Transcription
The house that we're looking into, although it might have a lower interest rate and be less expensive at $400,000, you're still looking at almost $500,000 at the current interest rates. I was thinking, well, that'd be cool if I could also utilize this line of credit to pay it off faster and get a house paid off in maybe 10 years.
So, there are just multiple things that are very enticing about your videos. That's why I'm here, just to get your intake and your input. The other model I've been using is very stressful, and it's just not working right.
So, all of that being said, do you realize that you could have your cars and your home that you're currently in paid off in 50 months? No? Okay, you are using all the wrong tools. You're using the bank tools, and they sell you loans. If you were in a line of credit, you wouldn't be paying the ridiculous interest that you are right now on your home. That's just literally what it comes down to.
With your cash flow, you're looking at the most you'll be in debt is 49.75 months. So, let's pretend that you have $10,000 cash flow, and we know according to your worksheet you have a little more than that. Now, that includes after you've made your debt payments and paid all of your living expenses.
You're living well within the model, which would be for your home not to exceed 30% of your bring-home pay, and your total living expenses, which are fixed costs that you're paying every single month, are not exceeding 50%. So, you're doing really, really good with your money.
Where you're missing it is with these loans because you're paying the interest right now. That's what the lines of credit stop you from doing. They have front-loaded this ridiculous interest that you've got at about 140%, according to your worksheet on that home.
So, you are absolutely right when you say that you're going to be paying $500,000 in interest on this home. No, you're going to be paying closer to $700,000 in interest on this home. When did you get the home?
We got into the home around September, what, September last year? We got in the home, so September 30, 2022. Yeah, last year we missed out on two rate locks that were lower because the house took so long to build.
Okay, so there are first lien HELOCs that you can get. If you guys are planning on moving, get ready for the HELOC. The HELOC is like $1,895 for origination fees, and I'm sure, not looking at your documents, at a $566,000 balance, you paid at least $20,000 in origination fees.
Yeah, probably. Your credit scores are good enough, and you've got the income to do it. So, for goodness' sake, when you go for your next appointment on buying a home, look at the HELOC.
Another thing is, the interest on the home that you're paying now tells me that $2,950 is going towards interest out of your payment. So, you have about $538 actually hitting your home.
Okay, where the lines of credit come into play, let's say if you decided, okay, I'm going to start doing this today without moving the home into a first lien HELOC. When you take a $10,000 chunk or a $20,000 chunk off of a line and put it into your mortgage, this principal balance means that you're saving.
If you were to do that today, you would be saving yourself, even if you guys are moving out soon. We're not talking about long-term getting it paid off; we're talking about when you do sell it, what amount are you going to have available to you?
Because you're saying that it's a $680,000 value currently. Whatever you can pay on that principal before you sell it, that is gravy for you. Right now, you have no gravy because you're only applying about $500 a month to your actual amount that you owe on the home.
So, if you were to do a $10,000 chunk and you were to throw $10,000 onto your home, that would jump you to August of 2025 as far as your mortgage on the amortization schedule, and that would save you $54,000 in interest.
So, that's just one $110,000 chunk. In your situation, with the money that you currently are making, you could not only do a $10,000 chunk, but let's say with your cash flow that we just talked about, you could do a $100,000 chunk every 10 months and not feel it because you would be rolling all of that into a line of credit.
You know exactly what that's going to save you when it comes to interest. If you were able to do a $100,000 chunk, let's say you did a $20,000 chunk. That's what I'm saying; you have so much to gain by getting a line of credit.
A $100,000 chunk on your home today would save you 10 years, plus $280,000 in interest. So, when you're thinking outside of the box and taking your mind away from loans and moving it into lines, you're going to save your wealth.
Money that you want to put into your retirement can now go into that instead of into these ridiculous loans. So, like I said earlier, if you get into the right tool today, you're going to have all of your debt, including your home, your cars, everything paid off within 50 months.
That's just math. It's just that you're doing nothing but paying interest right now. Right? Okay, so you have several ways to move here. You could go get a basic line of credit because you were talking about feeling threatened.
