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Video How to pay off a 30 year home mortgage in 5-7 years
29:13   |   views   |   11/14/2017


  • hi my name is Laura piccata thank you so
  • much for tuning in to my channel today I
  • want to talk about how to pay off a home
  • mortgage that is a 30-year home mortgage
  • in just five to seven years I'm going to
  • be going over the strategy and a lot of
  • people ask me can I apply this towards a
  • car loan or student loans and yes you
  • can but I'm going to insert a disclaimer
  • that before you jump in and start to
  • start using the strategy I want to make
  • sure that you understand it understand
  • it fully first or consult with a
  • financial advisor before you implement
  • anything so now without further ado
  • let's jump over to the whiteboard and
  • get started all right I drew a little
  • stick figure on the board and this stick
  • figure is going to represent an employee
  • and the average person in the United
  • States makes fifty six thousand dollars
  • per year for easier math I'm going to
  • run that up to sixty thousand dollars
  • per year which will come out to five
  • thousand dollars per month in that
  • household income so this employee all
  • that they know of how to do is go to
  • their employer and trade their time for
  • money now I want you to take a minute
  • and think about the process of what is
  • the first thing that most people do as
  • soon as they get paid
  • [Music]
  • alright so the first thing that most
  • people do is as soon as they get paid
  • they go to the bank and it deposit their
  • money into either a checking or a
  • savings account the savings account
  • simply represents an emergency fund in
  • case of unforeseen events happening and
  • you need to spend some extra money on
  • something now we're going to take a look
  • at some average monthly expenses and
  • since I am covering how to pay off a
  • home mortgage the first expense that
  • we're going to take a look at is a home
  • loan
  • [Music]
  • the average price of a home in the
  • United States is $200,000 so that's the
  • example that I'm going to use now we're
  • gonna have a 30-year fixed mortgage with
  • payments that gonna come out to a
  • thousand and two hundred dollars at a 6%
  • interest the next most common expense is
  • minimum payments on credit cards so I'm
  • gonna take a look at a line of credit
  • [Music]
  • and the limit on this line of credit
  • which we can say is just a Visa credit
  • card will be $15,000 hmm kind of
  • everything looks very squished so I'm
  • going to move it over 15,000 the present
  • balance already is gonna be $12,000 and
  • the minimum payments if the balance is
  • 12,000 is gonna come out to somewhere
  • around $600 per month
  • add a 21 percent APR okay so looks good
  • so right off right from the start we
  • already have our two monthly expenses
  • this is per month I just want to include
  • that in here so that it's clear all
  • right so I'm gonna take that out of the
  • checking's because that would be the
  • process so our first two expenses home
  • mortgage hm next is $600 for credit card
  • see see next most common expense are car
  • payments because most people have a car
  • and I'm just going to say it's somewhere
  • around $600 for car and everybody's got
  • living expenses so living expenses for a
  • family can add up to somewhere a
  • thousand and two hundred dollars and
  • that includes everything from groceries
  • to utility bills to paying for the phone
  • for the internet services
  • and then whatever is left over will go
  • into a savings account which in our case
  • is going to be eight thousand four
  • hundred dollars and this will include
  • both long-term and short-term savings
  • okay so at the beginning of the month we
  • had five thousand dollars coming in so
  • that was our input and by the end of the
  • month we if we add up all the expenses
  • and what went into the savings we have
  • minus five thousand dollars so that is
  • our output so at the end of the month if
  • we subtract our output from our input we
  • have a zero cash flow and this is the
  • model that 95% of the population live by
  • it doesn't matter how much input how
  • much someone is making per month because
  • somebody might be making a hundred
  • thousand dollars per month but if their
  • output and their monthly expenses add up
  • to a hundred thousand dollars by the end
  • of the month they are still broke
  • because their cash flow is zero so now
  • how do you start to operate like the
  • other 5% of the population do with their
  • finances so the first thing is
  • understanding the difference between a
  • loan and a line of credit and we're
  • going to take a look at specifically the
  • interest rates because if I was the bank
  • and you had to borrow money for me would
  • you rather pay me a 6% interest or 21%
  • interest of course most people would say
  • 6% because it's it's first of all it's
  • the smaller number than 21 which
  • actually in everyone's mind
  • automatically me
  • means that you're going to be paying
  • back less money in interest so but to
  • understand the difference between these
  • two I'm going to use a little different
  • example if I was to ask you what
  • temperature would have to be in order
  • for rain to freeze you'd say either 32
  • degrees Fahrenheit or zero degrees
  • Celsius but then what if all of the
