Question 1

What is the Mortgage Cutter method?

Accepted Answer

The Mortgage Cutter method is a financial strategy that uses a Home Equity Line of Credit (HELOC) to help you pay off your mortgage and other debts faster. It works by using your cash flow to reduce your average daily loan balance, which can lower the amount of interest you pay over time.

Question 2

Is this method the same as making extra payments?

Accepted Answer

No, it is a different approach. While making extra payments reduces your principal, the Mortgage Cutter method changes the fundamental way your interest is calculated—from a traditional amortization schedule to a daily interest calculation on a line of credit. This can lead to significant savings beyond just extra payments.

Question 3

How does a HELOC help pay off a mortgage faster?

Accepted Answer

A HELOC is a revolving line of credit. By depositing your income into the HELOC, you immediately reduce the principal balance that accrues interest. Your expenses are paid from the HELOC, but for the time your money sits in the account, it's actively working to lower your interest costs.

Question 4

Is this a guaranteed way to save money?

Accepted Answer

This estimator provides an educational illustration based on the information you provide. Actual savings depend on many factors, including your real income, spending habits, interest rate fluctuations, and the terms offered by a lender. It is not a guarantee of savings or loan approval.

Question 5

Do I need a specific bank to use this strategy?

Accepted Answer

No, this strategy is not tied to a specific bank. Many financial institutions offer HELOCs or readvanceable mortgages that can be used for this purpose. We recommend researching lenders to find one that offers favorable terms for your situation.

Question 6

What do I need to get started?

Accepted Answer

To get started, you can use our free mortgage payoff estimator. Simply enter your current mortgage details, income, and expenses to get a personalized blueprint showing how this method could work for you.

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