Alright, YouTube friends, Kris Krohn here with Limitless Wealth TV and today
we're talking about how do you go about paying off your house early and I'm
going to share with you hands down my favorite strategy kind of compare it to
society strategy and see if we can help you take a 30-year game and turn it
into a 5-year game.
Alright, how do you get your house paid off fast? This is a really really really
good question but before I show you how to pay it off as fast as possible, let's
first understand that I'm not going to share with you the traditional
methodology right, here's the traditional methodology. Here's my house and I'm
going to do a 30-year plan, that just happens to coincide with a 30-year
mortgage, right. Some of you might say, but Kris, I got a 15-year plan. Yeah, that's
the 15-year mortgage. I get it, right. I own my property, I'd like to get it paid
off. On a 30-year plan, you're going to pay for that house two and a half times,
that's because of what you have to give the bank up front with interest fees and
as it amortizes out over the course of the life of the loan, the bank is going to
make a lot of bank on your property and I don't necessarily have a problem with
that but if my goal is to pay it off, are you open to a more intelligent approach?
Well my approach is a little bit different, this is a real estate
investing channel so let me share with you what I would do to take 30 years and
turn it into five years, would that be cool for you? Okay, first of all, you got
this property and if you're aggressively throwing money on it,
then chances are you're building some equity with the property. Banks will
usually let you lend on up to 80% or 90% of the value of your home so
let's just entertain a scenario where you have some equity in this home. Let's
say that you have $50,000, now there are two ways to access this, you could do a
cash out refinance and curve probably $5,000, $6,000 worth of
lending fees or you could do it for free with what's called a home equity line of
credit. I really like HELOCS, the HELOC basically says, you have a fifty
thousand dollar line of credit, like a credit card but it's tied your house and
when you use it, then we charge you interest, when it's paid back, we don't.
HELOC's usually are super cheap money. Let's call it 3% or 4% so
all of a sudden I've got $50,000 line of credit and I'm like well
that's good, that means that I've paid off some equity in my house, why on earth
would I ever use that home equity line if my goal is to pay it off? This is
where I'm going to show you how to take one step backwards to take two giant
steps forward. Here's the faith leap. Take that 50 grand and let me show you how to
put it into another property that is an investment. This is P for primary, this is
your home, this is the one that we want to get paid
off and if you want to pay it off faster, we're going to allow an investment property
help make that happen. Let's say that we find a house with a 20% discount in an
equity growth market. I've got houses that I do every single day just like
this so I take you one of my markets and we get a 20% discount at home, the $50,000
is another 20% down payment so now all of a sudden, you got the house 40% paid down,
it's almost half paid off and when a house is half paid off, do you know what
that means for the cash flow? In my system, that means that the cash flow is
really high. First of all, high enough that when you do borrow the home equity
line for this, that 3% to 4% is going to have a monthly fee. Let's
call it $200 a month but if we're here, I'm making $500 a month
and guess what, that means that I've got enough money here to pay that and that's
the principle that you need to understand. You are creating more debt
and then when you buy an investment property, the 60% still there, that's
also more debt. Now I've got more debt here and I've got more debt there, that's
the step backwards however, what happens if you cash flows home $500 a month, you're
getting $300 because $200 goes back to pay your home equity line. What happens when
that home in these growth markets experiences 5% to 8% annual appreciation
and let's just say in two years you have a choice, you can sell that home, you can
get your 20% back out and wipe out your home equity line, you can get the 20%
that you found the property with, you've got all your cash flows you collected
on it plus you've got the growth in the market. Let's say that you could sell
this house and make $50,000. After paying this 50 grand back. Now just think about
that for a minute. We went in, played real estate game
Monopoly for a couple years and look what happened.
We returned the $50,000 which means that our debt went down but if I wanted I
could take this 50 grand and pay off my house 50 grand faster. Do you know
how much you actually paid on your house in 5 years to the bank? A whole lot
less than $50,000 so you've done something really really good here, in
addition you were still paying down your house. Now I want to ask you, do you want
to put the $50,000 a profit into this house or would you like to put it
in another house? Well if it worked one time and I've
gotten it to work thousands, then you'd go and sail on and buy another house and
you might say, but Kris, what if I use that home equity line and I use that to
also buy another house in fact, what if we strategically put our money together
that we bought three smaller houses? Well guess what I have now, cash flow, cash
flow, cash flow, even more than I had counteracting the home equity line. I've
got equity equity equity and let's just say in a few years I go to sell those
houses and now all of a sudden I've been able to roll that into a
$180,000 of profit after it paid back my home equity
line again. Now I come back here, if you've got a normal sized house like
most people, you paid off your house and then you get the other dilemma but
couldn't I keep investing? Yeah, you could keep investing but now you have a paid
off asset and now you have other assets to go and buy more real estate so
ultimately two choices here, right. You can pay off your house through the bank
which is why you're going to pay for two and a half times and it's going to take
30 years or you could do it a whole lot faster by using some of the
equity and by putting it into more real estate. That's how you pay off your house
a lot faster. If you want a professional team that will help you build a
portfolio and maneuver all that and make all of that happen while letting you
have a hundred percent of the profits, you may want to check out my website and
see some of the things that we're doing around here because I'm telling you,
we're all about accelerating your results and helping experience
exponential growth in your wealth.