How to Pay Off a 30 Year Home Mortgage in 3-5 Years (Using First Lien HELOCs)

hey what's up everybody it's Jamel Gibbs your family oriented entrepreneur welcome to another podcast episode this is the business and investing podcast where you learn all things business and investing related so today we're going to talk to a specialist a HELOC specialist helocs have been uh a key topic on this particular channel uh on my podcast as well you know I've had recent guests DeAndre Clayton as well as uh Reggie Briscoe talked about it and today we're gonna have someone that DeAndre introduced me to his name is Anthony rushing from first lean heloc.com we're going to talk about how people are using first lean helocs to pay off their mortgage within the first five to seven years of having that HELOC on their property so how can you pay off a house within five to seven years on a previous episode you you heard Reggie Briscoe talk about how he did it within three years right so I'm gonna talk to Anthony Russian today we're gonna talk about exactly that how is it even possible this is a guy who specializes in firstly in helocs and I believe they're the only banking institution in the entire country that offers this particular product and specializes in it as well so you're hearing it right from the person the guy the company who specializes in it and you're going to see how it's possible for you to be able to do it my man Anthony rushing what's going on my man hey Jamil I'm I'm great man dude thanks for having me on I'm excited to to chat with you and kind of share um you know what we've learned what we know about this particular product you know how people are using it right and how people are using it to improve their lives um one of the ways is is to aggressively aggressively pay off their home and it's it's really it's amazing it almost comes across as being kind of kind of magical or fake you know people kind of push it off but the reality is the the results that we see and the results that are our clients are getting are true uh and and we see it day in and day out and it's amazing I'm just I'm kind of grateful to be uh to have kind of fallen into it if that makes sense because it's uh it's something where I feel like my work day in day out gets to actually improve people's lives um in a way that I don't know if I'd be able to otherwise so it's really pretty cool absolutely man so we're here to provide the value man we're here to provide the game plan the information that people need in order to be able to take advantage of this stuff because honestly this stuff is not it's not readily available it's just not right you know right banking the honestly a lot of banks the banking Society so to speak they don't want us to know this stuff they want to keep us on a 30-year mortgage for as long as possible but at the same time this particular product isn't for everybody it's not going to work for everybody so um we're here to provide that information that people need in order to make that determination for themselves right absolutely why don't we tell everybody a little bit about yourself bro well I have uh my history a bunch of different things uh went you know finished high school went to college and uh joined a band I left College to join the band I played music for six years Jordan did all that um got my real estate license at that point and then um toward the tail end of my my uh time with the band um met a real estate investor I have my real estate license at that point and he um we created a three-person partnership and we built out built up 40 doors uh which you know owned and managed and um and then actually uh when I went back to college finished College um and then went into uh to teaching actually I was I wanted to joined this program called Teach for America that focuses on um High extremely high educational outcomes for um for underprivileged kids if that makes sense uh and that's you know that really was a calling for me because I knew that my work and you know my toilet you know and sweat and tears and everything right was actually you know it resulted in someone else's benefit right and I felt like that was a really worthy cause um went to school for that was going to become a principal all that kind of stuff had twins um and then uh realized that um so through that we ended up selling the the complex if that makes sense and that gave me the down payment to buy you know my primary residence with with my wife at that point so um but we um we when we had twins I realized and thought about you know the the likelihood of me providing a financial feature for for them in the way that I wanted um and it it was it was hard for me to see that right um and so made a move into the mortgage business which is complete 180 right um and um that was really a decision for the family that I made um and I did the retail stuff and then found out about this firstly in HELOC product and I learned about how it how people are using it to aggressively you know pay off their homes become debt free people using it the capital in their home or the equity in their homes as capital to invest in leverage for Investments to build you know to build wealth to build generational wealth and I also learned that no one knows about it and I was like this is crazy how can no one know about this and I was a it's something that provides an extreme amount of value right when it works and it's important to say that but when it works it provides an extreme amount of value and I thought I was like you know through education and through my work with there with that you build a skill set to be able to teach Concepts to people right uh you understand in a way how to present information and build upon um foundational understanding to get to higher level Concepts I was like man this is this is great I get to now go back to something where I'm not just doing this for financial gain for my family right I get to have a purpose that does that but also is for a higher purpose in a way and um and to me that's what drives me as a person um and so I was really attracted to this and I was like look I'm just going to commit everything to that so that was about that was about four and a half years ago at this point um and I made the complete switch from retail you know amortized mortgages to this um and um that's how I got here and I I am extreme I love it I'm extremely passionate about it the people that were able to help have been able to change their life trajectory in a lot of ways just because with what they're doing already we apply a vehicle a financial vehicle for them that just works for what they're already doing better right that's not again it's not a given for everybody but like that's really what we try and do and what it works it's it can be life-changing it's awesome yeah man so great story man we we you know we heard how you got into real estate we also heard how you got into the mortgage industry and why first lean helocs why you're passionate about it so what exactly is a first lean heal up yeah that's a that's a good question so um all in all the first thing HELOC is just a different kind of mortgage it's it's a it's a mortgage it follows different rules than an amortized mortgage does that's it right so people here he locked a lot of times they think of a second lead HELOC and that's an extension of credit on top of your existing mortgage and that hence the second lean position it's kind of on top of your mortgage they get paid off second if the borrower defaults right that's you know a first link HELOC is the actual mortgage and so a lot of times what we'll do is uh use it as a refinance right so we'll refinance people out of their current mortgage by using a first link HELOC to pay off their mortgage the first thing HELOC has a limit we call it the line amount right and it has a balance which is usually the balance of your current mortgage and it's an open-ended line of credit so um you know we're talking it's a mortgage that just follows different rules than an amortized mortgage does the main rules have to do with money flow and the in has to do with interest calculation um so and what we do you know is we basically teach people how to work within those rules how to leverage those parameters right how to best take advantage of how this loan works for your advantage and um you know that that's really all it is it you know a lot of people think it's some new um new crazy idea and it's actually been around since before the amortized mortgage as we know it has been around a lot of people think no one else uses