How to Quickly Pay Your Home Off Using A 1st Lien HELOC

Updated as of January 24, 2024 | 3 min read

Quick FACT

Did you know that 40% of all homes in the United States are currently free of their mortgage debts? If you’re in the middle of your mortgage, then you’re likely looking at these households with longing — and for good reason too. The faster you can pay off your loan, the quicker you can get out the high-interest rates that cut into your savings.

There are many ways to pay off your mortgage early, but one of the lesser-known options is a first lien HELOC. This option works by taking over your existing mortgage. In this article we’ll show you how a first lien HELOC can help you pay off your loans in half the time, saving you thousands in interest. Let’s get started!

Current Ways to Pay Down Your Home Quickly

There are a variety of ways you can pay off your home quickly. Here are some of the popular methods:

  • Try and make biweekly payments
  • Save and make an extra payment annually
  • Apply more money toward your principal each month
  • Refinance your mortgage
  • Try an adjustable-rate mortgage

The only problem is that most of these methods limit your flexibility in managing your money by “locking it into the equity”. When considering that interest rates for Mortgages are at 20 year high, a First Lien HELOC combined with the velocity banking strategy can be a very viable option for reducing your principal balance quickly and minimizing interest liability on your home loan. 

Disclaimer: The interest rate on your home loan has a significant role in determining how much in interest you will pay over the life of the loan. Prior to 2023, interest rates were at or near all time lows, often in the 2-4% range. After the Federal Reserve revised its economic policy to fight inflation in 2023, Interest Rates are currently at or near a 20 year high. If your mortgage was closed during the “historic loan period”, some of the strategies on this page might not be as relevant to you as someone closing in 2023 or later. For this reason, we recommend exploring our First Lien HELOC calculator in order to fully assess your options. 

Reroute All Income Into 1st Lien HELOC

The first part of this strategy is to deposit 100% of your income into your 1st Lien HELOC. This pays down your principal balance as much as possible and immediately decreases your interest payment as much as possible. It’s amazing because it lets you get dollar-for-dollar pay down for every dollar you make.

Reroute All Expenses From HELOC

Now that you’ve rerouted your income into your first lien HELOC you can use it like a checking account. You will then use this account to pay all your bills and expenses. In this way, your 1st Lien HELOC works like a revolving line of credit, but with a lot lower interest rates.

Disclaimer: Consumers who pay off their credit card balance each month do not pay interest on the card.

If you want the home pay down the strategy of a first lien HELOC to work, then you must maintain a positive cash flow. What’s positive cash flow? Simple: it’s when your income is more than your monthly expenses. Keep in mind that this might affect how you spend your money for the duration of the first lien HELOC.

As such, it will affect the projects and expenses the homeowners can take on — especially if they’re on a budget. For example, a kitchen renovation might seem like a good idea. But it can easily spiral out of hand in terms of expenses. Similarly, if you’ve been eyeing a new car, then you might want to wait until you pay off your mortgage before committing to more debt.

If you can afford these projects and expenses, then you can pursue them. Just make sure you’re generous when calculating the expected cost of whatever you’re considering buying. That way it doesn’t interfere with your expected mortgage payments.

So, how can a first lien HELOC make your interest payments decrease? To understand, you need to know about how banks make money off interest. Traditional mortgages use an amortized calculation to find the interest rate. This means that they use the previous month’s balance to find the amount of interest you owe.

So, regardless of what changes get made to your balance throughout the month you still pay the highest amount. If you want to learn more about how banks make money off mortgages, then make sure to check out our guide here. HELOCs on the other hand, use the average daily balance to calculate how much interest you owe.

This means that the day-to-day changes, like decreasing your balance, can make your interest rate decrease as well. So, by routing your income to the HELOC with each paycheck, your balance decreases. Over time, this can lead to thousands of dollars in savings.

We hope this article helped show you how a first lien HELOC can help you save money on your mortgage interest. As you can see, there are certain scenarios where it just makes sense to go to have a line of credit and mortgage rolled into one. Here at First Lien HELOC, we’re passionate about helping families pay off their homes as quickly as possible.

Nothing pleases us more than seeing someone pay off their home decades before they were supposed to. That’s why we hope you’ll contact us to help you pay off your home more quickly. If you’re ready to experience the joys of financial freedom, then get started with your pre-qualification application today.

Achieve Financial Freedom

Sign up on to get connected with a licensed lender who can deliver an all-in-one 1st Lien HELOC. They’ll walk you through the application process and help outline your budget, your numbers, and exactly how much you can save by replacing your mortgage.