  • sudden in 1 up to 1 degree Celsius now
  • which one is hotter of course you would
  • say that one percent I mean the one
  • degree Celsius is hotter but isn't 32 a
  • bigger number than one of course it is
  • but we're looking at a different unit of
  • measure so in our case even though 32 is
  • bigger and it looks like it is bigger
  • one is hotter because of it being a
  • different unit of measure it is the same
  • exact idea when it comes to first
  • understanding the difference between
  • alone in the line of credit even though
  • this is a bigger number and it seems
  • like you're going to be paying back more
  • in an interest first we have to
  • understand what effects the interest
  • rates so that we see how both of these
  • work so now on a line of credit the
  • interest first of all is simple what
  • that means is that the bank doesn't know
  • how long it will take for a person to
  • pay back this balance and therefore the
  • interest is calculated daily and charged
  • monthly it is also revolving what that
  • means is that is to
  • two dimensional so I'll just draw it
  • over here
  • two dimensional it means that as soon as
  • that $600 minimum payment is paid you
  • can use your line and credit you can use
  • your Visa credit card to go to the
  • movies to buy some groceries to do any
  • shopping that you need to do or to spend
  • that money again that means as soon as
  • you pay you can go back and use it again
  • and it's revolving however on a home
  • loan or just on a loan in general as
  • soon as you pay your monthly payment of
  • a thousand and two hundred dollars it is
  • 1-dimensional so it means that when you
  • pay that monthly payment it just goes
  • straight to the bank and you cannot use
  • that money again to do any shopping to
  • go to the movies that's it another main
  • differentiator is that it is amortized
  • what that means is that the bank knows
  • that you have 30 years to pay back the
  • the loan and therefore they calculate
  • the interest for the whole 30 years and
  • they they bill it so when you're making
  • your monthly payments a portion of the
  • main portion actually the biggest part
  • of your payment is going towards paying
  • down interest and just a very small part
  • of it is paying down the principal to
  • better see how the banks calculate this
  • and what that looks like I'm going to
  • draw an amortization schedule
  • all right so I got the amortization
  • schedule right on the board and as you
  • see we have the monthly payments on this
  • side and we have the time the timeline
  • down here which is basically how long
  • you have 30 years to pay off the loan so
  • since our monthly payments are a
  • thousand and two hundred dollars nine
  • hundred and fifty of that thousand and
  • two hundred is going towards paying down
  • the interest two hundred and fifty is
  • going towards paying down the principal
  • which is two hundred thousand dollars so
  • this is what the chart looks like as
  • you're making your monthly payments
  • every single month interest goes down
  • and gradually you're paying more and
  • more to pay off the principal right
  • where they intersect is actually 17
  • years into the loan that represents a
  • point by when the interest begins to
  • decrease enough where your monthly
  • payments are paying off the principal
  • more and more so you see it's only
  • starting to take your payments are
  • really just starting to take effect
  • 17 years into the loan or it's actually
  • starting to add up to pay off this
  • principal sooner but nowadays a lot of
  • people throughout their whole entire
  • life aren't able to pay off their
  • mortgage for their home and the reason
  • the main reason for that is what happens
  • at the four-year mark let's take a look
  • four years equals 48 months since our
  • payments are a thousand and two hundred
  • dollars every single month I'm gonna
  • multiply that by 48 and that gives us a
  • total of fifty seven thousand six
  • hundred dollars and that is going to
  • represent total
  • pay down now 950 was going towards
  • interest that equals 46 thousand five
  • hundred dollars I believe let me check
  • that really fast forty five thousand six
  • hundred went towards interest so
  • interest pay down total pay down on loan
  • don't want to get that confusing two
  • hundred and fifty dollars equals twelve
  • thousand and that is principal pay down
  • alright so I really want you to take a
  • look at this and see that in four years
  • of making consistent payments of a
  • thousand two hundred dollars on your
  • home loan for that for four years which
  • equals forty eight months you've paid a
  • total of fifty seven thousand six
  • hundred dollars okay in our example nine
  • hundred and fifty of this would go
  • towards the interest so right off the
  • bat out of the fifty seven thousand
  • dollars six hundred forty five thousand
  • six hundred dollars went to the interest
  • and only twelve thousand of your of
  • these payments not yours I don't know
  • what your numbers are but of that of
  • those payments went towards paying down
  • the principal of the home loan so that
  • only knocked off twelve thousand dollars
  • so now what is the main reason that most
  • people never end up paying off their
  • home mortgage is that at the four years
  • mark
  • the bank will call up a homeowner and
  • say are you interested in a great and