it reality is this is the main type of home loan that people use in Australia South Africa you know across Europe it's another type of home loan that people use when it makes the most sense and that's really all we're trying to do is bring it bring it and advocate for this product that may actually be better for you if it is then it makes sense to to choose it if it isn't the best option then obviously you shouldn't get it so really that's what we're here to do is just kind of share and advocate for this whole product and concept and way of using it absolutely and for those of you who are interested keep watching because we're gonna share with you how you can get a consultation with Anthony in order to be able to to see if this is the right fit for you now also as a side note I know we're using uh we're throwing around the term HELOC a lot of people may not understand what HELOC means it's basically a home equity line of credit you want to talk about that a little bit sure sure so home equity line of credit um I don't like to to compare this to credit cards often because credit cards have a bad rap right or they can have a bad rap a credit card is a line of credit and the thing that makes it a line of credit is the institution Bank whoever it is provides you with access to their money we'll call it right and you can borrow against that line of credit and you can pay it back if you want money can go in and money can go out freely so what a home equity line of credit is it's a line of credit that's actually secured by your real estate and that's why I call it it's a kind of mortgage right because a mortgage by definition is a loan that's secured by real estate and so a HELOC is a kind of mortgage right that's an open-ended line of credit which means you can put money into it you can pay it down as much as you want but every dollar you put in there you can also take back out so when you take it back out it increases your balance too right so um so I like to compare it to a credit card because that's something that people are familiar with right um and so it works in a similar fashion right so when you get a first lien HELOC it pays off your mortgage you have a limit just like with a credit card right and you have your balance just like with a credit card and you pay interest on that balance now the way it calculates its interest is different than a credit card but in that respect it's the same right it's it's it is a line of credit that you can pull from and use it as you need but you can also pay as much put as much money into it safely you can put everything into it safely if you want right because it is because every dollar you put in there you can take back out if you need it so the liquidity piece is something that uh and when I say liquidity is access to the money you put into it right the money you put in you can take back out so your money is liquid that part of it is actually an extremely integral piece or understanding for people to get to be able to use the strategy right to be able to leverage how how this works right so yeah man so how does let me ask you this man this is just you know a question that you know I'm randomly coming up with because I'm sure a lot of people are going to ask this question as well how can people use a first link HELOC to pay off the balance of their property relatively quickly so there's a there's a strategy right there again I kind of go back to what I mentioned before with any with any structure vehicle uh any sort of um yeah Financial vehicle that that you have there's a structure to it right and the better you understand that structure the better you know how to work within it to take advantage of how it works right so that's what we do so there's a certain way to treat I'll call it right a first link HELOC to fully maximize its benefit right some people call it velocity banking right uh we we've our thumbprint is you know maximized cash flow strategy someone else calls it accelerated banking right all these terms and if you know if you look up velocity banking that'll be the one that probably pops up the most uh on the internet that's the one that's most familiar but um all that is is there's a best way to work within this loan right to get the maximum benefit so um so we teach that right people utilize the strategy so we talked about one difference would have which has to do with the money being able to go in and come out right that's extreme people we use that right the other way it's different um and the reason why I'm going there first before just going straight to the question is because uh and this is the educator in me right is that in order to understand how we use this we have to understand how it works first right right so there are two main ways one has to do with money flow and the other one has to do with interest calculation so on the interest calculation part if we compare this to your mortgage right the way your amortized mortgage calculates its interest each month is it looks at your previous month's end balance and it uses that end balance against your rate to calculate your payment for the month and that's just that's just how they work right um nothing wrong with it it's just the calculation that they that they've chosen to use um a first in HELOC or the right first thing HELOC is going to use a different calculation it's going to use What's called the average daily principal balance so what it does is it takes the average of all the days in the month right so you've got you know let's say 30 days in this month it takes the average of all those individual days balances it uses that average against your rate to calculate your payment right well that means if you want the lowest payment you need to create the lowest average right that that understanding right if you want the lowest payment we create the lowest average right well how do we create the lowest average well if I've got 30 days in the month right I want the lowest average for all those days I need to have the most number of those days with the lowest balance does that make sense right I need the most days out of all that with the lowest balance that's kind of the big secret like a big reveal like like here's the curtain right um like so that means we need to start with the first day with the lowest balance right so if if I if we're going to maximize how this works we need to create the lowest balance on the first day possible right because that takes advantage of how this works that leads into the first part of the strategy right so if I'm going to create the first the lowest balance as fast as possible when I receive money all of that money needs to go into the first thing HELOC because that creates the lowest balance as fast as possible Right so when you get paid when people implement this strategy when they get paid they deposit the money not into their checking account but into the first thing HELOC because that creates the greatest decrease in their balance and every dollar they put in there goes toward principal pays down the balance it's like your principal payment almost right like you're living off your house pretty much living off your house that's right well if you did that with a mortgage an amortized mortgage remember amortized mortgages your money's locked away it's called the closed ended loan and so if you put all your money in your amortized mortgage well people need to eat food and you know pay for stuff right so you can't get the money out to pay for you know to pay for your expenses which is why that is not possible well not a good idea for an amortized mortgage well remember here everything you put into you can take back out so that's just what you do you pull from this to pay your bills right you pull from this to pay your cell phone your car your Hulu subscriptions right your kids education if that's what you're doing right you'll every expense that you have comes from there so if we think about the month as a whole all of your money goes in which creates the greatest decrease in your principal balance well as you pull from this to pay for your bills your balance incrementally increases month over month and at the end of the month take a look and see where's my balance now compared to the beginning right so basically what it means is every dollar from your income that you put in there that you don't take out to spend right is simply still in there when you first put it in there it's principal reduction you take away from that and whatever's left in there is your principal paid down for that month and so what that means is that it