Money Magazine Article: https://money.com/youtube-mortgage-payoff-velocity-banking/ HELOC Strategy Explained: https://youtu.be/eGVn9iq1e6c So a few months ago, I was interviewed by Money Magazine writer, Samantha Sharf, about our strategy of using a HELOC to paying down your mortgage. She was certainly intrigued as many of you were and she asked me some really intelligent question. She did inform me that the article was put on hold and recently, she let me know that the article will be published. And it did! I really appreciated Samantha’s professionalism and she certainly had many good points. However, there are parts where I do disagree and I would like to provide my response and reaction! Feel free to read the article yourself and other articles that Samantha wrote! Now originally, this video was close to 45 minutes! (YIKES) So I did edited it down to 23 minutes. So unfortunately, I wasn’t able to include ALL of my reactions. But much of the points that were made by the article isn’t really new to me and I’ve heard many of these arguments before. First and foremost, the article never mentions the existence of a 1st lien position HELOC. For the entire article, it presents the strategy through the lens of a 2nd lien HELOC strategy. Therefore, the article fails to mention the full story of the strategy. The article also never mentions the fact that a 1st lien HELOC can be used as a “safety net” for individuals that undergo an emergency or even worse, loss of income for a period of time. So for the sake of making a valid reaction to this article, we’re going to stick to the 2nd lien position HELOC strategy and we’ll make a case for it. Now, on the positive note, the article does a good job articulating the general idea of using a 2nd lien HELOC and does a good job explaining the effects of the lowered average daily balane which ultimately has the effect of saving money on the interest side… But when the article begins make a comparison of using a $10,000 bonus to make a principal payment against the mortgage, it fails to understand the benefit of using a HELOC that ultimately lowers the average daily balance WITHOUT any excess cash/bonus introduced to the numbers.
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