Using Your Home Equity as a Bank

— Slide 10: The BLOC is a Better Financing Option —
You can use your BLOC to finance any financial need

What We Have Learned

As demonstrated in the previous illustration, you paid off the car within 1 year. All further payments from your child is now excess income. You will be earning the interest instead of the bank.

Of course, this is a simple illustration. Factors may lesson the amount of discretionary income you may have from month-to-month.

What has been demonstrated is the power of the BLOC program.

You could use the BLOC to finance your child's education, put a down payment on a vacation home, renovate your existing home, start a family business, and finance other family needs. See our home equity samples.

Where to Next:

Jump over to our 10-Step Success Plan. We will demonstate the next steps you need to maximize the use of the BLOC concept for fnancial management: go to 10-Step success plan

We will also demonstrate how the BLOC can be used to paydown your mortgage loan debt: use your BLOC to paydown your mortgage loan

Last Important Note:
Never Let Your BLOC Move Into Negative Territory

Your BLOC should not drop below a zero balance. This is money that you are giving away to the banks. So what should you do if your BLOC balance reaches zero:


  • How about paying down your mortgage:

    Example:
    assume you closed on the following mortgage loan four years ago to the month:

    mortgage loan amount: $300,000
    term: 30 years
    APR: 6.00%

    you will then use your BLOC to make an additional payment of $5,000 on the 48th month of your mortgage repayment plan.

    Your BLOC will look like this:

BLOC Account
Starting Credit Line Balance: $60,000

Month
BLOC Activity
Advances from BLOC

Payments to BLOC

Balance Owned
Aug Beginning Balance     $(844)
Aug BLOC Pay Mortgage Principal $5000   $4,156
Aug BLOC Living Expenses $4000   $8,156
Aug Pay Paycheck   $5,000 $3,156
Aug Pay Auto Loan Payment   $362 $2,794
Aug Activity $9,000 $5,362 $2,794
Paying down your mortgage can save you money
by lessening the amount of interest you pay on your mortgage loan.

Your savings will approximate to the following:

You will be trading $18K mortgage in interest by using your BLOC to advance $5K.

Mortgage Loan Rate Term
$300,000 6.00% 360 Months
Monthly Payment: $1,798.65
Total Interest to be Paid after 360 months: $347,514
Interest to be Paid after making a $5,000 payment: $329,504
Interest Savings (approximately): $18,010

Download this spreadsheet to run your own numbers.

FREE Download (MS Excel Worksheet)

If you have MS Excel - or other type program - use this amortization schedule to analyze your own payment and payoff numbers.

review this further in the mortgage payoff slide

 

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