allows for it allows for you to use every dollar of your Surplus and dedicate that toward paying down your house what every single dollar that you don't spend is dedicated toward principal reduction which means there's no faster way to pay off your house right because there's no money anywhere else all of your money is there you just take money out to pay your bill so you literally dump in your entire paycheck let's say somebody makes I don't know five grand a month and you know this is after taxes and you know they're trying to pay off a two hundred thousand dollar house literally the five thousand dollars is going toward the payment and then it'll pull the expenses that they need to live off of from that amount almost like a credit card like you mentioned almost yeah almost like a credit card I mean it's because both are open-ended lines of credit we can compare the two because they work similar this just works in a much grander way right in a much more in a much bigger way because you're not talking about a ten thousand dollar payoff right you're talking about a three 400 000 payoff and oh sorry go ahead so I was gonna say you know if if somebody keeps pulling money because you got to live right so if somebody is paying off their mortgage but then they continue to pull money from it wouldn't that affect the balance at the end of the day 100 so they would there although they are paying so they're meeting their monthly payment amount but then they're still pulling some money out which means that they have to pay more money back as well doesn't it um yes so you know if if there is the you know let's if we think about your scenario you owe two hundred thousand dollars in the house and you deposit five thousand into it that that income of that five thousand dollars does reduce the balance from 200 to 195 right which that's a five thousand dollar reduction in your balance right you pay down your house by five thousand bucks right so I don't say they use 3 000 of that again so it goes back up to 198. that's right it goes back up to 198. so out of the five thousand dollars that they put in there right they took out three thousand for their expenses well they still have two thousand dollars of principal reduction right because the income goes into principal production they still have two thousand dollars of principal reduction in there at the end of the month that's kind of the way I like to think about it you know which is great because with the banks like using that same scenario if I were to put five thousand dollars towards let's say I needed to pay for 200 000 note yep and I put five thousand toward it but I have no I have no other way to pay my other bills and anything like that I can't reuse that money unless I refinance which is going to cost me money that's right that's right and then on top of that using that same scenario if I make a let's say a normal mortgage payment on a regular loan to a bank only a fraction of that amount is being paid towards principal the majority of that especially in the beginning of a loan is being paid towards interest so I'm not really paying down that loan for I think it's like an average of 17 years when it flip-flops and then you start paying more towards the principal than any interest you know what I mean so I do I do and we that's a path that we'll probably want to go down a different day yeah the amortization schedule is something that um that people I think just accept because they they're like hey look this is the way to become a homeowner yeah it kind of stinks but I'm just going to ignore how how bad the schedule is actually how how bad amortization is for me I'm going to ignore it because that's just how people become homeowners I can go that I can go in a soapbox for that for a long time so we'll save that for another day but yeah I agree I agree yeah so if you guys want to see another podcast episode with Anthony where we talk about the the ins and outs of the amortization schedule and how it's really not that effective be sure to leave a comment in the comment section if you're watching this on YouTube yeah you know uh hit the like button as well while you're watching this video but listen um another question for you man you know we're here to learn how to pay off a mortgage in five to seven years all right A lot of people want to know how to do that yeah why don't we provide them with a say a five-step process on what it takes to be able to use a first lean HELOC to pay off their mortgage within a five-year time frame yeah the first thing that has to be true is you have to budget well and you have to make more than you spend that's the that is the it I could even bring it down to a one-step process well not process but that that's the prerequisite right you have to be able to budget if if you if you're living month to month right let's use that scenario right um household owes 200 000 and they bring in five thousand a month that's great right so they drive in their income reduces their balance from 200 000 to 195. right well let's say they have two kids in daycare and two car payments and you know they're uh and they go out to eat sometime right but their expenses are five thousand too right well remember when they drive in their income that reduces their balance on day the first day they can and that affects their average daily principal balance that's awesome it's a win right because you're saving money on interest you that that does work and that is a good that is the best way to treat this but that won't make this work right because in this scenario their expenses are five thousand dollars too right we're living month to month right so they pull from their HELOC to pay their bills well their balance at this point is 195 as they pull from there you like to pay their bills at the end of the month they've pulled out five grand so now their balance is right back to 200 000. next month 5000 in down to 195 right they pull from their HELOC back up to 200 000 right 195 200 000 1985 this household would never pay off their home with this right this is not a good idea for them right um it isn't often but every once in a while we'll talk with people who are excited about the strategy and the idea they learn about this and they they're excited it's going to work for them and we run a calculator every time we talk to people but um there's every once in a while we'll come across someone who thinks it's going to work and you know we we have to you know we're our goal is to help people with this right that's right not just to get loans and so um our goal is to change people's lives for the better and so if we know this isn't going to work we you know hey look you know to these numbers look good to you no they don't that's weird well here's the thing it looks like there's enough cash flow in the household for this to work right but so number one is you have to you got to make more than you spend uh you got to budget well got to be disciplined with your finances what if people wanted to make some sacrifices right let's say somebody makes five grand a month and they're you know spending a little they're eating out a little bit more than they should but their goal is to pay off the mortgage in five years you can sacrifice some things in that case right you can you can sacrifice some things we um or make more money or make more money or if you have a car well there's this other part to it too where this is a great debt consolidation tool tool also so if you have two car payments and you Loop them into the HELOC it actually increases cash flow more than it hurts you from a HELOC payment standpoint which we can go over that later too but that's a really good way to shift debt from uh yeah less about bad a bad place per se right to a much better place which can actually change the trajectory for this as well um you can change your habits um and you can you know choose to eat eat out less or you can choose to you know spend less what's the reality of that actually happening most people don't want it right you know most people don't want to change their habits right and that's the way that's kind of the direction I was going is like yes you could right we don't like to have those types of conversations or I I don't like to guide people there because I believe that one of the hardest things to change it or is your routine is your habit culture whatever you want to call it right like that's and that's why people like you know your your Dave Ramsey's are are doing a good job is because they are able to successfully help people become disciplined