It seemed a little dangerous to put so much money into your equity or whatever you're talking about. You're already into your equity $566,000. So, getting a $100,000 line of credit is going to chunk onto the home's principal.
Now, you still are at $566,000, but the thing is, when you have a line on the side of your mortgage, with your income and your cash flow, that line's going to be gone in 8 to 10 months. Then you're going to pick it up and do it again. That's how fast your house is going to pay off.
So, imagine $100,000 that you're paying off every 8 to 10 months. How fast your mortgage is going to be gone? Yeah, exactly. So, especially if we move into a house that's less around, we're only going to finance, I guess, or this first lien HELOC.
It'll be about, after 6% total with closing costs and commission, I'm assuming the house is going to be about $415,000 or $410,000. So, you're saying, um, that sounds like, I said, 6%. Where did you go with that?
So, this house is at, you know, we have $566,000 at like 6.25% or 6.75%. The next house that we're hopefully getting in by this fall is the purchase price. The total purchase price will be about $415,000, and we're going to roll over everything we get from this house into that next one.
So, our mortgage will probably be sub $400,000 unless we do this first lien HELOC, which I'm still kind of confused about. So, really, it won't be 4.5 years or 48 to 50 months; it'll be less than that because we'll be starting at a baseline value of about $390,000 instead of $566,000.
Okay, so that's the kind of purpose of this. I like to hear that it'll only take 50 months in our current situation if we didn't leave this house, but we want to leave this house to be even catapulted forward even faster.
So, new numbers would be around $410,000 starting mortgage with hopefully a lower interest rate. But at this point, it doesn't seem like it really matters if we're doing $100,000 every 10 months. It sounds like the house would be paid off in like three years or three and a half years or something.
If you did nothing but just said, okay, I'm going to use a line of credit for the next purchase that you make, and you had a $390,000 balance, and then you added in $8,500 for your vehicles, you're still going to be at a three-year payoff for everything.
A three-year payoff? Well, that's crazy. Okay, it is crazy, but you make good money, and you have good cash flow, and you're learning how to use lines of credit.
So, how long did you think you're going to be in your mortgage? I was hoping, you know, we were talking about if we just did an extra thousand a month, it would be, you know, 21 point something years or 18 years. I can't remember the math I just did a few weeks back, but that was like all best-case scenario.
I was still looking at the amortization schedule, still saying, well, you know, instead of $500,000 or $600,000 in interest, at least it's $250,000 or $300,000. Obviously, this sounds much more appealing, but I just didn't know, can we qualify for $100,000 on a credit?
We don't know. You know, we were talking about how does that work when we need expenses? We don't understand how you just pull things out of a line of credit. Is it like a card? Is it like connected to your bank account? We just don't understand anything about that.
That's the scary part; it's the unknown of how to utilize a line of credit to make this work. Well, you know what? Just like I'm scared to death of flying, and you're not because you know how every bit of those instruments work, right?
If you teach me that and make me feel safe in a plane, I'll teach you this. Perfect! I mean, I'm an instructor, so I can teach you. I still fly small planes, so it is just what you know.
Just like you understand that airplane and how that works, once you learn how a line works, it's not going to be scary anymore because it's so simple. I mean, I say that in my videos, and people are like, it's not simple, but it is. It's so simple; it's just a tool.
So, just like your tools on that plane, you use different ones to do different things, right? Once you learn how the tool in the bank works, it's just as simple.
Just like you're making payments right now monthly because that's simple to you, because that's what they teach you to do. But once you have $390,000, and this is a HELOC, a home equity line of credit, the only difference between this line and a mortgage is the interest.
The mortgage is pushed because the interest is so lucrative to them. I don't know if you've seen the videos where I talk about the difference between the mortgage and the HELOC, but to kind of educate you for a minute, the HELOC is a simple interest product.
Meaning that right now, the rate is 7.25%, but it's simple. A loan is an amortized schedule, so that means that you have your set payment. Let's say it's $3,000 a month; it is set every month. You're going to make a $3,000 payment.
