My Epiphany

I feel really lame because it really just all made sense to me, like literally, yesterday. So please, those who already know this plan, don't laugh at me. I'm really am smart.

See, I've been told before about how you can pay off your mortgage using your HELOC in a matter of a few short years. We thought we were smart about 6 years ago when we refied our first home to a 15 year loan. We took out an HELOC about a year later because we had a lot of equity since our principle balance was going down quickly. We did an addition to the home as well as maxed out our HELOC money available to us to purchase our current home. It is now our rental property and a great investment for lowering our income for tax purposes.

But what I just figured out is the deal where people pay their living expenses using their HELOC while putting most of their paycheck toward paying down the principle balance on their mortgage. Now, obviously it wouldn't make as much sense if your interest rate on the HELOC was 8% ( like it was about a year ago ) and your mortgage rate is 5.7% but now that the HELOC rates are hovering around 2.5 - 3%, it makes perfect sense! It's amazing how much you can buy down in a year. I really don't see the rates going up, or at least back up to the 6 - 8% rate it was anytime soon Not until the economy starts showing signs of improvement and the Government has to inflate interest rates again to buy back the money they sunk into the system. So why not take advantage of the low rates for now?

So, I've made a goal to try it. If it goes the way I THINK it should, we should have our rental property's first mortgage paid off in a year without having to sell some stocks which was my previous plan. Paying off an original 30 year mortgage in 10 years is an amazing, freeing feeling!

Brilliant! Wish I had this epiphany a couple of years ago.