right that's really hard I mean most of the people who were not disciplined before and now they are the reason why they did that is they had some major event in their life that snapped him out of and they said I never want to go there again it's like you know what that's like man you know what's coming to mind it's like asking somebody to lose weight when they really don't want to lose weight you're telling them or they want to lose weight yeah yeah do they really want to lose the weight no yeah like I want to go to the gym and get your shoulders that's not gonna happen you know like come on like you know what I'm saying like but you know that that's the thing is like even if people it's not like we're forcing people to make the change people want to make the change but just like diet programs just like workout regiments just like what uh um New Year's resolutions right uh I'm gonna do the you know the five o'clock morning thing right like three weeks the three you know I'm gonna do the for three weeks exactly right and then what happens is you go back to your regular routine that is also a something that we pay attention to right because I could have conversations with people all day and hey look why don't we just say like do you think you can cut out on this those aren't conversations we have because we again we want to set people up for success uh so first so first things first you're approaching this from a realistic standpoint you don't want to put somebody in a position where they're gonna fail right off the rip right so you want them to be able to succeed at this which is make more money than you spend that's step number one what would be step number two step number two is um is I would either watch jamel's podcast uh you know a little shout out there about velocity banking you can go to firstleanheelock.com as well and they have a there's it's a free educational resource that that you can learn about this um there are there are other really great resources online uh in terms of you know not to push people in a different direction but uh but online if you look up velocity banking we believe that I don't like we don't want just to tell you it's going to work right the conversations we have with people are not hey give me your you know tell me how much you owe what are your expenses you're going to pay off your home in this amount of time right we could do that but we're not empowering people to understand how this works and to control it because the reality is that you have control over how fast you pay off the house but it's not going to work if you don't understand it so we believe in the power of Education um and that that was again that was one of the main alignment uh pieces that I recognized in terms of this product and what comes with it the fact that this strategy is not as well known the fact that the product is not as well known right that involves a lot of Education the fact that people are actually paying off their homes in three years five years seven years that people are really skeptical about it yeah because they're like that's got to be fake right it's got to be fake people doing it you need to write emails right and I've never heard of this thing before so yeah it's it's got to be fake well the reality is that it isn't fake we do see results like that day in day out but it but it does take it does take understanding about how do you control this right so if things go awry right or if things you know it's a flexible tool so if things go out of the way that you expect them to you know what to change you know what to do to control this to go in the direction that you want right yeah so first things first look be disciplined right so you need discipline yeah in order to spend less than what you actually make a lot of people have that problem so it's not easy yeah so you heard you know heard Anthony say look other countries use this tool you have Australia they're using it certain parts of the uh UK using it other countries are using this as a primary tool because it actually works right this is how they're building real wealth relatively quickly in America we're so uh I don't want to use the word uh brainwashed conditions or conditioned that's a better word to use conditioned to use the amateur the 30-year amortization loan right and we believe in that because of that because that's what's being positioned in front of us but if the first lean HELOC was positioned in front of us we'll believe that that actually works as well we'll see results because everybody around us isn't using the first lean HELOC a lot of us are uneducated on it and that's where the education part comes into play so you got be disciplined get educated yeah right these are the first two steps what would be step number three step number three um so we have a calculator one person helot.com that you can actually input your numbers right you input your the amount that you own the house you input your current take-home pay right because that's the amount of money that goes into the HELOC each month right you input your monthly expenses those are the most important parts right um expenses are everything you spend money on right your mortgages including business let's say somebody owns a business you know um should they include that in there as well it depends on if you're using gross business income or if you're just using your household take-home pay if you're using your household take-home pay in terms of your distributions or if you do distributions with W2 right then I would just do that and then I would just do your household income if you plan on keeping them separate if you plan on integrating them it for one you're going to want to talk with a with a CPA tax attorney about uh intermingling of funds and how to how to show it in a way that that you can present to the IRS that they're going to be okay with right um if it if you're going to include gross business income then you're going to want to use business expenses and um and household expenses as well right so usually we do household expenses because there have been a handful of people who have who've successfully integrated the two business with first in HELOC the reality is the first thing HELOC is written to your person or to um to a revocable trust so um there are ways for tax attorneys and CPAs to integrate the two but and I'm happy to share those later on but my advice is if you're going to try and do that then first consult with them because they're the ones who are going to have to get your back if the IRS comes after you so it needs to be their plan they need to be the ones who who manage who come up with the plan and manage it and understand it so that way they can explain how it's legitimate within the tax code so that's a good question it is um so yeah if we usually go with personal you know take-home pay uh and then household expenses as well and leave the um leave the other stuff aside if that makes sense got it got it man so um you know at the end of the day we want to use that calculator to see if it's a good fit for us I'm going to be sure to link the uh the link in the description box that you guys need in order to be able to get access to that definitely so first three steps we talked about three of them right discipline right spend less than what you make yep number two educate yourself you're already doing that right here and I have a complete infinite Banking and HELOC playlist on my YouTube channel where you can get more information in fact I'll link the uh podcast I just did with DeAndre about how helocs actually work uh right up at the top so you guys can check that out and number three you want to use that calculator stop playing around with the numbers to see if it's a good fit for you yeah what would be steps number four and five how is it possible for our listeners to uh pay off their mortgage in five to seven years so step four would be schedule a call with one of us um I I my official employment is actually with First Savings Bank um I'm a loan officer I I was the sole loan officer for a couple years just doing first in helocs we have um we've we've grown a good bit in terms of volume and in presence and so now we've got four loan officers here I'm the sales manager helping Drive the team and so schedule a call I can give you the link for that too uh you know you can check that out um with one of us and what we'll do is we'll actually walk through the education piece with you um I don't want to say we forced that but we kind of force it because it's that important that's a good thing though man you