  • lower rate and all you have to do is
  • just refinance your home mortgage and
  • most people will say okay it sounds
  • great let's do it without maybe even
  • realizing what that what that really
  • does because what that does is that
  • you've resets the clock and it actually
  • puts a person back at the beginning of
  • this whole schedule so you see as time
  • progresses you gradually begin to pay
  • less and interest but now even though
  • you have better baby interest it doesn't
  • really matter because as you're paying
  • those payments now you're still back at
  • the beginning where most of it is going
  • towards paying down the interest and
  • people get stuck in this cycle and if
  • they keep refinancing every four years
  • that is the reason why they're not not
  • paying off their home there's a great
  • rule app it's called calls mortgage
  • calculator I will leave a link for it in
  • the description of the video and if
  • you're interested in checking it out
  • it's free as of right now but what it
  • does and why I like it and why I'm
  • suggesting it is if you actually want to
  • plug in your own numbers for your home
  • loan and you can see basically what I
  • explained over here just with charts and
  • a graph but it basically will show you
  • the numbers for your home mortgage so
  • you can actually see how the payments
  • and the interest are tipping at the 17
  • year mark
  • and how everything adds up that I'm
  • explaining right now all right so I just
  • wanted to show you the app Carl's
  • mortgage calculator this is what it
  • looks like and if you download it you
  • can input all the values say what is
  • your property value what is the
  • principle that you have on your mortgage
  • what is the interest for how many years
  • and then it's going to calculate the
  • payment then you will have all the
  • buttons right at the top
  • here and then if you just click on
  • summary right over here it's gonna give
  • you all the values so I just took the
  • numbers from our example and as you see
  • at the very bottom the total interest
  • paid is two hundred thirty one thousand
  • and six hundred seventy six dollars and
  • 38 cents so as you see the six percent
  • is not really six percent because if you
  • calculate everything you technically
  • bought your yourself a house and then
  • you bought a house for the bank also if
  • you click in this app on table you can
  • see how all the payments are adding up
  • until you pay off your home loan in 30
  • years so I think it's a really cool app
  • to check out for your home now I just
  • want to say that does this look like 6%
  • and people don't realize this a lot of
  • the time because everybody when they're
  • taking out a home mortgage is just
  • focused on their monthly payment but as
  • soon as you begin to see what is the
  • total payments versus interest paid and
  • you start to calculate that over time it
  • doesn't look like 6% and the bank
  • doesn't doesn't lie about it it is all
  • told and listed in the Truth in Lending
  • statement in the paperwork when you're
  • signing for your home loan so now that
  • we have this mortgage what do you do to
  • pay it off faster and save a lot of
  • money on this interest all right so this
  • is where I get into the strategy this is
  • where I start to explain how to use what
  • I'm gonna what I'm gonna show you to
  • save a lot of money on interest and to
  • pay off that home mortgage faster I just
  • made some room on the board but
  • basically what this strat
  • gee that I'm going over requires is that
  • you bypass the system of depositing your
  • money into a checking and savings
  • completely and take everything that is
  • earned for the entire month your entire
  • income and apply it towards your line of
  • credit so we're gonna move our monthly
  • income towards our line of credit now
  • might sound crazy but I'm gonna explain
  • to you what it does and how to you
  • continue to pay the bills using this
  • method now before I go on I just want to
  • say why are why are people saving
  • because a lot of people from a young age
  • are told that it's important to save and
  • it is but wealthy people know that you
  • never want to let your money just sit
  • what the people usually invest their
  • money and let just letting it sit in an
  • inactive account it actually does more
  • benefit to the bank rather than the
  • person saving their money by letting it
  • sit in the savings the reason for that
  • is that when you go to the bank and you
  • deposit money into savings account the
  • bank will offer you 1% but when you're
  • just letting it sit there and an
  • emergency comes around and let's see you
  • have to get a brand-new car you go to
  • the bank and you ask for a loan to be
  • able to get a new car and the bank says
  • great so we're just gonna give you a car
  • loan but all you have to do is just pay
  • us a five point five percent interest on
  • it so essentially what the bank does is
  • they lend out your money that you're
  • just letting it sit in the bank back to
  • you and making money off that money
  • that's just essentially how the bank's
  • make profit that's how it works
  • now that we're bypassing the system and
  • no longer letting the bank control our
  • money but rather we are in control of it
  • and putting it towards the line of
  • credit which is actually an active
  • account this is what it's gonna do
