Background
$150000 appraisal in 2005. It might be appraised quite a bit higher since we have done many $$$$ more of improvements since the appraisal. We were in a hurry since the interest rates were going up and wanted to get the construction loan turned over into the locked mortgage rate
2005 original 30 year mortgage $110,000 on new house
Currently paid down to around $85,000
Interest rate 6.2%
Payments around $700 per month
I need to have it paid off completely within 5 years because of medical problems.

This is what I have been thinking. I did a App-O-Rama in Feb. Right before I did it, we took out a heloc for $25,000 for emergencies and to help with bt if needed. Since the interest rates on the rewards checking accounts and cd's etc tanked as soon as I did the rama, I haven't been trying that hard to pull the money out of the cards. But I currently have a little over $49000 from bt's in rewards checking accounts. This is all on the business card side. I still have $85800 0% bt money from business cards and $27,800 0% bt money from personal cards that could be pulled out. This is all in my name and my business name.

My plan --- pull the money out of the rewards checking accounts and use it along with another $36000 from the business side to completely pay off the mortgage. Since this will not be on my personal cr, as soon as the cr has cleared showing the house paid for, take out another heloc for $60000 to have for emergencies. The LTV would basically be the same as when we took out the heloc before the rama.


I already pay extra on my monthly payments so even though the payments will be higher than what the actual mortgage payment is, I don't think I'll have any trouble meeting the minimum payments. My credit score has fallen a bit, from 773 on transunion before the rama to 738 today. I have been doing the b and all of the transunion inquires are off, but I still have 5 experian and 7 Equifax. I'm hoping before long the Equifax will start moving, but from some of the talk on here, this might not be happening. Anyway, my spouse's score shouldn't have been affected at all by my rama, and since we will only have his income considered when applying for the new heloc, even though it is a joint loan, I don't think we will have any trouble getting another heloc. Or am I wrong and my inquiries and new accounts on my score, hurt our chances? Any one have any thoughts on this???

Then I'd pay the minimum payments monthly through my 0% bt period, and when my time is about up, sign up for new cards in spouse's name and business. And bt the balances to his new cards. When his time is up, it'd be my turn again, until it's paid for.

My emergency back-ups---I'd have the 2 helocs that could completely pay off the cards if needed. The interest rates on the helocs are basically pretty much the same as the mortgage rate we have now. Although they can jump up 2 points in 2 years but hopefully by then, if this works anyway, we will have the amount paid down a bunch since we will no longer be paying any interest at all. Another emergency back-up plan is borrowing against the retirement account. We also have emergency cash, close to $25000.

So what do you all think. Will this work? What have I not thought of, etc.

Thank you for any and all help and your ideas on my new project.
I also want to say that I have learned so much since I found this forum, I wish I would of found it much sooner. I've found out that I've made many mistakes but hopefully not so many anymore. Thanks!!!



Note to myself--find out the % each company requires for minimum payments on each card used.

I think it is a great idea and will work and I've been thinking about doing this on my car loan (~$30k). Best of luck to you!

This is something I have been thinking of doing as well. There are risks with this strategy. The first is that 0% credit cards will no longer be available or not available on terms that will permit you to replace the ones you used to pay the mortgage. You propose to cover this risk by having a HELOC available as a backup. There is some risk you may not qualify for the HELOC and some risk the HELOC may be terminated when you do not expect it. You would need to carefully study the terms of the HELOC to assess this risk. Then, even if the HELOC is still available, you have a risk that the interest rate on the HELOC will rise so high that you will lose all that you gained by using the 0% money early in the process. I do not rate any of these risks as high in the short term, but they are real. Against those risks, we must weigh the possible benefit of having what amounts to a 0% mortgage that does not even encumber your home. Of course, you won't be earning interest on the money you apply to the mortgage, but that would only be 3-4% in today's environment.

Green for OP. I have been thinking of doing the exact same thing because of the tanking rates. My strategy was going to be similar:

Mortgage 140K (house worth around 300K) at 4.5% (15 yr)
Current HELOC 30K (not utilized) at prime -.51 (currently 4.76% but over 50K draw it is prime -1).
Payment 1445/mo

My strategy was to do a AOR on myself (2.0 AOR) payback the mortgage and expand the HELOC to 125K (mortgage - 1 years payments).

Hopefully the HELOC company (Third Federal) could go by the 2 year old apprasel of 250K and up it to 50% with the payoff letter. If a new CR is needed, I'll put it under my wife's name only.