know that way people understand exactly what they're getting themselves into when they I hate to say getting yourself into it because it sounds like it's coming from a negative standpoint but really it's not you're educating yourself to know exactly what you're doing to be successful at it that's probably a better way to position it 100 100 so schedule to consult with you guys you guys will walk them through it almost like like coaching them through it in order to be successful at it right and I'll again I'll link that in the description box for you guys and finally step number five what would that be five is is fill out the app and get the loan uh the experience looks just like a mortgage whether it's a refinance we can do these for purchases too so um you know it requires 10 down as well so you can go to 90 89.9 roughly 90 percent loan to value so if you're doing it as a purchase it's 10 percent down most of the people that we help are doing are refinance uh because they when the as they're doing research they get frustrated with the fact that amortized mortgages work the way that they do and they look for different Alternatives that can work better and and this is one and so um and so yeah the last one is is fill out the application after it's called yeah after the call that we have we'll we you know we'll say hey look this is something as long as the numbers work right yeah we'll move forward with send you the application and then it just really looks like kind of getting pre-approved and then underwriting and then you get the loan that's right so if you're purchasing a property normally if you're going through with a 30-year amortization you can get an FHA you can get a conventional loan for less than what you have to put down here right three and a half to five percent but here's the deal you got to sit on that loan for 30 years and you're gonna probably pay two and a half times of what the actual purchase price of that mortgage is so if you're buying a 200 000 home you're gonna end up paying 450 000 and that's the best case scenario to me yep best case and that's if you don't refinance that's if you don't move to another home I mean we're talking most people stay in the house for five years right so we're taking seven to eight different amortized mortgages that start at the beginning every time and we can talk more about that later but like that's a big deal yeah absolutely versus coming up with another five percent ten percent down on a purchase and being able to pay off this property in five to seven years yeah that's what we're talking that's how you build real wealth that's how you get access to the capital you need right that's right or you can go to refi process the rather than if you have the equity in your home yep let's say your house is worth two hundred thousand dollars they'll give you a hundred and eighty thousand yep and you won't have to come and come out of your pocket with that ten percent that's right right ten percent is already built into the home what if you have investment properties will this work on investment properties as well so I can't do first lean helocs on investment properties right now between you and me and I guess everyone else that's watching the podcast we're working toward that but I can't do it right now perfect building on it yeah there you go there you go that being said um there there's a there is a really great strategy uh to not just pay off your home your primary residence there's a way to utilize this with multiple properties to become debt free from a portfolio standpoint with just one and so we can talk about that too it's it's a it's a really cool strategy I think it's cool I'm kind of biased right but um but it didn't do it let's dig into it a little bit man okay okay so um so we have this this way of aggressively paying down your debt right all your money goes in the HELOC you pull from the HELOC to pay your bills and all your cash flow serves as your principal reduction right and the more that you cash flow the faster you pay down debt right and if you just pay off your house awesome right well let's say you've got three other homes three other rental homes with mortgages on those well now you're stuck paying amortized mortgages on these on these other homes so the strategy that we implement which is actually better than if you had helocs everywhere so uh and I say that because what people and I think initially think is from a Debt Pay down perspective it's better to have helocs everywhere because helocs are better once they learn that first thing helocs are better like we got to get them everywhere right that isn't actually true numerically it's better to have one HELOC as your central hub and keep your amortized mortgages elsewhere because what you do is you let's say um let's use that 200 000 let's say you owe 200 000 on your dollars on your house but your line amount is 300. are you with me so what that means is you owe 200 000 but your limit on this HELOC on this line of credit is 300 000. so at that point you have a hundred thousand dollars that you could access if you want right now we can label that a number of different ways right we can label that as your emergency fund at its core at its most basic level that's what it is um we can use that as a Tracker to figure out how is your success with the first thing HELOC how much Equity are you building right we can label it as capital and that's where the investor comes in right at this point in time the investor would label that as a hundred thousand dollars of capital that I can access immediately at like eight percent right which I mean the bed with the investor the better that they have access to Capital in different ways this is another way right but a hundred thousand dollars at eight percent immediately is pretty darn good in comparison to the other things that are available right and so so the strategy is to pay down the first lean HELOC to where you have enough equity available to fully pay off one of the other mortgages one of the other mortgages and then you use the heat you keep paying towards the heat lock you keep you keep the heat but here's the thing when you pay off you don't just pay down the mortgage right because if you just pay down the mortgage what you do is you you take on debt on the HELOC which increases your interest cost on the HELOC or you don't increase cash flow you have to fully pay it off because when you fully pay it off yes you increase your heloc's balance compared to where it was before but you increase cash flow because now you don't have a principal and interest payment anymore over here that money flows into the HELOC and increases the pace by which you pay it down me right Murphy's right there man you do it again Rick you pay it down to where you can pay off fully pay off the next property right how what's the average turnaround time for something like that like how long would it take using this scenario somebody's paying three rental properties what do you like would that take another 15 years or like how long does it take to pay off it I mean like that just like the first thing he locks in there is dependent your outcome is is solely dependent on your cash flow if that's all we're looking at the the outcome for your payoff time is solely dependent on the balance that you have the monthly payment how much cash flow are you do you increase each time that you Loop in a property it it is it's individual to the person but so so one example I had um uh probably about a year ago and this one sticks out the good ones stick out you know the ones that are super super solid stick out but um but about a year ago I had a lady and she had uh principal residence that if she just paid off she just used velocity banking to pay off her home um it would take about five years um but she had two other rental properties one had 28 and the other one had 25 years left on the amortization schedule right so by implementing the strategy she was able to become holistically portfolio debt-free in eight and a half years instead so it added three and a half years time right which completely changed her whole her whole perspective right so her whole portfolio instead of having an additional 23 an additional you know 20 years left on her amortized mortgages she's completely debt free just by looping in the debt from the other properties for this place you're shifting debt from a worse place to a better place that's really all you're doing so what if debt-free is not the goal though man like what what else how else can you use a program like this how