But what they didn't tell you when you signed the contract on the home you have now is that this interest throughout this 30 years is pushed to the front of the loan. They take the interest and figure it for 30 years, but where they get us is they push it in the first seven years.
That's why you're spinning your wheels in the first seven to 10 to 15 years. You're paying the bank first; you're buying their house first, then you get to buy your home.
So, the first 15 years of a mortgage is 15 years you're still paying half, but the majority hits in the first seven. Why do they do that? Well, it's statistically proven that every American family is either going to move within the first seven years, which is what you're getting ready to do, or they're going to refinance by the fourth year.
So, they win. You move, just like you're doing right now. You're paying them to rent; you're not gaining anything off of what you're giving them right now. When you move, as they know you're going to, you're going to do it again.
You're going to move into another mortgage, and you're going to spin your wheels again until you and your wife decide to either move again or let's just refinance because we're going to get a lower rate. Is that not what you just said to me?
So, we sat around with those conceptions in our mind because that's what they told us to think. We're going to move anyway, or we're going to go ahead and refinance to a lower rate, which does nothing but reset all of that interest you just paid.
Okay, so they're making a killing. This is how the banks are so huge. When you're moving into the 7.25%, that's a simple interest. This interest is literally only charged over what you did in 30 days, not 30 years.
So, with your income being so large, with a $390,000 line now that's revolving, this means you're going to have a checking account with this line, and it's going to be your checking account now.
So, they're going to give you $390,000 as a balance on your home that when you put in your $20,000 income every month is going to smack this down. Well, when it comes down, your interest is charged off of the average.
So, what was your average throughout the month? Not what is the high balance, not on this. Okay, so that's how you win. When we're using all of our income, that goes in and hits this line first, then we pull out all the expenses, the other living expenses, debt, whatever we've got to pay on.
Now, you're back up to $380,000 on the home you're paying for. Now, you're not going to be $10,000 down on that home until about 2026. You did it in one payment of putting your income in.
That's the difference; you're knocking this balance down every month, and you're not doing anything different. You didn't get an extra job; you're using a different tool that the bank already offers.
So, that's how your home is going to pay off so fast. You're using your income, and you're revolving it every month through this account that's just bringing this balance down until it pays off.
Now, another thing that's a real plus on these lines, let's say that you get into a line, the $390,000. You've been in it for, okay, so let's say that the value of the home that you're buying is $500,000.
With your credit score, they're going to give you $450,000. You're going to have $390,000 of that in home, so that's going to leave you with $60,000. By the time they pay off the mortgage or the home you paid the people that you're buying it from, you're going to have $60,000 left over to pay off your cars or whatever.
Okay, so let's say that you use the whole $450,000 because you've paid off debt, and now you owe $450,000. It's the same thing; the $20,000 will go into this line, but those car payments that you had before are gone.
So now you're just putting all of the cash flow into here. That's why you have, say, a $110,000 cash flow today. When you pay off the car loans, you're going to have $1,200, right?
Because they're like, yeah, $18,800 more dollars, that's just coming in here and sitting. So now your expenses may be $8,000 a month, so you're at $438,000 by the end of your first month.
See how fast you went from $450,000 to $438,000 in one month? Right, because it's simple interest, not front-loaded for the first seven years of crazy interest rates.
Because I do look at that on our payment. I see, you know, $3,100, $3,200 interest, like $900 in principal, and then, you know, we've got taxes, fees, whatever.
It's frustrating, but I don't know how this is what's good for us to hear. We want another method to get rid of this because, like I said, when we open up a small business, we want to have as little overhead as possible but want to have access to cash if we need it.
Then being able to have access to quick cash and being comfortable with dumping all of our income literally every month, that's what our big question was: how do we access this quickly? You said it's tied to a bank account?
Yes, this is a checking account. So, what happens is it's a side-by-side. When you have, like mine for example, I have my HELOC and my checking. So, I keep the checking at a zero balance, which is what they do on the first lien.