Considering my payment is about 1% of mortgage, the payoff of the credit cards are like making the normal minimal 0% payments.

Considering my last AOR gathered 200K+ on each AOR I think I will have room to spare and make interest on the remaining money.

In 6 months after the AOR, do a WOR to keep the float going.

In the event of not being able to AOR, pay back with HELOC money and pay less then I am currently paying.

With this action, I am getting a virtual 4.5% FDIC interest rate (you are getting a 6.2% return).

My watchouts and worries:
1. Rates are not static and could go up.
2. AOR money may not be available, although it has been for years.
3. Re-fiing with a big HELOC
4. Getting the heloc expanded.

To answer the card payback percentage question here are the following percentages from my AOR:
AMEX 0.02
National City 0.025
Chase 0.02
Juniper 0.01
US Bank 0.01
Citi 0.015
BOA 0.01
Discover 0.02 to 0.03
Advanta 0.0225

I'll be watching your thread for comments and suggestions to your strategy.

The obvious question - why are you sitting on $85k of available 0% money (on Biz cards at that)??? Even with the recent rate reductions, that's leaving over $250/month (equal to 4 free mortgage payment over the course of a year) on the table.

I guess it's because I got discouraged. Opened up the first reward checking account and within 2 weeks, they lowered the rate on it. Then opened the 2nd account and the next day they lowered the rate on it. But you are right, I should have done the bts and put the money into the accounts. That is a good project for this week, I have the check for Chase and have already checked to make sure it's a bt check, I'll deposit that. And then I'll work on the BOA card and see what I can do to get the cash out of that card. The citi business accounts, since they're good for 12 months after making the first bt, I figured I'd save those for later to keep the AOR going for awhile longer. They don't have that great of cl anyway, and so far they haven't cli for me, maybe after I have them a couple more months, they will.

Honestly do not do it. you do not have the AOR organized right so not actually making any real money with it. You have 80K of 0% but just sitting there not earning you money. If you put it at 3% for 6 months you will earn just over 1K put that towards principle and you will help yourself out but you are not going to get your entire morgage paid off in the next 5 years with AORs the way you are going. Maybe as you get bigger and better ones going but that takes some real work and more organization then you seem to have at this moment. You are moving money around but not really profiting from it.

Since the money is being used for a personal expense, can the IRS impute interest on those 0% loans from your business credit cards?

With (round numbers) a 100,000 dollar loan and 700 dollar a month payments (you still have to pay Escrow into a HYSA to protect yourself) - and a 2% average monthly payback, you are going into shock of three times the payment. The good news is that after a few payments (5 payments) you are already down to an 1800 dollar payment and after 10 months (assuming you stick with the 2k) - you are down to a 1600 dollar payment. The strategy of this is to survive the early onslaught. --------The average for the minimum payments would be .015, so the payments would be around $1300, which would work for us.

If you did not do any AOR shenanigans, how much would you have paid down the $85k mortgage balance over five years? --------We've been paying it down pretty fast. It was a 30 year mortgage taken out in the fall of 05 and by my calculations, the last time I figured it up, we're paying from year 18. I figured we could get it pretty much paid off in 10 years.

In other words, if you want to pay off the mortage, you're going to need some real money from somewhere, or it's just going to rubberband back on you, or your HELOC, or whatever. -------I plan on making the full minimum payments required on the cc from our income. I didn't plan on using other bt proceeds to be paying the payments. $45000 of it would be from cards that require .02 minimum payments, $40000 from cards that require .01 minimum payments. That's $1300 per month payments. We can handle that. And the other 0% bt's can just be used to draw interest and I'd use part of it to make the minimum payments required for those cards. Or to make occasional larger payments on the cards that would have the mortgage on them to keep the cc companies happy. But I wouldn't go over what the interest would be from them.

why not take the HEL from penfed at 4.99% ( which will be deductible ) and pay off your mortgage at 6.2% ( you will be paying 3% to some credit cards for BT fee which you can't deduct )-----------I can't take out another heloc until I have the mortgage paid down more. With the mortgage and the heloc that I already have, we are at 73% ltv. And we can't deduct the interest from our mortgage now because we can't itemize. The bt's I have done so far, I have had to pay $175 bt fees, so that's .0035

What about an offset mortgage? Not that UFF scam, bascily a HELOC as the first lien, but some have an option to lock in rates.

This thread lists three legit offset mortgages Mortgage Accelerator / Offset Account / Pay off Your Mortgage Sooner Myths and Facts FAQ