Episode Transcript
[00:00:00] Speaker A: Hello and welcome. Thank you for joining me today. This is Equity Mastery Episode 2 Podcast 2. I am Vel T. Daniel, Executive banker and mortgage loan officer. MLS number is going to be 223-9514. Happy to help. We got a really good show today. I want to go over a debt consolidation program. What they look like right now at.
[00:00:26] Speaker B: The fall of 2024.
[00:00:28] Speaker A: Coming upon winter and the holidays. These are what most program going to look like and I'm going to dive.
[00:00:33] Speaker B: Deeper into other examples.
[00:00:35] Speaker A: But for today I want to go over a really cool program that we.
[00:00:40] Speaker B: Came across this week.
[00:00:42] Speaker A: So I had a client I was speaking to earlier this week.
[00:00:46] Speaker B: The client wanted to do a debt consolidation program.
[00:00:50] Speaker A: I'm just going to outline what happened, what they were looking for and the.
[00:00:53] Speaker B: Solution that we found.
[00:00:54] Speaker A: I'm not going to delve into any specific details but just give you the details of what it looks like so.
[00:01:01] Speaker B: You can apply it towards yourself or.
[00:01:03] Speaker A: Anything you might be thinking. So the client had six debts that.
[00:01:08] Speaker B: They were paying separately. I'm going to go over those in.
[00:01:10] Speaker A: Detail in just a moment and we'll. I'll share my screen. And they also had a home equity line of credit but they had six accounts they were paying on separately and.
[00:01:21] Speaker B: They did not want to do that anymore.
[00:01:23] Speaker A: It was kind of a hassle to do that. They were on a fixed income as well and they noticed they were paying higher interest debts and they just wanted to see if there was anything that can be done to help alleviate that and lower their monthly expenses and also.
[00:01:43] Speaker B: Increase their monthly cash flow.
[00:01:45] Speaker A: So what we looked at was a debt consolidation program and it worked out wonderful. So here are the details. The client has a first mortgage and they also has a second lien on the property or a second mortgage or a home equity loan or line of credit. It can be called different things but.
[00:02:03] Speaker B: They have a second loan on the property.
[00:02:05] Speaker A: Theirs was called a home equity line of credit. I'll go into detail in later videos. But their payment at this time was only interest only.
[00:02:15] Speaker B: So the monthly payment that they were.
[00:02:17] Speaker A: Making was only hitting the interest and the balance or principal balance was really not going anywhere.
[00:02:25] Speaker B: They also had other higher interest rates.
[00:02:27] Speaker A: On the side that they wanted to.
[00:02:28] Speaker B: Pay off as well.
[00:02:30] Speaker A: And they just, they just had a gut feeling that they knew now was a good time to look and see.
[00:02:36] Speaker B: How they could save money. So this is the debt consolidation program.
[00:02:39] Speaker A: That we worked out for them.
[00:02:40] Speaker B: And I'll go to my screen here.
[00:02:42] Speaker A: On the left side. I'm going to list where they currently are. And all the old accounts that we're going to list and look at paying off for them. And on the right side, I'm going to show the new program or solution that we found for them that was life changing. So we'll start on the left side. So the client has two loans.
[00:03:03] Speaker B: They have a first loan and a second loan.
[00:03:06] Speaker A: We want to pay off the second loan in this case because the first mortgage rate is in a good spot and the balance is high enough that it makes sense to just leave it where it is. So we're just going to focus on.
[00:03:17] Speaker B: Their second loan and the five other debts.
[00:03:20] Speaker A: So the first thing that we have to pay off for them is their heloc. They have a home equity line of credit. The balance on it is roughly 44,000.
Okay. The actual balance is right there. And then they're paying 500amonth for it, roughly. And it's interest only.
Now they have five other accounts that we're going to pay off for them as well. And if I were doing this with you or if you want to do this with us, all you would do is if you have an idea of what you want to pay off, you just want to grab a sheet of paper and just write down what it is, the balance, and how much you pay for it monthly. So follow us. We have the HELOC that's paid off. Then we have five other accounts. We have a credit card, just call it credit card number one, because we have a couple of others to pay off. The balance is roughly $7,500. And they're paying roughly $500 a month towards this credit card. Okay, the next one, we have another credit card. So let's just grab this credit card number two.
All right, credit card number two. The balance on that is $5,000 roughly. And they're paying $250 a month for this credit card. All right, guess what? They got another credit card credit card number three. The balance on that is roughly $2,450. Okay, 2450. They're paying $200 towards that account.
And then there's an installment loan.
And the balance on the installment loan is roughly 2150. And they have a set monthly payment of $287 for that account.
[00:05:13] Speaker B: And then the last account is going.
[00:05:15] Speaker A: To be credit card number four.
Credit card number four.
[00:05:22] Speaker B: The balance on that is roughly $1600.
[00:05:24] Speaker A: And they're paying $97 for that account. Okay, so we have six accounts all together. We have the home equity line of credit HELOC credit card number 1, 2, 3, an installment loan, and credit card number 4. These are arranged highest to lowest. But the total amount of debt to.