It's a zero balance. So, if I have, say, my electric bill comes in, and it's $400, it hits the zero. On these first liens, it'll sit here until midnight, and it's a sweep account.
So, at midnight, it will come out of the HELOC, pay off the $400, and now the $400 will be in the HELOC. Okay, now let's say you get paid tomorrow. You have a paycheck that comes in from your paycheck at 12 midnight.
It'll sweep into this HELOC, and now you've got $1,000 less owed on the HELOC. This is automated. Can it be with our current existing bank account?
No, they set up one now. If you get a HELOC with your current bank and they'll link the accounts, then it can serve as the same thing. If you're running a schedule on that and you did a $20,000 chunk, what would happen is your $380,000 would be knocked down to $360,000.
That's going to knock off to May of 2027, so it'll jump the schedule to May of 2027, and it's going to save you closer to $6,000 in interest.
So, this $120,000 chunk onto your $390,000 loan at 5% is still going to wipe it out really fast because as soon as you put this $2,000 from any line into this, your income is going to go right back in, and you're going to be back down to a zero balance.
So, your first month is going to be taking care of your expenses, then are going to come back out. So, this house payment is $239 a month.
So, with your house payment and everything coming back out in expenses, let's say it's $10,000, you could immediately in your second month do another $10,000 chunk. So, you're already down.
So, you at $360,000, then you'd be at $350,000. Right when your income goes in again, you're going to do it again. So, you're talking about you literally could do $10,000 chunks through the line into this every month.
So, how long is it going to take you to have your home paid off? How was that? 10? So, that's $120,000 a year. So, $380,000, like three and a half years maybe if I'm really pushing it.
Probably three and a half years, yeah, three to four years. So, you're still going to get your cars and your home paid off in about 48 months, and with your credit score and income, it ought to be very easy to get either.
Okay, so what limit should we be looking for to make this all happen as quick? Just a $20,000 line of credit? That's fine. I mean, you can use that.
I think that I would definitely try to get more because the more you get, the more damage you do upfront on the mortgage. Like a $50,000 would be even better.
Yeah, so like let's say because you could pay off $50,000 every five months easy, okay? Just based on what you're showing me right now. Right?
So, if you were to do a $50,000 chunk on the $380,000, you have literally knocked off your schedule up to July of 2031. So, that means that you've saved, that's like nine years of interest saved right there, eight years of interest, $117,600 in interest as well, just one chunk that you can have paid off in five months.
Okay, well, that's kind of depressing that this is not more widely known because, you know, as kids growing up, we look at our parents, and we watch them just pay a 30-year mortgage, and then they pay it off, you know, after buying a house in the 1980s.
After retirement, they pay it off, and they go into the sunset like, wow, I guess that's how it works, that you just wait 30 years. I'm just like, this does not sound appealing at all.
An amortization schedule, a packet this big, you pay $1.2 million for a $500,000 home. I was like, this just doesn't sound fun. It doesn't sound right. It doesn't sound fun.
I was like, there has to be a better way. So, I just Google, Google, Google, and finally found you. So, it's sad. It's sad is what it is.
They sell it as the American dream. The American dream is to own the home, but where they got us, and it was started in 1929, they literally named it what it is, mortgage.
How they advertised it as you can now own this big property for this little bitty payment, but what they did was when they named it, they gave it exactly what it is. Mort is mor, yeah, mortal, yeah, death.
They named it death-gage, which is grip or, you know, any kind of contract you're going into. So, you're talking about a death grip or a death pledge, however you want to say it.
They named it for what it is because you're either going to pay on it till you die or you're going to lose it because you're not going to make the payments. The reason that the line and the loan are totally two different animals, you've got a line that's a little baby kitty cat, and then you've got this loan that's this big ferocious lion.
What makes it so different is the way the interest is set up. The line is a simple interest; the loan is an amortized schedule. So, they take the loan interest that's over 30 years, and they front-load it in the first seven years.
That's why all of your payments right now are going to interest except a little over $500 a month. So, when they are setting you up in that first seven years, they statistically know every American family is either going to move in the first seven years, which is what you guys are getting ready to do, or you're going to refinance by the fourth year, which is going to reset the interest anyway.
