HELOC Rate Lock/Cascading
A powerful approach to reducing your mortgage costs and improving your monthly cash flow. Whether you're looking to lower your interest rates, manage your mortgage components more effectively, or simply make smarter financial decisions, this has you covered.
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What Is the HELOC Rate Lock/Cascading Strategy?
Leverages prepayment privileges and a Home Equity Line of Credit (HELOC) to gradually reduce mortgage balance and lower interest rates.
Step-by-Step Process: Initial Setup
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Setting Up Your Mortgage and HELOC: Work with your mortgage professional to secure a $500,000 mortgage on your $1,000,000 property, ensuring you have a $150,000 HELOC in place within a $650,000 overall credit limit.
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Choosing the Right Lender: Ensure your lender offers flexible prepayment privileges, allows for multiple mortgage components, and provides the option to re-amortize your mortgage after each prepayment.
Benefits
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Interest Savings The strategy effectively lowers your interest costs by leveraging lower rates for new mortgage components.
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Accelerated Principal Repayment: By maintaining consistent payments, you can pay off your mortgage more quickly and reduce your overall debt.
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No Increase in Total Payments: The strategy allows you to optimize your payment structure without increasing your financial burden.
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Flexibility: The strategy can be adapted to various rate environments, providing benefits even when rates are stable or slightly rising.
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