Hey folks. Michael Lush. I wanted to talk
to you today about the baseline differences between a mortgage and a home equity line
of credit. Again, a mortgage tends to be a compounding interest loan where a home equity
line of credit’s really no different than a credit card. It’s simple interest meaning
you’re paying interest on that day’s balance. If the next day’s balance is lower, you’re
going to pay less interest and a lower payment. Let’s take 2 examples here. Let’s take a traditional
mortgage, 4.25 on a 30 year loan at $300,000. The payment is going to be $1,475. Let’s take
that same debt and let’s transfer it and think of it as a home equity line of credit. Now
in a home equity line of credit you have $300,000 so the same as that mortgage right?
Here’s what we’re going to do. Instead of using my strategy, just to show you an apples
to apples comparison, we’re actually going to make the same payment of $1,475 because
again that’s what your payment would have been on the mortgage of $300,000 anyway at
4.25%. We take our $300,000 [inaudible 00:01:03],
pay $1,475, and guess what? You actually pay it off in 24 1/2 years. The reason why I’m
telling you this is right off the bat you can see that a home equity line of credit
is far superior than a mortgage. Using the home equity line of credit, like
your checking account, you’re going to accelerate it even further. On average, 5 to 7 years.
Again, that’s not changing anything about your budget. If you’re accustomed to taking
all of the money that you earn and depositing it into a checking account, and at the end
of each month you’re paying your bills out of your checking account, that’s all we’re
asking you to do with a home equity line of credit.
Instead, don’t use the checking account, use your home equity line of credit. It doesn’t
force you to pay more or less or change anything about your budget. You’re keeping your budget
the same. You’re just changing where you’re cash goes.
If you like this video, be sure to like below, subscribe to our channel. Again, thank you
and God bless. Thanks for watching the video. If you liked
that one, I actually picked out 2 more for you that you can watch right here.
Speaker 2: Other way. Point the other way. Michael: This way?
Speaker 2: Yep. Michael: Actually, I picked out 2 more for
you that I’d like for you to watch. When you get done, I’d also like you to subscribe to
our channel. Take care.