your 4% mortgage? You pay off everything to me, I take over your payment and pay you 1%. I have many opportunities that yield higher than 5%.


#5

Boy… you are even more cutthroat than @hanera in trying to taking advantage of your fellow forum members… :rofl:


#6

Taking advantage? I pay people 1% and the bank pay you nothing. I am being generous! :smile:


#7

Ok you are certainly selling it to the wrong person… try this trick on another person, maybe @BAGB… :rofl:


#8

If Heloc rate is 1-2%, it might make sense. When Heloc rate is similar or higher than mortgage rate, it does not make much sense.

A lot of credit cards offer 0% for 1-2 years. How can we get a few credit cards with very high credit limit? You can then refinance your home mortgage to a Heloc. Then use 0% credit card balance transfer to pay off Heloc. Later use Heloc to pay down credit cards. And repeat this cycle year after year. This way, you’ll pay 0% rate for your home loan

The key is get a few credit cards with 100k credit limit. Any trick to get high credit limit credit cards?

This is a trick that you need to remember the dates correctly. But it can be automated or reminded by email


#10

Not so attractive (or useful) for bay area home owners, esp the people with stock investment or business side options.


#11

That’s my job, per some posters here :wink:


#12

Actually I think we are all taking advantage of @manch for using this site… he should start charging a subscription fee for regular posters… :wink:


#13

which credit card lets you do 0% balance transfer without a fee? the fee is generally 3%


#14

There’s no free lunch.
CCs charge a minimum, or a 2%-3% < > for a transfer.

You have to work the numbers to realize if it’s a good deal or not.


#15

I see 2% fee with 0% for 12 months.

It might be a bad idea to use credit card to replace mortgages. However, if you have 5% or higher Heloc, 2% transfer is still good. It may not be worth the time and trouble if your credit limit is not close or over 100k. 3% of 100k is 3k a year.


#16

He already benefits immensely, still haven’t paid school fees to me. So far, I view it as charity.


#17

Oh I don’t know what happened with the school fee thingy there… :rofl:


#18

Even though I signed up for a Heloc (more for emergencies) doesn’t the new tax law blunt the usefulness of them by not allowing the interest to be tax deductible? Why give up a mortgage whose interest you can deduct for one that you can’t?


#19

If heloc interest can’t be deducted, then maybe rental income need not be taxed?


#20

Right. HELOC interests is not deductible thanks to the stable genius.


#21

Heloc for rental is now better than Heloc on primary