  • okay so I just drew another graph on the
  • board and since we are taking our whole
  • monthly paycheck and putting it towards
  • the line of credit right off the bat we
  • had $15,000 limits so that's illustrated
  • over here with a balance of $12,000
  • currently on the card and down here we
  • have the time line because we're making
  • payments every single month so we have
  • monthly increments now if what if you do
  • what the strategy says you would take
  • your entire monthly paycheck which in
  • our example is $5,000 so we take it from
  • our checking that's depositor checking's
  • but we're taking all of it and applying
  • it towards our line of credit so that
  • will knock our balance down by 5,000 but
  • we still have our living expenses so by
  • using the strategy let's see what what
  • happens to not just our living expenses
  • but all of our expenses so since we're
  • we moved our money over here we no
  • longer have to worry about our minimum
  • credit card payment since it
  • automatically gets taken care off
  • because we're paying we're putting money
  • in that card towards that card so that
  • automatically creates a $600 cash flow
  • again since we're no longer saving our
  • money into a savings account that
  • creates $1400 cash flow so that equals a
  • $2,000 cash flow so now if we add up the
  • expenses it equals $3,000 because we
  • still have to pay our home loan mortgage
  • payment we still have our car payment of
  • $600 and we still have our living
  • expenses of $1,200
  • so to pay those we're gonna use our card
  • and that same month that's gonna bump us
  • up by $3,000 so this is our first month
  • okay
  • next month we are doing the same exact
  • strategy and that bumps us down by
  • five thousand dollars but we're gonna
  • use our card so it bumps us up again by
  • three thousand dollars second month
  • third month January same exact strategy
  • again we're paying for everything using
  • art card K one two three
  • [Music]
  • okay so what Iowa straighted is you keep
  • applying the same exact technique
  • month-in month-out
  • and actually if you begin to add up the
  • numbers for this example you'll be able
  • to pick your balance off completely
  • within six months okay
  • so next month after six months since you
  • are at zero or in our example we are at
  • zero you can't take that money again and
  • apply it towards a car that has a zero
  • balance so what do you do well this is
  • where we have to create more debt and
  • you see not all that is bad if you know
  • what you're doing
  • there's actually good debt so what you
  • would do is you go to the bank and you
  • tell them that you want to apply $12,000
  • from your line of credit towards paying
  • down the principal of your home mortgage
  • your home loan it's very important that
  • the person at the bank that you're
  • talking to understands you're applying
  • the money towards principle pay down and
  • not a regular payment because if they
  • process this as a regular payment it's
  • just gonna take a bulk of it and apply
  • it towards interest and that's not gonna
  • work so it's important that they
  • understand that $12,000 is principal pay
  • down as soon as you do that your line of
  • credit balance bumps up to $12,000 and
  • you keep applying the same strategy to
  • pay it down where it is important to see
  • how this is working is that you're able
  • to pay down $12,000 in six months
  • whereas the regular way it had taken you
  • four years from our previous example so
  • this is kind of the so this is the
  • strategy so every six months you keep
  • going back to the bank and applying
  • $12,000 because you're paying it down
  • six months and you keep going through
  • this process again and again until you
  • pay down this balance and that's how you
  • pay it off within five to seven years
  • now what about emergencies well we have
  • all this cushion over here for
  • emergencies emergency money
  • okay since we're no longer putting
  • anything into savings again since we're
  • using an active account and not an
  • inactive account to put our money
  • towards what is the bank gonna do well
  • the bank is gonna notice so they're
  • gonna actually increase your limit
  • because we're making monthly payments
  • and we're paying off balances rather
  • quickly
  • another thing that's gonna happen is
  • your credit score is going to go up
  • okay so credit score is gonna go up and
  • it's important for me to mention is that
  • you never want to max out your credit
  • card to the very limit because that I
  • will actually have a negative impact on
  • your credit score so you always want to
  • stay below the limit so this is
  • essentially the strategy and now I want
  • to just say how would you rather pay 21%
  • or 6% thank you so much for watching
  • this video if you did find it helpful
  • please be sure to leave it a thumbs up
  • as I would really appreciate it and if
  • you know of somebody that might find
  • this helpful then please share it with
  • them also if you enjoy information about
  • business and real estate investing I
  • will be putting out content around those
  • topics every single week so please
  • subscribe to my channel to stay up to
  • date with my videos and if you still
  • have any questions regarding this
  • strategy please leave them in the
  • comments right below and I will see you
  • in the next video thank you

