Alright, YouTube friends, Kris Krohn
here with Limitless Wealth TV and today we're talking about how do you go about
paying off your house early and I'm going to share with you hands down my
favorite strategy kind of compare it to society strategy and see if we can help
you take a 30-year game and turn it into a 5-year game. Alright, how do you get your house paid
off fast? This is a really really really good question but before I show you how
to pay it off as fast as possible, let's first understand that I'm not going to
share with you the traditional methodology right, here's the traditional
methodology. Here's my house and I'm going to do a 30-year plan, that just
happens to coincide with a 30-year mortgage, right. Some of you might say, but
Kris, I got a 15-year plan. Yeah, that's the 15-year mortgage. I get it, right. I
own my property, I'd like to get it paid off. On a 30-year plan, you're going to pay
for that house two and a half times, that's because of what you have to give
the bank up front with interest fees and as it amortizes out over the course of
the life of the loan, the bank is going to make a lot of bank on your property and
I don't necessarily have a problem with that but if my goal is to pay it off, are
you open to a more intelligent approach? Well my approach is a little bit
different, this is a real estate investing channel so let me share with
you what I would do to take 30 years and turn it into five years, would that be
cool for you? Okay, first of all, you got this property and if you're aggressively
throwing money on it, then chances are you're building some
equity with the property. Banks will usually let you lend on up to 80% or 90%
of the value of your home so let's just entertain a scenario where
you have some equity in this home. Let's say that you have $50,000, now there are
two ways to access this, you could do a cash out refinance and curve probably
$5,000, $6,000 worth of lending fees or you could do it for free
with what's called a home equity line of credit. I really like HELOCS, the HELOC
basically says, you have a fifty thousand dollar line of credit, like a
credit card but it's tied your house and when you use it, then we charge you
interest, when it's paid back, we don't. HELOC's usually are super cheap money.
Let's call it 3% or 4% so all of a sudden I've got $50,000
line of credit and I'm like well that's good, that means that I've paid
off some equity in my house, why on earth would I ever use that home equity line
if my goal is to pay it off? This is where I'm going to show you how to take one
step backwards to take two giant steps forward. Here's the faith leap. Take
that 50 grand and let me show you how to put it into another property that is an
investment. This is P for primary, this is your home,
this is the one that we want to get paid off and if you want to pay it off faster,
we're going to allow an investment property help make that happen. Let's say that we
find a house with a 20% discount in an equity growth market. I've got houses
that I do every single day just like this so I take you one of my markets and
we get a 20% discount at home, the $50,000 is another 20% down payment so now all of a
sudden, you got the house 40% paid down, it's almost half paid off and when a
house is half paid off, do you know what that means for the cash flow? In my
system, that means that the cash flow is really high. First of all, high enough
that when you do borrow the home equity line for this, that 3% to 4%
is going to have a monthly fee. Let's call it $200 a month but if we're here,
I'm making $500 a month and guess what, that means that I've got
enough money here to pay that and that's the principle that you need to
understand. You are creating more debt and then when you buy an investment
property, the 60% still there, that's also more debt. Now I've got more debt
here and I've got more debt there, that's the step backwards however, what happens
if you cash flows home $500 a month, you're getting $300 because $200 goes back to pay
your home equity line. What happens when that home in these growth markets
experiences 5% to 8% annual appreciation and let's just say in two years you have
a choice, you can sell that home, you can get your 20% back out and wipe out your
home equity line, you can get the 20% that you found the property with, you've
got all your cash flows you collected on it plus you've got the growth in the
market. Let's say that you could sell this house and make $50,000. After paying
this 50 grand back. Now just think about that for a minute.
We went in, played real estate game Monopoly for a couple years and look
what happened. We returned the $50,000 which means that
our debt went down but if I wanted I could take this 50 grand and pay off my
house 50 grand faster. Do you know how much you actually paid on your
house in 5 years to the bank? A whole lot less than $50,000 so you've done
something really really good here, in addition you were still paying down your
house. Now I want to ask you, do you want to put the $50,000 a profit into
this house or would you like to put it in another house?
Well if it worked one time and I've gotten it to work thousands, then you'd
go and sail on and buy another house and you might say, but Kris, what if I use
that home equity line and I use that to also buy another house in fact, what if
we strategically put our money together that we bought three smaller houses? Well
guess what I have now, cash flow, cash flow, cash flow, even more than I had
counteracting the home equity line. I've got equity equity equity and let's just
say in a few years I go to sell those houses and now all of a sudden I've been
able to roll that into a $180,000 of
profit after it paid back my home equity line again. Now I come back here, if
you've got a normal sized house like most people, you paid off your house and
then you get the other dilemma but couldn't I keep investing? Yeah, you could
keep investing but now you have a paid off asset and now you have other assets
to go and buy more real estate so ultimately two choices here, right. You
can pay off your house through the bank which is why you're going to pay for two
and a half times and it's going to take 30 years or you could do it
a whole lot faster by using some of the equity and by putting it into more real
estate. That's how you pay off your house a lot faster. If you want a professional
team that will help you build a portfolio and maneuver all that and make
all of that happen while letting you have a hundred percent of the profits,
you may want to check out my website and see some of the things that we're doing
around here because I'm telling you, we're all about accelerating your
results and helping experience exponential growth in your wealth.
