First Lien HELOC
Strategy Plan

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About us

FirstLienHELOC.com is a community driven movement to help educate American Homeowners about better strategies to pursue financialfreedom We work across the US to educate and empower homeowners and financial consultants with modern techniques and finance procucts to better their lives, increase their net wort, and decouple from multi-decade debt. If you're looking to grow, check out community and courses online for additional information and education.

How to Use This Guide

In this document we will outline the strategy thousands of homeowners are using to pay off thier homes in as a little as 5-7 years and save tens-to hundreds-of thousands of dollars in interest cost. we'll review how both mortgages and HELOCs work, HELOC can be a much better product, and will show you how to do side-by-side comparison of your existing mortgage vs what you could save with a HELOC (based on your current financial.)

At the end of this guide,we'll outline next steps for you to take to achieve financial success, and we'll invite you to participate in our online community to work in a step with others pursuing a similar financial journey.

Your Personal CashFlow

Simpy put, this is your net income, or your total monthly take-home pay. Take the total (gross) income that you makae monthly, and subtract your fixed cost or other expenses to find average net monthly income. This is an extremely important figure, because this will be the basis through which you will be able to pay off you home in a fraction of the time. Please note –do not include your mortgage payments in this figure, we will cover that later on.

1. Income

Your Monthly Income –

Whether your W2 / Employee income, you take distributions from an equity portfolio, your're a business owner, you own rentals, or maybe have some sort of pension, you'll want to add up all of your income streams from your household into one total gross monthly income. If your income is consistent it's easy to calculate this. If it is variable in nature (ie. commision, bonus, overtime, self-employed,) then you can take the average of the past 6 or 12months of your income to get a usable number.

2. Expenses

Your Monthly Expenses –

This figure will include all fixed and non-fixed expenses, including debt paymnets (do not include your mortgage), your utility bills, your consumables like food and entertainment, your recreational activities, and any additional costs you might need to pay on a recurring basis. Think of this as your total monthly spend.

3. Budget

You'll want to use some sort of budget to track and manage your financial income and expenses. Whether you use an App, or a spreadsheeet, it's a great way to keep a pulse on your financial performance. Want to know about budgeting? Check out this guide on
https://firstlienheloc.com/articles/budgets

4. Your Personal Cashflow

Once you've figured out your income, expenses, and budget, you'll be able to calculate your net income. This is a simple calculation (net income – total expenses) = personal cashflow. This figure is used to calculate how much you can alot monthly to pay down the principal balance of your home loan.

Your Personal CashFlow is:

Your Mortgage Paydown

Understanding amortized loan

The mortgage has been a staple finance product for American homeowners for more than half a century. Backed and subsidize by the US Federal goverment, this loan products has its advantages and disadvantages. One thing that is important to know is that with mortgage, you are paying a majority of the interest (money paid to the bank for lending your balanace of the home) up front. This means that in the first 10-15 years of your payments, between 50-75% of your payment is just going straight into the bank's pocket, which means it's NOT going to you. When you refinance you go back to the begginning of the process and give the bank the majority of your payment all over again. The bank love this, because it uses your money over and over to make them richer, and puts you behind in your journey toward financial stability.

Amount In Interest You'll Pay for Your Mortgage:

Cost of Your Home:

Effective Interest Rate:

Your Alternative –
the First Lien HELOC

Understanding the new way to finance home

First Lien HELOC? Huh? What is that?
You've probably heard of a second lien heloc, one that sits after the mortgage and lets you tap into your home's equiity. But did you know that you can replace your mortgage with a HELOC and get the best of both words in an “all in one mortgage product?”

Simply put, a First Lien Helocs acts like a giant credit card that is secured against the value of the house. It calculates interest based on the previous period (month's) average daily balance. This means that as you pay down your principal balance and gain equity in your home, the interest you pay will directly reduce inline with the balance, on a daily basis. So when you implement a high velocit pay down strategy, you'll be rewarded with paying a tremendous amount less in interest.

Remember – even with “good” interest rates on a mortgage, over the course of 30 years, you still pay about as much interest as you do for the actual price of the home. That means that you will usually pay for your home twice, like buying a home for yourself and buying a home for the bank!!

But with the first Lien HELOC and the strategy we are sharing with you, you can reduce that by half or even to one third of what you otherwise would have paid.

