Before people can buy a house, they require a mortgage from the bank unless they can pay the total amount out of their pocket. However, a traditional mortgage has several problems attached to it, including the eligibility requirements and the burden of carrying a debt for a long time.
Velocity banking, where you use HELOC (home equity line of credit) to pay off your mortgage by using it as your primary account, is a good option. When you have clients who find it difficult to understand the concept, a velocity banking calculator will help you in many ways, from introducing them to its various benefits to providing them with valuable recommendations based on factual data.
But what are the few examples of banking calculators, and what makes them so effective?
What is velocity banking?
It is a better way of paying off your mortgage loans using a home equity line of credit or HELOC. In this method, you use your credit line as your primary account to repay the loan or mortgage while also taking care of everyday expenses. Some people called it the HELOC strategy. It also eliminates the need for a savings account since you would use your credit line as your primary operating account. You might even think of it as taking a loan to pay a loan, but in a more efficient way. After you have paid your monthly expenses from your primary account, you can use the remaining amount as principal reduction payment for the first mortgage (assuming it is your first mortgage). You require four things for this kind of banking to work: home equity, good credit score, credit card, and positive cash flow.
How can a velocity banking calculator help you?
Even though the concept is not as complicated as you might think, it has many aspects attached to it. Since it is a non-traditional method of paying off a mortgage, your clients might have apprehensions about its functionality. Using a calculator, you can demonstrate its practicality and benefits using factual mathematical data and figures. You can also offer valuable suggestions, including the specific line of credit amount they should apply for as a loan, how to use that money to pay off the mortgage, and how whole life insurance can help them with the long-term financial strategy.
What are the types?
A velocity banking calculator is software used to describe the various calculations involved in this type of banking. Even though its primary function is to calculate, you can use it for multiple purposes, some of which are funding illustration, diversification, and borrowing strategy. For example, a funding illustration calculator lets you know how much funds your client should deposit into their HELOC account and their other options for emergency funds. You can also use the calculator to inform your clients about their cash flow, the interest rate of the equity line credit and the options available to them if the interest rate increases over time.
What must you check before buying a calculator?
You must check whether the software for the banking calculator is easy to use and installed with just a link or two. It would also be helpful to check what types of calculations are available related to this banking method and if there is a free trial period to help you determine its efficiency.
You must use a banking calculator to help your clients understand the concept clearly. Nothing is as authentic as mathematical data to prove the efficiency of a method, and using a calculator lets you generate valuable and accurate data for this banking method.