Paying Off Mortgage With Personal Loan

For a few years now, I've been periodically hearing people on real estate podcasts talking about accelerated mortgage payoff strategies in which they either use a personal loan to pay off their mortgage or somehow use a life insurance policy to do it. I've read a few e-books on it and watched some videos, but I can't wrap my head around it. Here's an example of one:

I follow along with the numbers until like the half-way point and then I lose him. He argues that your mortgage (or car loan) interest rate isn't the effective rate and you're better off playing off a mortgage with credit cards and then paying the cards. That doesn't make sense to me, but there are people making videos and writing books about this. There must be something to it, right? But they're also selling financial products.

My gut tells me this is a sham, but it would be so powerful if it were real that I keep being drawn to investigate. The only accelerated payoff strategy I know of is putting extra money to principal, which is what I've been doing. Can I write this off as a sham and move on already or is there something here?

 
tthhdd:
If you can’t figure out that this is a sham, you have serious IQ problem

Explain exactly how it is then. Rub my nose in it.

heister: Look at all these wannabe richies hating on an expensive salad. https://arthuxtable.com/
 
Most Helpful

The guy is simply doing the math wrong and is charging people money to hear him do math incorrectly.

His example is essentially saying that $67,000 in credit card debt at 18% interest is better than $67,000 in a mortgage at 5%. He says this because the mortgage is an amortized loan and the interest payments are front-loaded. He then says that credit card debt is superior because it is "simple interest" rather than an amortized loan.

He ignores that as long as you have a credit card balance that the debt will compound at 18%.

 
Temujiin:
The guy is simply doing the math wrong and is charging people money to hear him do math incorrectly.

His example is essentially saying that $67,000 in credit card debt at 18% interest is better than $67,000 in a mortgage at 5%. He says this because the mortgage is an amortized loan and the interest payments are front-loaded. He then says that credit card debt is superior because it is "simple interest" rather than an amortized loan.

He ignores that as long as you have a credit card balance that the debt will compound at 18%.

Cool, thanks man. That's what it seemed like but I couldn't believe that there seems to be a small industry surrounding this when the numbers just don't pencil. So what's the scam exactly? At what point does he get paid? Is he trying to sell you a line of credit? It won't work though. How the numbers are, your principal won't go down any quicker and you'll pay more in interest. Wouldn't this be discovered really quickly?

heister: Look at all these wannabe richies hating on an expensive salad. https://arthuxtable.com/
 
GoldenCinderblock:
Cool, thanks man. That's what it seemed like but I couldn't believe that there seems to be a small industry surrounding this when the numbers just don't pencil. So what's the scam exactly? At what point does he get paid? Is he trying to sell you a line of credit? It won't work though. How the numbers are, your principal won't go down any quicker and you'll pay more in interest. Wouldn't this be discovered really quickly?

What does he care? People selling these programs (think a Tai Lopez or Grant Cardone) - they don't care if you make money, if their strategies work, etc. All they're doing is selling you a product. The guy selling snake oil in 1850 didn't actually think his product would work, either... but you make your sale and move on. As long as this guy finds enough suckers who don't realize they are stupid, and think they've found the "loophole" that makes them instantly wealthier with no effort expended, he'll continue to eat well.

It's a scam. Looking for logic or sound financial reasoning is silly; if it was a sound program it wouldn't be a scam in the first place.

 

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