I disagree - I think there IS a benefit without making additional principal payments. I'm having trouble calculating the exact benefit, so let me try through an example.

Let's say you have a $200k mortgage, and make $5k a month. Let's also say you have a $1500 mortgage payment, and spend the remaining $3500. This leaves you with no extra money to apply to principal.

1) With a "normal" mortgage, you'll pay your $1500 every month, and your principal goes down a small amount.

2) Now say you take out a HELOC for the same amount as your monthly income, $5k, and apply this directly to your mortgage. Your paychecks get direct deposited into this HELOC and your bills get paid out of it, and depending on the exact timing of when you get paid and when your bills are due, you could say that the average daily balance is $2500.

So how are these two different? In #1 you pay interest on $200k. In #2 you pay interest on $197.5k. What I can't figure out is how significant that is, but it is definitely different and you have not contributed anything extra to principal. You're benefiting from the difference in how interest is calculated on a mortgage (monthly) and a HELOC (daily). Also the benefit should increase over time. The price you pay is the difference in interest rates as well as any fees associated with it.

I'm not saying U First is selling a good product, but that there is some sense to what they're saying.

I originally submitted this question after hearing a news interview with the author of this book:
http://www.amazon.com/How-Your-Home-Years-Sooner/dp/0974267600
I haven't read the book, although there are some interesting comments from people who have. He recommends using a HELOC as a way to reduce interest payments.

Thanks for discussing this, and for dealing with a stubborn Wise Bread reader :)