Denzel Rodriguez explains why using a 7-9% HELOC to pay off a 2.75% mortgage doesn't make financial sense. The math works against you when the borrowed rate is so much higher than what you owe. If stress about the mortgage is the real issue, there are better ways to handle it.
Denzel, would you use the HELOC if your interest rate is 2.75, however, the HELOC. No. Yep. So we spoke about that earlier, too. Too big of a gap. And when rates come down, prices will go up, giving you more equity to tap into. That's true as well. That's where I am. Just got divorced. Only have my mortgage at 2.75, but want to pay it off quick. Okay, so again, whenever we want to, whenever we're in a position of a really low rate mortgage, you're. We're in a weird time, so. So you acquired a mortgage a few years back at a super low interest rate, 2.75%. And then inflation took off, taxes went up, the world went crazy with COVID a lot of stuff happened. You're now in a high interest rate environment. Mathematically, it's just not going to make sense for a lot of people to accelerate their 2.75% mortgage by means of Velocity banking using a 7, 8, 9% T lock. It's just not going to make sense, guys. So do not overthink this. It's just not going to make sense, period. I've never done a scenario where I show that big of a gap. Never. If I have, call me out on it. But we can go back, we can look through my archive. You'll never see me taking a 8% HELOC to pay off a 2%, 2 and a half, 3% mortgage. It's just. That's too much. You're squeezing it. You're forcing the strategy to work. So that's just not gonna make sense. Way, way too much, too crazy. Okay, so then the question becomes, well, Denzel, I still wanna pay this off, right? It's a big part of my expenses, and it's a big stressor for me. There's emotional attachment to it. Well, let's look at the other method. Let's look at the other ways that we can potentially do this. Okay? Brianna says tackle student loans first too. In most cases, yeah, right. Just depends. But like, when it comes to the student loans, we can look at, you know, what your payment is, what the rate is, compare that to the mortgage. But if, for some weird reason, if your mortgage is less than your student loan balance, well, then even debt snowball would say pay the mortgage off first. Especially if that payment is much larger than the student loan. But that's rare. I've never seen that. Never seen somebody with more student loans than mortgage. It could happen, though. Could totally happen, too.