like what else can you use this money for right which sounds crazy right like to most people they're like why would you why would I not want to be debt free right well that's not always part of people's plan right that's like there are a lot of people who leveraged that right they they use that the way we see it is look at investors investors we'll name it right and the thing is the way that we see it is this product is flexible to help work with with different paths different goals right if you if all you want to do is become debt free I didn't even put that the right way because it's not all you want to do if that's your goal that is an awesome goal and this can help you do it when it works right if your goal is to build a portfolio to start building a portfolio to build upon what you already have to scale to work toward you know to wealth or generational wealth this is a tool that can help enhance that right so from an investor standpoint the reality is that it provides you with access to Capital that you wouldn't have otherwise with a mortgage absolutely and there are a lot of people across the country who are sitting on one two three four five six million dollars worth of of equity that is unused in their home that they can't access we call that debt Equity right you can't touch it right and that's just part of a mortgage a lot of people just take that for granted and they're like okay whatever right yeah well as an investor the better you are at identifying opportunity that can generate a higher rate of return right the more your problem is capital right hey look I mean if you know I've talked with a number of enough people to know that the one thing that they say is if I could just have 15 million dollars of leverageable capital right that's all like there isn't enough capital I could have right because they're great at identifying opportunity and so um so what this does is this frees up it makes available the equity that you have in your home to leverage right so you know people that if if people strictly want to pay off their home we'll go to the you know Baseline right if that's their goal and they become completely debt free now they're sitting on three hundred thousand dollars of equity that they could use at eight percent eight and a half percent which means their cogs can actually start to turn and think to themselves hey what if I took a hundred thousand dollars right and what what if I took that and and bought an investment property and then put thirty thousand dollars into it to rehab it right and then either did the bur method and I you know refinanced it out did cash not refined to pay myself back right now I've got this home right that's cash flowing right just by doing that or what if I were to sell it right which then could generate an additional if you did a good job you know 30 to 60 Grand right like it for one with when you have an amortized mortgage the reality is when it's paid to zero or even while you're paying it you have access to none of the Avail none of the equity that's in the home this flips the switch it changes the game and it gives people access who otherwise wouldn't have had it at all right access to it for the actual investor it gives you another source of of capital right that's immediate that you can access immediately at an interest rate that is and and to be honest with you man for me like I'm going to Blackrock route man like yeah never sell you know what I mean what's the point in selling where you can just keep recycling the money that's right pulling it out and keep getting more of it you know what I mean get more properties use that money from the you know what I mean so that's the Black Rock route that's what I call it at least that's kind of the game you want to play man you know hold on to assets because you you make money when you buy when you sell it you lose all the uh you lose all the income that's coming in from it that's right that's right the name of the game is like Monopoly man you wanna you wanna make sure you're holding that's the that's the nature of this this whole real estate game in the first place yes there's a lot of different ways to make money in real estate right but the real wealth is built through holding everything man so with that being said man what are some of the obstacles that people will face trying to get this type of machine going well um once we get the the cash flow part once we get the budget piece out of the way right because that's the main thing right I mean all in all that's the main thing because that determines your success that determines your failure if people you know if you have a consistent habit of being disciplined you're likely to succeed with this I mean that's you know that's pretty much it right but um then there's the part about getting the loan right you have to qualify right you have to qualify for the loan so what does that look like um so credit score you're going to want to have a 680 or above um 700 is sort of the mark that that provides the best terms the interest rate isn't at least for for where we are right at First Savings Bank the interest rate isn't dependent on the score so as long as you qualify same offer same options um and so there's there's the credit score um type of home right so uh you can use stick bills I could do condos um can't do mobile homes or manufactured or the other one that starts with an m that I can't remember right now uh mobile manufactured and there's another one um and I can do all states we can do all states except for Texas Hawaii so none of the ends none of the end none of the M's yeah right um let's see um I can do all states but Texas Hawaii and Alaska right now quick question about the uh not to cut you off man quick question about the income like what type is there a certain income level that someone needs to be at in order to make this happen that's a good question there's some people here that's not making a lot of money but then there's people who are kind of there's all levels of income here so right what about the people that who are who aren't as make making as much because they're a little on the younger side so if you if you already have a mortgage on your house right and you are able to qualify for that qualifying for this is a little bit uh a little bit more stringent if that makes sense from an income standpoint but if you qualified for your current house it's likely that you'll qualify for this too in terms of new purchases in terms of purchasing a home um I I wish I could give you a good answer to well it's it's really I understand we we can't know until we get it in and that's kind of a risk people don't always like to take because it involves a credit poll and stuff but um but people don't like to take it but you know you can but you can go to places like uh rocket mortgage or uh you know they're that they're quick pre-approval places where they can tell you you're pre-approved for X in five minutes you don't always qualify at all they don't I don't see that as being as doing a good service for the client yeah um you know you got to do the work to get a good answer and like they just don't do the work and they give you an answer but it's not a good one so you can't always trust it so you know it's it's better just to do the work and learn either the good news or the bad news because you know if you're working with someone good they'll tell you how to make you know a a bad answer a good one you know it to get it right so you can live for it um but the the debt to income is a piece that that balances the amount of income that you bring in against the amount of debt that you currently have including the projected housing expense which is you know that the cost of the home the loan in the future right um and so our debt to income Max is a 45 that doesn't usually mean much to to people um unless you're kind of in the business or you do this a good bet right so somebody's making 10 000 a month and they spend 45 on it you know that's pretty that's probably a good window that's probably a good window right and so um so the debt's income is has less to do so I kind of separate two lines of thinking right one is is the first thing HELOC a good idea for you right that's where we talk about your spending including your you know restaurants and your credit cards and you know your um your Hulu subscriptions and all that kind of stuff right then we talk getting qualified for the loan and our conversation around debt to income is a little different because we don't include your your little expenses that you spend in the debt