So you have decided to pay off your home faster so you are not burdened by your biggest debt. Awesome! Congrats on your decision. So which option works best? You could do bi-weekly payments. you could make extra payments. You could even switch home loans to a HELOC. Which one will work best for you? Our latest video will show you.


Hey folks. Michael Lush. I recently got a question of what different ways are there to pay off a mortgage fast? There's actually four. One of the ways is actually about reducing your terms. Let's say you have a 30-year mortgage term.

If you do the Dave Ramsey method you could actually take a 10-year mortgage. Here's the issue with that. You're going to have a lot less flexibility because on a 10-year mortgage the payment is going to be substantially higher than it would be on a 30-year mortgage, but you'll no doubt be forced to pay it off in 10 years.

Now, there's no flexibility again, so if at the end of the month things are getting tight, guess what? You are under contract to make that 10-year mortgage payment. This requires quite a bit of discipline.

Another form is actually making extra payments. You've got a 30-year mortgage and you've got some residual income, throw some extra money towards your mortgage at the end of each month. Another common way is biweekly payments. A lot of banks and services will actually charge you money to give you the information I'm about to give you for free, how to set up biweekly payments.

When you refinance into a mortgage, which I don't suggest you do, but I'll get to that later, but if you were to refinance into a mortgage how you set up biweekly payments is you've got a payment deferral of either 1 month or 2 months. Everyone's guaranteed at least a 1-month payment deferral.

Before you make your first payment you know who you need to make it to, so go ahead and make a full payment ahead of time, and then when it's actually due take your mortgage payment, cut it in half and then pay that every 2 weeks.

You basically just set up your own biweekly payment plan. On a 30-year mortgage, paying biweekly can accelerate the payoff by 5 to 7 years, meaning you'll take a 30-year mortgage down to 25 or 23. That's pretty good. That's a lot of savings when doing biweekly.

Here's something that's way better. Actually refinance the entire mortgage into a home equity line of credit. Let's say you take out a $300,000 mortgage on a 30-year term at an average interest rate let's say 4.25. The payment is going to be roughly $1475 per month, principal and interest, excluding taxes and insurance. What if we were to take that same $300,000, put it onto a home equity line of credit and actually not pay more, not pay less, but pay the same, $1475? This kind of gives us our baseline barometer of what's better, what actually computes faster?

Wouldn't you know it that a home equity line of credit will actually be paid off in 24-1/2 years paying $1475 for the exact same terms as a mortgage, so as you can see, it's faster. What we teach, again, is don't just make a payment to it. Treat it like it's your checking account, so put all of your money into it and pull money out as you need it for expenses, because if you make more money than you spend, you're actually treating your home equity line of credit like a savings account.

That is going to accelerate it, again, on average, paying it off in 5 to 7 years. It's really that simple.

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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