[cptacek]

Originally Posted by cptacek

I just looked at bankrate.com, and a $50,000 HELOC has an interest rate of 7.59% (the best rate on there today) while a 15 yr fixed loan is 5.64% (not for a jumbo loan). Here are my assumptions so you can play along at home.

1st mortgate = $100,000, interest rate of 5.64%, 15 year fixed, with payments of $824.53 each month. If you get the mortgate at the first of October, pay $824.53 starting on the first of November, and continue through the regular schedule, you will pay off the mortgage on 11/01/2022. You will have spent $148,488.15

I am going to assume that you get a HELOC so you can put a first time payment of $5000 on your 1st mortgate. I am going to assume that you make the first payment of $5824.53 on 11/01/07 and then make regular payments of $824.53 each month thereafter. Using this schedule, you will pay off the mortgate on 09/01/21 with a payout amount of $142,243.70.

There, you say, you just saved $6244.45 and 14 months off of your mortgage.

Uh, just a second. You paid $5000 up front on the second loan (so you only "saved" $1244.45 on your 1st mortgage), and you had to pay interest each month on your HELOC.

Let's assume that the HELOC has an interest rate of 7.59% that is fixed (which doesn't exist, by the way...a HELOC interest rate is variable, and will likely go up).

So, let's go with your assumptions. You don't spend any money on the HELOC until the 4th week. Let's say that you put $5000 on your HELOC on the 22nd of every month to pay all of your bills. We'll say that means that you have to pay 7.59% interest on $5000 for 8 days every month. That is $8.32 a month. Not too bad a monthly payment, huh? Except you will be doing this for 166 months. 166*$8.32=$1381.12.

$1381.12 > $1244.45. You just paid more in interest on your HELOC than you saved on your 1st mortgage. =><=

Originally Posted by rooskers

cptacek - Basically my Graphing calc is just doing what your spreadsheet did lol. Depending on the difference in the interest rates between the HELOC and the 1st mortgage and other assumptions made you can save some money using these programs. The best scenario I could come up with was around 10 - 15 dollars a month. Of course I did not calculate the cost to refinance or monthly and upfront fees these programs charge you. On another forum I did exactly what you just did and got pretty much the same reply as willowstudios gave you. I give up as far as I am concerned if someone wants to pay someone for telling them through magic they can pay their 30 mortgage with no extra payments in 10, 15, 20 whatever years earlier then I say go for it. I will just trust the old sayings, NO SUCH THING AS A FREE LUNCH and IF IT SOUNDS TO GOOD TO BE TRUE THEN IT PROBABLY IS. Of course I also trust my calculations.

So two of us actually pulled out the spreadsheet/calculator and did the math. Where is your math, so we can compare?