Download subtitle


In the above video I reveal a powerful strategy that is practically available to all, but is known and fully understood by a very few. If one takes the time to learn and implement this method of eliminating debt, one may find themselves pleasantly surprised of how quickly their home mortgage, auto loans, student loans or business loans can be completely paid off.

This strategy is known as Velocity Banking and in the video I will demonstrate how Velocity Banking can be used to pay off a 30 year home mortgage in just 5-7 years without sending double payments to the bank or changing one’s current level of income.

I start off by creating a scenario of a financial situation by taking an average household net income in the United States combined with some of the basic monthly expenses: home mortgage, minimum payment on a credit card, car payment and living expenses which include groceries, utilities, gym membership…

Once all expenses are identified and subtracted from the net monthly income it is important to understand the impact of cash flow, the difference between a loan and a line of credit, how the interest of a loan and a line of credit is calculated, and how monthly payments on a mortgage are dispersed between interest and principal paydown. To help demonstrate these differences I create tables and an amortization graph. As I go on to unveil the main differences I also identify the biggest reason why nowadays most homeowners are unable to payoff their home mortgages due to the unstrategic use of home refinancing.

By this point having had identified the difference between a loan and a line of credit I can reveal the benefits of utilizing a line of credit to pay off a home mortgage in 5-7 years. This is where I get into the Velocity Banking strategy which incorporates an unaccustomed method of moving one’s entire monthly paycheck into a line of credit instead of the accustomed checkings and savings accounts. By adopting this method one can leverage a line of credit to free up cash flow, gain cash back rewards, build credit history and improve credit score, but the greatest leverage created is the thousands if not hundreds of thousands of dollars in interest savings.


Android version:


► Velocity Banking & Real Estate Investing Course - Please email me at for more information.



DISCLAIMER: I (Laura Pitkute) am not a financial advisor, real estate broker, a licensed mortgage broker, not a certified financial planner, not a licensed attorney, and not a certified public accountant, therefore please consult with a competent professional prior to engaging in any financial strategies. Not everyone will experience 100% success rate by using this strategy as it requires a commitment to keep applying this strategy over time until the desired result is achieved. I (Laura Pitkute) do not promise or guarantee any specific outcomes and/or results from the use of this strategy.


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