So, they win. It doesn't matter if you're in it for the move or if you're buying; they're going to get the additional interest. Only 1% of Americans ever pay off their mortgage.
So, everybody is throwing out all of this interest that they think they're buying. One percent? Wow, that's sad. That is very sad.
And just like your parents, they work all of their lives to pay the bank for something they didn't even ever have to pay for. It was already theirs; they just didn't know how to use it. I didn't learn about this until I was 40. No, I was 39.
Yeah, well, I mean, we were doing the, I know it's not your favorite, but the whole Ramsey schedule for like two years, and I was like, this is not, it's like every month. You know, we paid off our student loans; we paid off all our credit cards.
Yeah, we paid off about $100,000 of student loans within like two years, and no, less than that. It was like seven months. Seven months, and it was just painful.
I was like, you know, we have no money at the end of every month. We're dumping everything into cash flow. We don't have any flexibility to do anything, and I was like, this beans and rice, sorry, excuse my language, I was like, it's not working.
And I was like, I don't believe in not investing now. Like, I'm like, we just got into our careers about four to five years ago each, and we're finally able to have a 401(k).
We're finally able to have a backdoor Roth. We're finally able to have a brokerage account, and I want to keep this money in there to stack up while we're paying off the things.
We realize we have a really, really, really good income. We're very fortunate to have that. We worked very hard to get where we're at, and we need to make sure we catapult ourselves.
I want to be 20 years ahead of where I want to be, you know, when I'm 45 or 50. Right? And doing this whole other method, it was just, it's too stressful. It's too slow.
I'm not going to cancel all my 401(k)s and just start dumping all this money into a mortgage for nothing, and then I get to, I'm 50, and my 401(k) is sitting there still at $230,000, hers is still at $85,000, and I'm like, what were we doing?
Why were we doing that? You know, because we want compound interest; we want it moving, and this sounds like the absolute best way.
I just wanted to get you on the phone because I needed to hear it one-on-one and not just, you know, hear a YouTube video. I want my wife to hear this too because, you know, I'm the YouTube study, the finance thing, like go research, and that's how I found you.
I just wanted to hear this. But, you know, we need to take the step, it sounds like, and just secure a line of credit. Like you said, $50,000, you know, in five months, $17,000 in interest on the potential, the new home, three and a half, four years paying off.
That sounds like we win. You know, we still lose a little, obviously, because, you know, we're doing things wrong here to get into another house. You know, they will win that battle, but I want to ultimately win the war.
I know it's cliché, but I feel like if we get into this now, yes, we lost money, obviously, but hopefully, we're young enough to where we can recoup from that quickly.
Your parents are going to be so, so proud of you when they see that you're a homeowner in less than, you know, four years max. You know, it's my grandmother. She's the one I think of because when you were talking about your parents, she was a single mom because of a bad marriage.
She was a school teacher, so the only thing she got out of the marriage was the home they had built. Thank goodness, you know, because that's what she literally used to live on.
So, she would work, pay down the home, refinance, get out money to like buy the kids' cars or whatever, you know, work more years, refinance. I don't know how many times that woman refinanced, but I thought when I was of age, okay, we have a home, and we're never going to pay it off.
So, I think about her, and she was just in the, you know, 1929. That's when she was born. So, that's what she was raised in, was we just, you know, the home is our asset that we just use.
The thing is, what's so stupid about it, you can do the exact same thing with a line, but you're not getting just toppled with all of that interest. You know, you're using a different simple interest line.
So, that's why I'm screaming to the world through these YouTube videos because the more people that can learn before they shut me down, then you'll know, you know, what you need to be doing as far as with these lines of credit and get out of these loans.
Your car loans are eating you up right now. Yeah, you have far less, you know, YouTube views, likes, subscribers than a lot of the bigger financial gurus.
