It is easy to wonder if you can pay off your mortgage in 5-7 years. While it might seem impossible, this dream could become a reality thanks to the velocity banking strategy. Velocity banking is a debt payoff method used to accelerate paying down a mortgage or other debts.
This strategy typically utilized a Home Equity Line of Credit (HELOC) to maximize net income and pay down your monthly debt while at the same time minimizing interest costs. Below are some of the things you should know about the velocity banking strategy.
How Does Velocity Banking Work?
Before delving deeper into our discussion topic today, it is essential that you understand how the velocity banking strategy works. Well, you can also refer to it as the HELOC strategy. After all, many people use a Home Equity Line of Credit (HELOC) to increase their cash flow when leveraging this method.
You count on the HELOC to pay down your mortgage faster than you could by using your paycheck or salary alone. This helps save money since you pay less interest to the bank over the life of the credit. Actually, you can use it to get some financial freedom because it’s not a service offered by a bank and you pay off your mortgage more quickly.
What You Should Do Before Velocity Banking?
While the velocity banking strategy offers numerous benefits, it doesn’t mean you should jump straight into it. Your mortgage provider may not allow chunking payments or may charge you for the privilege. That’s why you should check this before even thinking about the velocity banking concept.
Furthermore, an assessment of your income and expenses is vital. The more accurate you are with this information, the better assessment you’ll make and the less likely you’re to be surprised by the charges you hadn’t anticipated.
Final Thoughts
With the velocity banking strategy, it is now possible to pay off your 30-year mortgage in 5-7 years without feeling the heat. Either way, you must follow this strategy to the letter to stand the chance of reaping maximum rewards.