The concept behind H.E.A.P.™ is really very simple and is based on the following principles:
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- Having a monthly balance in a checking account is NOT a good idea (money in a checking account earns you zero or very little interest and that interest is taxed annually).
- It is always best to use all available dollars ALL THE TIME to pay down the debt on your home.
- A good home equity acceleration plan will NOT require you to alter your spending habits.
Understanding the following will help you understand the basics of H.E.A.P.™
Your lender charges you interest on a daily basis (many people think of mortgages as a monthly expense when it is really a daily expense). If you can figure out a way to reduce your “daily” interest charges you can save a large amount of interest paid over the life of a loan.
H.E.A.P.™ is very simple in that the program shows you how to use every available dollar every day to pay down debt on your home mortgage
When you use every available dollar to pay down your debt ALL THE TIME, your daily interest charges are reduced and doing so over the life of a loan has a tremendous compounding effect. This compounding effect will help you reduce the term of your loan by several years and save thousands of dollars in interest.
Don’t believe it? Look at the following real world example for a typical American couple:
Mr. Smith and Mrs. Smith earn $3,000 collectively twice per month as their take-home pay (after-tax pay which equates to $72,000 after-tax in a dual-income household). Assume they have a $250,000 house with a $200,000 mortgage balance. Assume the interest rate on the loan is 6.25% with a payment of $1,231 a month (without taxes and insurance). Assume the loan has 30 years remaining. Further, assume that their monthly bills (not including the mortgage) are $3,500 a month.