Paying Off Your Mortgage in 5-7 Years
WAEPA’s Annual Member Meeting this October will include a Plenary Address by Jordan Goodman, America’s Money Answers Man, on a variety of cutting-edge topics surrounding Financial Wellness. WAEPA sat down with Jordan to discuss one of the most noteworthy portions planned for speech, centered around paying off your mortgage in 5-7 years (on your existing level of income!).
Some background on Jordan:
Jordan Goodman, AKA “America’s Money Answers Man,” is a nationally-recognized expert on personal finance. He is a regular guest on numerous radio and television call-in shows across the country, answering questions on personal financial topics on shows like The View, Fox News Network, Fox Business Network, CNN, CNBC and CBS evening news.
He is the author / co-author of 13 best-selling books on personal finance, including Master Your Debt, which attendees of the event will receive for free.
Jordan, tell us about this concept.
The mortgage equity optimization strategy allows people to pay off their existing mortgages (which typically last 30 years) in about 5-7 years on their existing level of income. The way they optimize their money allows them to pay those off sooner than they ever thought. It’s really just a way of having your money work for you, and not the bank.
Sounds too good to be true!
This method requires a mind shift – you must think in a different way about your money to get it accomplished. If you’re willing to do that, though, the payoff is 20-25 years of not having to make mortgage payments, and huge savings on interest.
The reason it sounds too “good to be true” is because banks don’t publicize it, although it’s a relatively well-known concept overseas. Basically, with the traditional method, you pay off your interest first, and pay down very little principal. This method switches that equation in your favor.
What are the first steps someone should take to analyze their own situation, and their ability to pull this strategy off?
Take stock of all your numbers; income, expenses, home value, existing mortgage balance and mortgage payment. There are a few things you’ll need for this method to work:
Own equity of your house (if you’re underwater it doesn’t work)
Decent credit score (maybe 680 or higher)
Positive cash flow
Describe how it works.
What you do is you take out an HELOC (Home Equity Line of Credit) against your house as a second mortgage. You keep your first mortgage in place (hopefully you have good interest rate on it). You keep your cash flow in the HELOC and pay all of your bills out of the credit line, so that every day your balance is going down, except for the one day a month you pay your bills.
Let’s say you have a mortgage balance at $300,000, with perhaps a 4% interest rate. If you open a $50,000 HELOC, you can use this technique to make progress on your actual principal every day. After a year, the $50,000 is paid off. You keep repeating this process until the mortgage is paid off, saving hundreds of thousands of dollars on interest payments.
Where can people find additional resources on this subject?
I’ll be speaking more on this topic, and a variety of other valuable financial lessons, at WAEPA’s Annual Member Meeting on Tuesday, October 30th in Washington, D.C. Guests will also receive a complimentary copy of my best-selling book, Master Your Debt, where you’ll find a full breakdown of the strategy.
All Civilian Federal Employees, even non-WAEPA Members, are welcome to attend this event. Registration is free, but seating is limited, so RSVP today.
Worldwide Assurance for Employees of Public Agencies (WAEPA), is a nonprofit association (not an insurance company) formed by federal employees, for federal employees. The goal of WAEPA is to provide access to products and services that promote the health, welfare and financial well-being of its members. After 75 years in business, WAEPA has over 44,000 members.
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Posted in Hear it from WAEPA
Tags: federal retirement, WAEPA