[00:05:46] Speaker B: Pay off for them for these accounts.
[00:05:48] Speaker A: Is going to be $63,000 roughly. Okay.
[00:05:51] Speaker B: And then the total monthly payments for.
[00:05:54] Speaker A: These accounts, it's going to be 1834. So right now the CL is currently paying $1834 a month.
[00:06:05] Speaker B: If we don't do anything, this is.
[00:06:06] Speaker A: What they're set, this is what they're doing. But the issue is the balances aren't going anywhere. When you pay minimum payments or just interest only payments, the balance really just hovers where it is. You're kind of just stuck and it just doesn't feel good. Deep down inside, a lot of folks.
[00:06:26] Speaker B: Realize there's a better way.
[00:06:28] Speaker A: And when that light bulb goes off, we can really find great solutions. So that's on the left side. And if you were following along and writing the things you are paying right now, you would have a list of.
[00:06:41] Speaker B: All the accounts, their name, the balance and the monthly payment.
[00:06:45] Speaker A: So you'll end up with the total amount of what you would need to pay off these bills and what you're currently spending right now monthly. Just taking the time to do this is so eye opening. And you'll see here. Now, the client also wanted to get cash out for home improvements and they needed roughly $10,000 to get cash out, to fix up their back deck and to add an addition to their garage. So they needed roughly $10,000 to do that.
[00:07:15] Speaker B: So after getting all the information on.
[00:07:17] Speaker A: Their income and their credit qualifications, looking at what we needed to pay off and getting the total for what we needed for the home improvements, just rough estimates.
[00:07:28] Speaker B: This is the new solution that we.
[00:07:29] Speaker A: Were able to set up for the client.
[00:07:31] Speaker B: And it was life changing.
[00:07:33] Speaker A: So what we did was we set up a new loan and the loan we set up was called a home equity loan. In this case, with the home equity loan is it allows you to tap.
[00:07:45] Speaker B: Into your equity without affecting your first mortgage.
[00:07:49] Speaker A: Okay.
[00:07:49] Speaker B: So if you have a very low.
[00:07:50] Speaker A: Rate on your first mortgage, you can do a home equity loan on the side, allow you to tap into that equity without affecting the first mortgage. So that's what we did. Now, the home equity loan typically has a fixed interest rate and the monthly payment is fully amortized. The client has a heloc, which is a line of credit and it's interest only, so the payment isn't amortized, it's only interest right now.
[00:08:18] Speaker B: So with the Home equity loan. Their monthly payment is now going to go towards their principal.
[00:08:24] Speaker A: Okay, now the total loan amount for.
[00:08:27] Speaker B: The loan we set up was $80,000.
[00:08:29] Speaker A: And the new monthly payment was $812 a month. They're currently paying $1,834 a month. Okay, now these are all the benefits to the home equity loan. The client was able to get cash out at closing.
The client received $12,000, $915 cash out at closing after paying off all these accounts. So all these accounts are gone. There's only one payment now of 812. The client is also receiving $12,915 cash.
[00:09:14] Speaker B: At closing to them.
[00:09:15] Speaker A: After all cost. The closing costs are rolled into the loan so you don't have to bring.
[00:09:20] Speaker B: Any cash at closing, which is amazing.
[00:09:22] Speaker A: The client's monthly savings is also going to be $1022.
Not only are they hitting their principal, they're getting rid of all these high interest debts, saving a thousand dollars a month. And they got the money they needed to do their home improvements and a little extra on the side just for cushion. Like, this was a complete home run.
[00:09:47] Speaker B: And there's so many other cases and.
[00:09:49] Speaker A: Examples just like this. Some much better, some a little bit under. But either way, when you're doing something with no cost, leveraging your equity, that feeling is just priceless. Just waking up knowing that all those debts are gone. The credit is going to improve through that. I'm going to save a thousand bucks a month and I'll get the cash I need to do the home improvements in my house. Like, these are like, it was high fives all over the place. It was really great. And I'm excited to see what we.
[00:10:20] Speaker B: Can do for you.
[00:10:21] Speaker A: It makes sense to take a look. It doesn't affect anything. It doesn't affect your credit. It takes maybe five minutes and we can say, hey, you're in a great spot, or hey, we got a nice solution that can really make a difference here. So in this case, if the client.
[00:10:37] Speaker B: Were to pay what they're paying now, they would have this new loan paid.
[00:10:41] Speaker A: Off in four years, nine months. They currently have 15 years left on the HELOC alone, including everything else. If they pay what they're currently paying now, that's all paid off in four years, nine months, saving them around $93,000 in interest alone.
There's so many benefits to this. I want to go deeper, but you get the point. $93,000 saved. If they just do what they're doing now, and that includes them having just under $13,000 in the bank.
Give me a call. Reach out to me. I'm happy to help. This client was thrilled and satisfied, and we look forward to closing them soon. So I hope you enjoyed the video. If you learned anything or if this was encouraging or inspirational to you in any way, you know how to reach me. Leave a like, leave a comment. Subscribe, Let me know what other videos you all would like to know about. There's so much content I want to release, and I'm happy to help in any way. All right, peace.
