It’s careful marketing spin. And IMHO, slight of hand and I see spin similar to that of an payment option ARM.
It appears that they’re taking your whole loan and rolling it into an HELOC set to LIBOR.
Your spending stays the same. repeat that. repeat that. repeat that.
Spending stays the same. (Note savings isn’t spending)
$400,000 HELOC, $10,000 monthly pay direct deposit, $9000 monthly spending.
I crunched a spreadsheet and almost thought they had something then realized I wasn’t “spending” my savings into my savings (brokerage). Adding savings as a expense and wallah, balance goes up up up… if the HELOC rate is mere 1% more than your fixed. Even at 6.5% Heloc vrs 6% fixed, it pushes your paid off date to 33 years. If and Helox rate is fixed at the same rate, the floating might save you two years in my scenario. ( I don’t that’s too likely though)
IMHO, these look worse than an option payment ARM. I wonder if people really realize they are paying more interest to prepay their loan as an HELOC.
As you said, you could more easily open a HELOC, not use it and pre-pay a $100 or so a month more and easily beat this program with lower risk.
