One HELOC, used as a sweep account (only with positive cash flow)

Steps

1. Open one home equity line (not several).
2. Pay a chunk of mortgage principal from the line, then run your paycheck through the line so it is paid down every month, and repeat.
3. It works only when the household's income is more than its spending each month. The saving comes from that surplus, not from the line.

Repeat: Monthly sweep; a new chunk when the line is paid back down.

Measure: Combined mortgage-plus-line balance each month. If it is not falling, stop.

This one does not fit the calculator.

Risks

• HELOC rates are usually variable and often higher than the mortgage.
• The home secures the line.
• Interest on a HELOC is deductible only if the money buys, builds or substantially improves the home (IRS Pub. 936).

Who it fits

Average household, Higher earners, Married couples, Single

Needs

Any homeowner with a mortgage.

How predictable

Depends on markets or variable rates