The approach called Velocity Banking, or the “HELOC Strategy,” is related to personal finance that leverages a home equity line of credit (HELOC) to increase disposable income and get done with your mortgage. It also saves amortized interest. The velocity banking strategy involves using a line credit to make cash flow and to pay off the mortgage. Here is what you need to know about Velocity banking:
What is a Velocity Banking Strategy?
This concept is known as “velocity banking” because it can increase the speed (or velocity) at which your mortgage debt repayments are paid off. The strategy has many moving parts and specific requirements. Here is a look at some of the conditions velocity banking requires.
You need to have:
● Equity in your home.
● A credit score of 680 or more.
● A credit card to cover your daily living expenses.
● Positive cash flow, that is, your income does not just meet, but exceeds your monthly expenditures.
Although you don’t need a lot of equity in your house, you will need enough to be eligible for the HELOC. This is a credit line you get using your home as collateral.
However, more equity can allow you to obtain a more significant credit line, accelerating your progress.
Get Started with Velocity Banking
Look at the step-by-step process using which you can get started with velocity banking strategy:
● Step 1: Apply for and open a home equity line of credit to begin the velocity banking process, for example, for $20,000.
● Step 2: Use the HELOC money to pay off your mortgage by $20,000. This means that you are replacing your mortgage debt with HELOC debt.
● Step 3: The banking aspect comes in: You use the HELOC like a checking account. You immediately deposit the funds you receive from your employer into your HELOC account. The balance can then be paid using all your take-home earnings.
● Step 4: You pay your living expenses monthly with a credit card.
● Step 5 – Once per month, you use the HELOC for your credit card balance and to pay your monthly mortgage payment.
● Step 6: You have a positive monthly income (one requirement for this strategy to work), so you pay down the HELOC balance each month. Once the HELOC balance has reached $0, you will pay $20,000 more from the HELOC to your mortgage and begin the process again.
How Does a Velocity Calculator Work?
The velocity calculator calculates how much money you will need to repay each month based on your current interest rate and loan length. This information can be used to make a budget and ensure you pay off your loan as soon as possible.
The tool can also calculate how much money you can borrow based on your income and expenses. It can help you decide whether to apply for a loan or a credit card. theviralnewj
Final Thoughts on Velocity Banking
Velocity banking may help you pay your mortgage faster. However, it is not feasible for everyone; it can be challenging to understand and implement and requires serious discipline.
It’s possible to work if you have all the necessary qualifications and are 100 percent committed to getting done with your mortgage as soon as possible. With the help of a velocity calculator, you can easily find out how much money you can save by following a particular financial strategy.
This information can help you make better financial decisions and achieve your long-term goals. Ensure that you understand the concept in-depth before getting started with your financial decisions.