to income right in terms of getting qualified that has to do with your credit report which includes all liabilities that you have so your car payments and your student loans and your personal loans and the amount that you owe right now on your credit card bills right um and those kind of things but it doesn't include all the all the other lifestyle spend spend right and the lifestyle spend that's the reason why we have that conversation first because that is determining whether it makes sense for you to even move forward with this idea or not right and then we get to qualifying for the loan which is just a little bit of a different conversation if that makes sense um and and so um there are ways for us to work within the credit report that we pull within the debt to income for instance we can increase debt to income by looping in a car payment right and that helps from a debt to income standpoint which also helps from a payoff standpoint too so it's a win-win um so even when we you know if we first get in a loan and the debt to income is at 50 percent there are things that we can do within uh within the rules of of the loan itself to help the debt income get down you know below that 45 percent that we need you need to have enough equity in the house to be able to do that though I'm assuming you do right so again we can go to 90 89.9 percent uh loan to value so if you if you're at if you just bought your house and you put five percent down um I could only do it if you brought the other five percent to the table got you so like let's say for example somebody has a house they paid I don't know 254 now it's worth 500. but I only got two cars and those cars are worth you know I don't know 100 000 bucks yep um they can probably get this loan done because at 500 at 90 so 450 000 minus the what is it three hundred thousand dollars in debt that they probably have right left after paying off the mortgage and stuff that still leaves them with an extra hundred and fifty thousand hundred fifty thousand so in that scenario at the very core the very base they have a hundred and fifty thousand dollars of cushion right exactly of emergency fund right which is strong you know it's strong look that's a lot that's a lot of months of of not having a job to to you know to uh you know and and I I it's one of those things we presented that way where it's like look if worst case scenario happens because people come with these questions right what what if I lose a job right well if you lose your job with a mortgage you get a 30 60 90 day late unless you can come out of pocket to make that payment right here we call it floating the debt you fall and you float on the equity on the home when you do that yeah it pushes your timeline back yeah you you increase your balance because you're pulling from this to put food in the table for your family to cover your bills to make your your interest paying it to the bank right you're basically pulling it from the house to pay the house back you are right which we don't lead with that right exactly that's not we you know if if you're worried about losing your house you shouldn't do it you shouldn't do it right I mean you know but it's it's a secondary benefit right that's true right and so it provides a level of security so in that scenario you start with 150 000 of cushion right or if you define it differently right I would still keep 40 Grand or whatever your whatever your six months that's my point man like I I you know me personally I like to keep a Year's worth of income yep so a Year's worth of income and the bank will float you right right everything on top of that is kind of useless to keep in a bank agreed you know what I mean so like a Year's worth of expenses in a bank should even the average person is not doing a year let's say six months worth of expenses six months would be what 30 40 000 bucks for most people right so let's just say 50 just for easy enough 50 Grand so with 50 Grand anything above that should be invested that's right so in this scenario right you have to you in this scenario you won't have to have that 50 Grand in reality because the house is your savings but we don't want to leave with that you know what I mean yeah exactly right so in this scenario right your balance is 300. you can go up to 450 so you have 150 available but you're not going to touch the top 50 of it right right so in this scenario if you're thinking like an investor you have a hundred thousand dollars accessible immediately right so then the question is where are you going to put it right and that's always a question what's the margin between what I borrow at and what I receive right um and if you're talking about like a you know it depends on the type of investment right um you know sometimes it's a monthly dividend kind of thing right sometimes it is a longer term three five six one year type investment where you take the money out and that results in an overall additional interest cost right that's that's your costs of funds we call it cost of funds to you is you know whatever the full amount of that cost is and then what do you generate on the back end after so you're doing a flip for example like it's going to cost you a good 20 to 25 percent to do a flip because you borrow most people are borrowing hard money which is you know the interest rate is crazy plus your paying interest only on the money while you have it so you might as well borrow it from yourself at that point and hard money takes 10 to 20 days to get anyway yeah you could do this overnight literally you can I mean with a checkbook yeah and so I would still take precautions just for people who are brand new I would still follow hard money guidelines even if you're borrowing money from yourself because there's a reason why they don't lose money you know they're making sure the value in a property is there up front through an appraisal they're making sure they have a contractor's estimate up front so they know how much work the property needs follow those guidelines get get the uh the attorney to close the deal or the title company make sure you're still even if you're borrowing the money from yourself you want to follow those guidelines because it's a protection for you absolutely but instead of paying crazy interests crazy interest and maybe a point on the front and a point in the back you're paying to yourself you pay you pay it to yourself and you increase the balance for a short period of time and again if you're doing a flip you then sell you take the principal that you borrowed put it back in and all the profit that you received goes back in there too suppose you that's a you know fifty thousand dollar profit instead if everything is exactly the same instead of owing 300 000 you borrow a hundred thousand up to 400 for the time that you're doing the rehab right and then you sell you get 150 back you put the 100 back bring you back to 300 and then you got the 50 profit that brings it back down to 250 right well now instead of having access to a total of two hundred thousand dollars minus the fifty right sorry instead of having access to the 150 that you had before now you have access to 200 total minus the 50 that is your emergency fund your six months of of you know living expenses which means now you can pull 150 out safely instead of 100 out safely and so people call you know when people think about it this way they call it paycheck parking because what you're doing is you're putting your your leverageable assets in a place that works for you while it sits there right and the only time you take it out is if it can work for you better somewhere else right and if you know if the only Investments you can find are going to generate five percent then you don't take them out right but if the Investments that you that you you know decide to invest in can generate 14 20 you know 30 50 percent then it's a better use of your money because you borrow at a lower rate to receive a higher rate and it just gives you access to more Capital to be able to do that than you'll ever have with a mortgage absolutely man and do you need a ton of money saved up in order to do something like this you don't need any money saved up actually um if you're well let me take a step back if your credit score is below 700 yes you're going to need about three months worth of reserves which is I would just take your current mortgage payment at you know multiply by three and that would give you about what you need right you can pull from multiple places for the reserves part of it um you can you know you can pull from checking