TIP 1: Banker Line of Credit (BLOC)
understanding the banker line of credit
What is the BLOC?
The BLOC is a Home Equity Line of Credit Account that is secured by the equity value of your home.
if your home's market value is worth $200,000, and the remaining principal amount on your first mortgage is $150,000, your equity value is $50,000.
Banks will open a personal line of credit account on your behalf for $50,000 at 100%LTV.
Two important links:
Home Equity Line of Credit Accounts are different than Home Equity Loans:
Home equity credit lines are open lines of credit where you can advance yourself money at anytime by simply writing a check against your line of credit.
Equity loans are one-time loans that work like mortgage loans. Banks will give your a loan based on the LTV value of your home. You will then repay the loan over a period of time at a fixed APR rate.
For this mortgage payoff program, you need to open a home equity line of credit account:
The BLOC to Function as a Money Account:
Instead of using your current bank checking account for receiving and paying funds, you will use your BLOC as your money account. All of your income and living expenses come into and out of the BLOC.
In other words, all of your wages, paychecks, and other related income will be deposited (or transferred from your money account) into your BLOC.
And all of your expenses such as your regular monthly mortgage payment, food, clothes, transportation, and all other living expenses will be paid by advancing funds from your BLOC.
Let's review this further in the next slide