People aren't interested in that type of finance advice because it doesn't produce as much interest for super-rich people. You know, we want to be rich one day. We're not, but we are being stifled, it sounds like, completely by the system that we only knew from children growing up into young adulthood now, and we're just trying to change immediately.
This channel has been up for one year, so I'm making waves, and that's kind of what's scary about, you know, it getting shut down because I've gained so much attention in one year.
People are getting awake, you know, they're like, what did she say? Even though I have some naysayers, there are a bunch of people that are falling in line here and getting their debt. I get messages every day, hey, I have paid off, you know, this in the last three months.
I hear that all the time, so it's making waves. If I wanted to be nervous, it would be about Dave Ramsey because he is everywhere, and he's teaching a 1960s cash method.
That would be great if we were still in 1960, but we're in a credit system now. We're not a cash system. They're trying to take cash away, and he can sit and say all day long that we're still, that we're not.
Everybody needs credit; you need credit to survive, right? So, I'm moving it into a credit system, and you know, the larger I get, the more attention he's going to come. I'm just waiting on it.
So, it makes me, you know, makes me a little nervous because I'm nowhere near as smart as he is in what he does, but it's still common sense that he's teaching.
You know, take your last 50 bucks cash flow and throw it into a loan that you're never going to see again, and I'm saying take your last 50 bucks a month and throw it into a line.
So, when you have that emergency, you're going to have access to your line, and you can pull it back out and use it again. That's why we wanted to seek advice too because opening up a business is another dream of ours that we've had for years and years.
We want to have that just extra cash flow, like you said, without going into massive, massive debt and just basically paying ourselves back every single month.
Not being able to utilize it because it sounds too easy that I put money in, and then I can immediately use it again, and then I put money in, and I can use it again, and it's a simple interest every month, you know, in large chunks.
It just, you know, like I can take the money out to pay my mortgage, or I can take the money out to pay a car, but I couldn't do that with a credit card. I couldn't do that with anything else because, first off, they don't allow you to link it up to that, and you'd be paying crazy interest on the card and the loan anyways for the car and the house.
It was like, what's, you know, it just sounds like the thing is here, it's just it's not a widely known method. Because of, you know, it's fine, I like our democracy and a capitalist society, but more stuff like this needs to be known for people that are trying to get out quicker so we're not a slave to big banks.
But see, that's the misconception too. You know, Donald Trump is not using loans; he's using lines. Right? I actually was reminded this morning because I was listening to this thing that the banks are using infinite banking, and we don't even know about that.
We're putting in 401(k)s, and we're putting into all this other stuff at the stock market that they don't even use themselves. They use infinite banking. So, you're just like, we're the rich are getting richer because they're feeding us, the working class and the middle class and the higher middle class.
They're feeding us the loans because that's how they're getting richer. Now, the one thing they're going to say every time is they're going to say you don't want that; you want this loan because it's a lower interest rate.
Yeah, I heard that in your video. Yeah, yeah. So, when you go in, I mean, don't be rude about it, but just when they say that, say, um, yeah, but I really want a revolving line of credit.
Revolving line of credit. Yeah, I heard that in YouTube. Don't let them push you into a loan. Yeah, they're going to, and they might get rude.
I have people tell me all the time that, you know, they said, well, why in the world would you want to do something like that? You're just going to get yourself in a mess. So, they don't know; they're not being rude on purpose.
They're just like us; they don't know. I'm talking to one of my clients, and he has been the senior mortgage loan officer for 40 years, and now he's using the INF method.
I asked him, I said, why are you coming to me? He said, I've never heard of this before. I said, you have been working in a bank all of your life. He said, I just never realized you could use a line of credit like that.
Yeah, that's pretty sad. Yeah, well, that's why we're here, and I'm just, we're just glad that we found it. So, yeah, I'm thankful. I'm thankful I learned it too.
I tell all my videos I just was praying for my finances because I was in a mess, and it was just like the light came on.
Awesome! Thank you so much for the time and producing YouTube videos. You're very welcome. You all have a great week and be safe in those airplanes.
Oh, we'll do. Very safe. All right, have a good one. All right, thank you. Bye.