This topic contains 0 replies, has 1 voice, and was last updated by Anonymous 8 years ago.
- November 12, 2011 at 5:13 am #376822
does this sound good?
you can buy a house now, and have it payed in 5-6 years. you can buy your vacation house now, or retirement house, and rent it, and the rent will pay the mortgage. and it will apprechiate by the time you retire.
you can reverse the compounding interest on a 30 year loan. (average daily balance). just like banks will take your payments and pay the lower interest loans first. when you do a 30 year mortgage, the lender takes monthly payments after the interest coumpounds the most. so instead you can take out a HELOC (home equity line of credit) as a second mortgage, a credit line of 30,000 for example, and use it to pay $ 15,000 towards the principle. now you lowered the principle amount by 15,000. so the interest is less. then use your monthly income to pay down the HELOC. when the HELOC is back to 0, pay another 15,000 to the principle with the credit. and your paying down the principle a lot faster than if you just made monthly payments to the loan. and the first month on the HELOC after paying it back down to 0, is 0%. the balance has to go past 30 days to have finance charges. since your always paying it down every few months, you’ll always have 1 month with no interest.
if you only paid monthly payments, after the first 10-15 years on a 30 year loan, you barely paid anything to the principle becuase most of your monthly payments go to interest.
if you have a 500,000 loan for 30 years, your actually paying $ 1,000,000 after 30 years because of the interest on the average daily balance of the loan.
so with the HELOC, you lowering the principle amount way faster then you could just making monthly payments.
and since your renting your retirement house, theres still monthly payments to the loan from the renters.
then in 5-6 years you will have some apprechation, and most of the loan will be paid, and you can live in it almost free, or sell it and have $ 200,000-$ 300,000 tax free.
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