Home Equity Acceleration Plan, H.E.A.P.™
Every month millions of people make a mortgage payment dreaming of the day when they will send their last one. In most cases that last payment is 25 years or more down the road.
How H.E.A.P. Works
By utilizing a Home Equity Line Of Credit (HELOC) like your traditional checking account, you can pay off your bills and your mortgage dramatically faster.
By opening a HELOC and using it like your normal checking account you can fund lump-sum equity reductions to your first mortgage.
Funding two or three of these lump sum reductions will dramatically reduce your mortgage term and help you become debt-free.
Did you know that your current mortgage accrues interest every day?
If you take your current mortgage balance multiply it by your interest rate and then divide that number by 365 you can calculate approximately how much interest you are being charged every day.
For example, if your current balance is $200,000 and your interest rate is 6.25% you are being charged approximately $34.25 every day!
If your payment on that loan is $1231.43 per month and you have $1027.50 in interest charges, only $203.93 will be applied to your principal. No wonder the loan will take 30 years to pay off.
HEAP works by reducing the per-day interest charges, with the lump sum reductions, which allows more of your payment to be applied to the principal thereby reducing your term.
Every month, many of these same people will try to figure out a way to make extra payments towards their mortgage, all the while trying to keep it affordable.
Even sending in a few extra dollars will reduce the overall term by months or even a few years.
Years ago the Bi-Weekly plans were introduced that gave homeowners a plan that was affordable, manageable, and had measured results. These plans often reduce the mortgage term by 3-7 years.
Although 3 – 7 years is pretty good, we would like to introduce the Home Equity Acceleration Plan, H.E.A.P.™.
If you have some equity in your home, and make more money than you spend, HEAP is a program that may dramatically reduce the term of your mortgage.
The best thing about HEAP is that you don’t have to alter your current spending habits to make it work, however, once you see the results you may wish to eliminate some of your excess spending to make it work even better.
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H.E.A.P. What You Will Need To get started
To get started, you should gather the following information. This information can be found on your monthly bill statements, your bank statements, and your mortgage statements. Once you have gotten this all together, you will use the HEAP Calculator to give you the roadmap you need to start the program.
1. Monthly mortgage payment amount – principal and interest
2. Annual property tax amount
3. Homeowners insurance premium amount
4. Current Mortgage Balance, Rate, and when the account was opened
5. Length of your current mortgage (15 years, 30 years)
6. Auto Loans Balance and Payment
7. Credit card balances and minimum payment amounts
8. Utility Payments (monthly average)
9. Other quarterly, semi-annual, or annual expenses (car insurance, etc)
10. Any other loan payments or recurring monthly expenses.
11. Your current monthly “cash” budget. These items would be fuel, groceries, entertainment, etc.
12. Your “after-tax” income per month and the frequency you receive it. For example, if you receive a paycheck every Friday for $1000.00 after taxes, that is the number you will use.
Once you have gathered this information you can proceed through the HEAP calculator to determine the benefits of using the program.
Accuracy is important, but if you forget something you can always go back and edit your entries.