When looking to safeguard your financial future for the better, it is essential that your pay off your mortgage or any other debts within the shortest time possible. And among the best ways to go about this is by taking advantage of what the velocity banking strategy offers homeowners.
Proponents of velocity banking believe it allows them to pay off their mortgage early. But does this really come to pass as claimed? Below are some of the reasons why velocity banking has become such as popular financial strategy for paying off debt in the past few years.
Interest is at the Minimum
Although taking out a loan is exciting, no one likes paying interest accrued. Paying money to borrow money isn’t an ideal way to maximize your finances. And given the fact that HELOC uses simple interest, as opposed to a mortgage’s amortized interest, rest in knowing you’ll have more control of lowering your interest expense each month. However, you must ensure you qualify for a HELOC rate that’s lower than your mortgage rate before trying your luck with the velocity banking strategy.
Helps Create Financial Freedom
Whether or not you like it, a mortgage payment will always be your primary expense every month. To have peace of mind, most homeowners prefer paying off their mortgage before reaching retirement age. After all, doing this allows them to have a greater sense of financial independence and security.
The fact that you’re owning your home outright helps you free up a significant amount of discretionary income that can be used in building your retirement fund. That’s precisely what you need to enjoy life after retirement.
Of course, there is more that’s destined to come your way when you use velocity banking as your financial strategy. Either way, it is essential that you consistently track your debt payoff progress when taking advantage of this financial strategy.
Skimp on this, and your debt balance could reach unmanageable levels quickly. In short, the risks involved with velocity banking require a heightened sense of awareness and focus for things to work in your favor.