Estimate: HELOC strategy vs. extra mortgage payments
This compares two ways to use the same monthly budget: running it through a HELOC, or paying it straight onto your mortgage as extra principal.
- This is an estimate for illustration only, not a loan offer or a recommendation. Actual rates, terms and costs come from the lender.
- HELOC interest is estimated monthly, and the rate stays at what you entered for the whole period. Most HELOCs have variable rates, so your rate and payment can go up or down.
- It assumes the HELOC stays open the whole time. Real HELOCs have a draw period; when it ends, you can’t borrow more and payments can change.
- Closing costs you enter are added to the HELOC balance at the start.
- Both approaches use the same monthly budget: your take-home pay minus your spending. All of it goes toward the debt each month.
- Other debts, like car loans and credit cards, aren’t included.
- Lump-sum strategy: the first lump sum is borrowed when the HELOC opens and paid onto your mortgage. Another is borrowed each time the HELOC is back to $0. Money left over after paying the HELOC goes onto the mortgage.