I got my first mortgage and home through my personal bank. I believe I had an ARM that started at 2.9%, which felt like a really good rate for buying my first home… but after 4 years of payments… well I didn’t feel like I was making enough progress. I was making all my payments on time, yet it seemed like my equity was hardly increasing. I remember checking statements and thinking “this can’t be right… can it?”.
I knew what a HELOC was because my parents had had one and used one before, so that wasn’t too foreign to me. But I just couldn’t understand some of the economics of how this would allow me to gain equity so much faster. I’m really into our budget and personal finance, and so I’ve been reading for ways to get ahead on being debt free without getting penalized in the process.
I came across the First Lien HELOC on Facebook and wanted to learn more about how this could work. After a little Googling… I came across the firstlienheloc.com site and spent several nights (and a few glasses of wine) trying to understand the strategy and ways that this loan differed from my mortgage.
I had an “ah ha!” moment when I read about how interest calculations can result in different payment distributions, and it all just kind of fell into place.
By switching to First Lien HELOC, I am on track to pay off my mortgage in just 4 years– that’s 26 years earlier than my first traditional mortgage with a savings of $98,289 in interest! (but who’s counting???)
Already in just the first year, I’ve paid over 22% of my home off. With those extra years and extra cash, I feel so much more optimistic about my financial future, and frankly, a lot more comfortable with our debt. My husband likes to poke fun at me, but I feel like we have a solid plan to tackle this monstrous debt, and my confidence has never been higher that I am in control of my finances.
Learn about how interest works! If you can understand the difference between an amortization schedule and an average daily balance, you’ll be in the right mindset to realize that APR / interest rate is just ONE variable that contributes to how much money you pay for your home.
Better yet – using the firstlienheloc.com calculator to breakdown my current loan vs. what I could be saving made it night and day easy for me to see what amount of money I was leaving on the table. I’d highly recommend using the calculator and then talking to someone about the numbers.