Sound interest? Let's have a deeper look.

Cost of Your Home:

Interest Rate:

Effective Interest Rate:

Amount You'll Save with this strategy:

The difference

Comparing the two loan products

	Current Mortgage	First Lien HELOC
	MORTGAGE TERMS	HELOC TERMS
Current Principal Balance
Annual Interest Rate
Years to pay off
Effective Interest Rate
ESCROW INFORMATION
Annual Homeowners Insurance
Annual Property Taxes
Annual Total
PAYMENT INFORMATION
Average Monthly Payment
Monthly Escrow Payment
Total
LOAN PERFORMANCE
Total Loan Cost
Total Interest Paid
Total Interest Percentage

	Maximized Cashflow Strategy
	HELOC TERMS
Current Principal Balance
Annual Interest Rate
Years to pay off
Effective Interest Rate
ESCROW INFORMATION
Annual Homeowners Insurance
Annual Property Taxes
Annual Total
PAYMENT INFORMATION
Average Monthly Payment
Monthly Escrow Payment
Total
LOAN PERFORMANCE
Total Loan Cost
Total Interest Paid
Total Interest Percentage

How to implement this strategy

Strategic ways to cut your mortgage in half

5. Exploit the way that intrest is calculated

First, to exploit interest calculation, you'll need to regain control of the way that your loan accumaltes interst. Generally this will mean that you'll need to get out of any finance poroducts that rely on an amortization schedule. Once you'vw switch into a simple interest loan product, you can then accelerate the time line of pay down, which will “hack” the way simple interest is calculated and drastically reduce the amount of interest you pay to the bank.

6. Shorten the time that you borrow the principal

Use the flexibility of your First Lien HELOC to maximize the paydown of your principal balance with your new cashflow. This will drastically reduce the term and interest cost of the loan.

7. Maintain our budgets and stay the course

Yes – you have access to a lot of capital now through your home's equity – but don't use it. Stay the course and focus on rapidly paying down the principal balnce of the home. Stick to your budgets and keep your new cashflows as high as possible.

8. Maintain paydown velocity

Continue to allocate your income to your paydown as much as possible, and use your Personal Cashflow. From our aggregate calculations, most American Homeowners will be able to reduce the total term of thier home loan from 30 years down to 10 years or less.

According to your income and expenses, you can consistently contribute: in payments each month toward your principal.

This payment velocity means you'll end up paying your entire home off in years, which is years faster than your current mortgage schedule.

Taking the next steps

9. Go to FirstLienHELOC.com/book

After you've signed up on FirstLienHELOC.com through our calculator system, you'll want to go to the booking page to get connected to a Firs Lien HELOC consultant. You'll go through your financials with this consultant to evaluate whether or not this is a good fit to you. Then, they will guide you to work with a qualified lender to prepare your financials for a loan applicaations.

10. Prepare Your Documents

Prepare your financial docs, and store them in a centralize location.
Thses documents generally are:

1. Identification like Driver's License, Passport, or Social Security Card.
2. Income documents, like recent pay stubs, W2, or your other income proof.
3. Tax Documents, including your last 2 years of tax return.
4. Rental or Mortgage docs, including lease agreements, HOI, or Mortgage Statements.

11. Submit Loan Appliation

Submit an official loan application with your match lender. They will work with you to get everything submitted, including your docs.

12. Close

After going through underwriting, close on your loan with the bank. Wheter buying a new home, or refinancing your existing, after closing, your mortgage will be paid off and your HELOC will be opened and active..

13. Update Direct Deposit / Income

Once you've closed, you'll want to update your direct deposit or where your deposit / income routes to to automatically deposit into the First Lien HELOC checking account. Remember, wiwth the sweep account feature of the HELOC, this will automatically apply all deposits to your principal balance. Don't worry – you can always use your equity to pay any bills.

14. Update Expenses

Whether you use a credit card or ACH to pay your bills, you can pay all of your bills out of your HELOC account. With the sweep feature, any debit from the account will automatically be pulled from your home's equity.

15. Track Paydown Results

Overtime, track your paydown results and velocity. If your sticking to the strategy and the budget, you'll see how much faster you are building in your home vs. your traditional mortgage. Be sure to share your results in the FirstLienHELOC.com forums! We love to see how you are using this technique to acheive financial success.