Best Ways to Pay Off a Home Equity Loan Line of Credit
The best ways to pay off a home equity line of credit are by making payments over and above the minimum payment. Find out how to pay off a home equity line of credit faster with help from a financial specialist in this free video on home loans and money management.
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Now that you have your home equity loan, what's a very convenient or fast way to try and pay your mortgage off sooner? Hi, my name is Matt McKillen, I'm with Innovative Financial Group, and the question is, how do I pay off my home equity loan sooner? A home equity loan is basically an interest bearing account, and the way the bank sets up your home equity loan is that they only require that you at least at a minimum pay the interest that's due on your loan on a monthly basis. So, if you pay just the minimum payment on your home equity loan, you'll actually never see principle reduction on the mortgage. So, I always advise clients, pay whatever you can over and above that minimum interest only payment, because everything that's paid over and above that minimum interest only payment gets completely applied to the principle. Now what that means is the next month, when you get your new loan and your statement, you're going to see that your interest charge will be decreased, because it's based on the new, lower balance. So you may, let's see if you've consolidated debts and you're saving five hundred dollars per month after you've used your home equity loan to pay off your bills, turn around and start applying an extra three or four hundred back on your home equity line. In doing so, you'll see it rapidly decrease, and you'll pay off your loan in much faster terms that what your bank had originally set it up for. Again, my name is Matt McKillen, I'm with Innovative Financial Group.