“HELOCs don’t have a positive yield.. they have a cost. You get charged the interest… it is not paid to you. The interest rate charged on an HELOC is higher than a standard mortgage.”
I understand that, but in effect the yield on the bill paying money by reducing the interest to be paid on the heloc vs. getting a pittance in checking acct. is a net benefit. That is why I called it the “High yield checking aspect” on the bill paying money and of course, the money in excess of the bill paying money that must be put into the system to get the house paid off. There is merit there, as compared to what, is the question. The actual program without the extra money isn’t going to do much that is for sure.
So, even in a best case scenario, the system in question is not much different than any other send more money program. It is just a tool. It is going to have to come in a better package than the two presented here so far for sure, but it could have some appeal and worth to some borrowers. I don’t see how a serious borrower gets around the fact that Helocs are adjustable and the start rate isn’t beating a fixed by much if any…and we should all be expecting mortgage rates to get worse. IMO
