A home equity line of credit is great...and smart to have instead of a traditional mortgage. However, don't make these mistakes when it comes to HELOC's. If so, you might as well stay on the treadmill of having a traditional mortgage. It's not going to allow you to pay off your home in 5-7 years like we teach our clients. Watch as we talk about two common mistakes or risks with a heloc.


Hey gang. Michael Lush again. As you can see I still haven't shaved, still growing it out pretty long. It's probably not a whole lot longer than the last video you watched. What I want to talk to you about is ways to use a home equity line of credit properly, and some of the most common mistakes that people have when using a home equity line of credit.

One, you don't want to treat it like it's a separate loan, so that you put money in a checking account and you just chalk that portion of your loan up as a different payment and you segregate your money and you just make a payment towards it. The purpose of the strategy is to use it like it's your checking account, so all of your money goes into it.

Now, something else that I make sure that my clients do not do, and when they call me I kind of interview them to make sure that they don't have these types of personality.

1) You don't want to use your home equity line of credit improperly. Most home equity lines of credit, when they give you a payment that's due at the end of each month, that's going to be the interest only portion. That's why the payments are extremely small. Don't pay just that payment. Again, treat it like a checking account. Put all of your money into it, and don't worry. You can get your money back out. If you only made the minimum payment, it's like being on a treadmill. You're not going to go anywhere.

2)...You're going to build equity extremely fast. Say you use my strategy and in 12 months from now you've got $100,000 of equity and you've always wanted an S-class Mercedes. Me too. I think they're great. Then you swipe your card and go get an S-class Mercedes that's going to depreciate 10% as you drive it off the lot, 30% in the first year.

That is the exact wrong way to use a home equity line of credit. If we are going to pull money out, we're going to pull it out for investments, and very specific investments, investments that pay dividends, cash flow, so that way when you're pulling it out you can actually pay it off even faster.

If you like this video be sure to click the like button below. Subscribe to our channel. We've got some more videos that we believe that you would love. Again, this is Michael. Thanks and God bless.

Disclaimer: Replace Your Mortgage does not offer mortgages, Helocs, or loans of any kind. Replace Your Mortgage is not a bank, and does not provide credit offers. Replace Your Mortgage is strictly for educational and informational purposes only.
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