If you’re a homeowner, chances are you have already heard about the velocity banking strategy. For some, it is the most viable way to pay off their mortgage in 5-7 years while others view it to be a scam. Either way, you can never underestimate the power of velocity bank until you finally give it a try.
The secret lies in figuring out what it entails before you can finally decide on anything. Fortunately, we are here to help clear some of the doubts you might be having about the velocity banking strategy. Continue reading to find out more.
What is Velocity Banking?
First things first, you ought to figure out what this financial strategy entails before you do anything else. In a nutshell, velocity banking is a strategy that allows individuals to use a line of credit as their primary account and use lump sums to pay off a loan. In most cases, this is usually a mortgage.
By using a line of credit, you will have an easy time using your cash flow and extra money to cover your expenses. Of course, some money goes towards paying off your mortgage. Keep in mind this strategy mostly employs the Home Equity Line of Credit (HELOC).
How Does Velocity Banking Strategy Work?
As mentioned above, this strategy works by using a line of credit as your main account. By depositing money to your pay periods and other random incomes, your free cash will be able to reduce the balance quickly. It is then that you can use the lump sums to pay off other debts be it credit cards or vehicle loans. The main idea behind this is that a line of credit will help you in using your cash flow to meet your expense while also going toward off your mortgage.
The Bottom Line
These are just but some of the things you ought to know before you can finally give the velocity banking strategy a try. Be sure to factor in the pros and cons of this strategy before moving on to the next step.
Stella Tennant has helped several global brands, which get heard across the digital space, through result driven content & social media marketing efforts. Studying blockchains and cryptocurrencies makes her hopeful of a free and decentralized future.