savings uh investment accounts you know brokerage accounts you can pull from IRAs 401ks at least the amount that you have vested currently that you're not obviously borrowing from as well um so no you don't need a lot of cash to do this um you don't need any cash right if you've got the credit score then then it's just a matter of getting qualified per debt to income and getting it done even you know there are closing costs uh I think it's important to name that a lot of times people hear the word HELOC and obviously what we think of are the helocs that we're familiar with which are second lean helocs and those don't usually have closing costs so super cheap right well that's just an extension of credit yeah mortgage right like we talked about before this is a full refi and if I think about closing costs closing costs are just paying people to do the work right in your town so you've got four different entities you've got Bank fees you've got appraisal you've got title fees and state fees because Banks got to do full underwriting right um you know there's a full origination closing all that kind of stuff you've got the appraisal we do a full appraisal there's Title Insurance remember this is a full out mortgage right so title insurance and closing fee as well and then it gets recorded with the state just like a first position mortgage would as well so um but the the great thing is with that is that the only thing you pay for out of pockets the appraisal and everything else gets looped into your loans balance so um and that's like five or six hundred bucks out of pocket the other amount you know again it's added to your loans balance so it does increase that um which is a reality right that being said it doesn't hurt your pocketbook now so if I think about the call it pain that people actually receive really the only pain that people receive if the purpose is to pay off the home is just an additional month or so in terms of their payoff which really doesn't change the outcome that much you know so um so yeah so a long story short man you know at the end of the day 700 credit score right we'll we'll get you the best terms or anything yep you don't really need a lot of money saved up but if you have a lot of equity that'll that'll help out yeah and educate yourself on this man and that's what this is all about it is and in order for you to get started I'm going to go ahead and Link everything in the description box of this episode so that you guys can look into this and use your money wisely smarten up right reach out to Anthony let them know what you're interested in doing if he can help you great if he can't help you right away he'll tell you how you can put yourself in a position in order to be able to get something like this done I think it's a powerful tool it's not for everybody so you got to be disciplined most people are not disciplined you got to be disciplined you got to be the person willing to go on a diet to lose the weight that's right you know what I mean you got to be the person willing to go to the gym and put up the weight is that in order to be able to make it happen you got to be disciplined if you're not disciplined with money do not do this that's right right but the links will be in the description box for you guys in order for you to get started and I'm looking forward to hearing your you guys success stories uh make sure you like this video subscribe to this channel click that notification Bell as well let me know if you want to see another uh episode with Anthony regarding what we spoke about earlier uh with the amortization scheduling yeah I think that's going to be an interesting uh episode for us to talk about but Anthony are there any books or anything like that that our listeners can look into in order to get more information um it's a good question um well in terms of books there I mean um I don't specifically know about any particular books that are out there I do know if if you if you're okay reading three information and trying to uh you can go to firstly heloc.com and they've got you know they we have some really I think great explanations about what this is uh how it works who it works for it'll help you better understand how it can how you may be able to apply it to your life and what you're trying to achieve um and I I think that would be a really great source to check out if that makes sense perfect um perfect there's a couple books that I could give you that that will help you really really dislike the amortized mortgage uh but we can we can save that for another day too so sounds good we'll talk about that on the next episode again leave a comment in the comment section let me know uh that you got because I'm gonna base that episode off of the comments that we receive if you guys really want to see that episode leave a comment in the comment section and tell me look I want to see the next episode with Anthony we'll make it happen all right I'm gonna link Anthony's uh information his website and everything in the description box of this particular episode if you're looking at it on a mobile phone you got to play around with the uh with especially on YouTube you got to play around with the uh the three I call it a hamburger um the hamburger navigation bar right play around with that a little bit the three dots that you might see on the on the uh screen um in order to reach the the uh description but it's there you just got to play around with the uh icons that they show you up on YouTube YouTube don't necessarily make that easy for you to get access to if you're on uh mobile phone another thing man any last words for our listeners regarding anything um getting started I just hope that this has been helpful uh I'm never bashful about advocating or sharing about this um because you know I'll never hold back on the education on sharing what this is who it works for how it works because the reality is it is another kind of home loan and it's a viable option for people across the country and right now it's just not very well known and that's not a problem but what that to me that means that there are a lot of people out there who are missing out on something that could really change their lives so I don't mind being forward with with pushing the idea because the reality is that the whether you get it or not is just solely dependent on the numbers right if the numbers show that it works then hey then we have a viable option right if the numbers show that it doesn't work then we say hey look it looks like this doesn't work so for me I have no qualms or being you know not necessarily being pushy but like really going out there and sharing this and saying hey look this can be a really great idea because if it doesn't work you shouldn't get it and we'll find that out right right absolutely listen guys we've talked about The Good The Bad and The Great and the Ugly on today's podcast episode and when you get the good and the bad you know you're getting real gems right because if we only talked about the good stuff then you should be skeptical but we talked about you not being able to qualify as well which is the bad part of it right so you know this was a great it was a fantastic podcast episode opinion and I'm looking forward to having you back I'm looking forward to continuing to build with you and seeing how we can help as many people as possible go from where they are to where they want to go and listen be sure to like this video subscribe to this channel click the notification Bell share it with your family and friends let's educate people on how he actually work because we're conditioned I like that word again we're conditioned to believe that an amortized mortgage is the best fit for buying a home when in reality you build real wealth using the strategy that we talked about today definitely I'm looking forward to hearing from you guys leave a comment in the comment section if you want to see the next episode and we'll see you guys then take care

Channel: Jamel Gibbs

Views: 31,346

Keywords: mortgage calculator, mortgage payoff, how to payoff your mortgage faster, how to payoff your mortgage in 5 years, how to payoff your mortgage in 7 years, how to payoff your mortgage early, how to payoff your 30 year mortgage, how to payoff your mortgage, how to payoff your mortgage quickly, save money tips, save money hacks, home mortgage tips, home mortgage calculator, home mortgage explained, home mortgage loans, home mortgage interest deduction, real estate, investing

Id: f1hvv_eijbQ

Length: 71min 17sec (4277 seconds)

Published: Sun Aug 06 2023