⭐️⭐️⭐️COMMONLY ASKED QUESTIONS / ARGUMENTS ANSWERED HERE⭐️⭐️⭐️ 👉 1. Why is this Better than Paying Extra into the Mortgage? We call these people, "Extra Payment Pagans"... We have a special video that explains why our strategy is BETTER than extra payments: ua-cam.com/video/BlqWO10PS5c/v-deo.html 👉 2. Where Can I get More information On This? You can watch our followup webinar here that answers more questions and you can schedule a free consultation with us afterwards: acceleratedbanking.com/webinar?sl=chopmymortgage We'll answer more quesitons such as "I don't have enough equity", "I have inconsistent income", etc. 👉 3. Where Can I Get the Calculator? Right here: chopmymortgage.com 👉 4. How is it possible to Pay Off the entire Mortgage with a HELOC? With a 2nd lien HELOC, it's hard to pay off the existing mortgage balance in full unless you have more than 50% equity. However, with a 1st lien HELOC.. you can completely replace the mortgage in full. It's technically a refinance to do so but you're going from a 30 year mortgage to a 1st lien HELOC instead of refinancing into another 30 year mortgage which resets your amortization clock. 👉 5. I still Don't Get This... How do I learn more? You can watch our FULL 60 Minute Explanation Seminar here: acceleratedbanking.com/free-virtual-class?sl=chopmymortgage 👉 6. Doesn't this require a TON OF DISCIPLINE? Actually, no! My team has created a complete system to either automate the entire process OR minimize the effort down to 30 minutes a month at most. There is an initial set up process but after that, there is little to no on-going maintenance. We do have software programs that can track results and progress for you. 👉7. What if the Bank SHUTS DOWN MY HELOC or FREEZE it? So this happened quite a bit back in 2008-2012 market crash. It's first important to understand WHY banks close/freeze them. Back in 2008-2012, banks closed them on homeowners who were either underwater OR had TOO much debt with no asset. The other common reason why is that the homeowner either abandons the home, does something illegal with the property, or defrauds the bank with false information. Ever since 2012 Dodd-Frank Act, there are MORE protections for the consumers/borrowers of HELOCs. Plus, out of the 1000s of clients we have for the past 5 years, we had yet to have a client lose their HELOC due to shut downs or freezing. So it's VERY rare! 👉8. Why SHOULD You pay off your mortgage in the first place with really low rates? Please watch 2:00 to 8:00 again because you definitely missed it...
As we have seen, governments and banks change the rules whenever it suits them to, and judges always side with the government. So you have no security whatsoever.
The Kwak Brothers are the smartest financial advisors I have ever seen. Better still, they are patriots who are not afraid to expose the agendas of the tyrannical globalists.
This is the BEST VIDEO EVER on how the MORTGAGE SCAM works and how to beat the scam. I was lucky enough to escape from the scam by paying extra payments for principal-only to have my property become free and clear much sooner after I found out that most of the monthly mortgage payment I made went to interest payment and only a very small portion was for reducing the principal and the monthly interest payment. The banks try to keep people as their cows for milking money for as long as they can. That's why they don't want the borrowers to reduce their principals owned to the bank even when the borrowers are able to do so. Make sure that making principal-only payments are allowed by your lender without penalty or expensive fees when you sign up for a mortgage.
I owe 165k on my mortgage but the property is valued at 800k. Still have a 27 year loan left at 2.9%. Would doing a 225k HELOC and paying the mortgage off be wise? Then just pay towards the HELOC? Think the HELOC would be at around 7%
I paid off my house in 9 years, 8 months, 1 week and 6 days living in L.A., CA. I went from 30 years to refinancing to 25 yrs, to 23 yrs, to 20 yrs, to 18 yrs, and finally to 15 years. Now $650 is what I pay for my property taxes, homeowners insurance and earthquake insurance monthly. For $650, you cannot get a converted garage to live in much less a studio apartment. I paid my mortgage every 2 weeks instead on waiting on the statement to arrive and I paid additional principal every time with it.
@@twincherry4958 Three did have closing costs built in. It came to .00125% to .00175 , which was not bad. No early pay off penalties. One can refinance from 29 years down to 7 years so long as it meets their dollar mortgage limits.
The mortgage on my 3br house with 2 car garage, HOA, water and trash collection costs are less than I'd be paying for the one bedroom, 90 year old, roach interested bungalow I moved out of. Oh... My house had nearly doubled in value in the 7 years since I moved in. Message: You have to buy your house when the numbers work for YOU
My house has now more than doubled and is cheaper than the new studios and one bedrooms at the end of my block. I did refinance to get the 2.25% interest rate but I’m not touching it again. I’ll just try to pay it off sooner.
Fun Fact: The French/Latin word mort (death) is the root word in mortgage, therefore, when you sign a mortage contract it actually signifies signing a death pledge.
Not to mention among those 30 years with your loan, in this economy you might lose a job. The bank can take away your home, even though you were making payments for YEARS.
So do you get any portion of the money paid back? No! It is like a bit car repo! All the product resold, you would have lost it, and the credit to engage in any other adventure! Sadly, it happens a lot. Example: Year 2008. Well, that is the worst case scenario. On the positive side, say, you ever keep up with your income for decades, you may actually own the house, even avoiding refinance at all costs!!!
You need to make sure that you are the titled holder, not the bank. But most likely if you know that and confront that they will not lend you as you know the scam.
Years ago banks helped me buy my first home. It was a good arrangement, they lent me money and I paid them back with interest. Over the years I realised that wasn’t enough for the banks and noticed them becoming predatory. I realised they didn’t really want people to be successful and independent.
It is in the name: MORTGAGE = DEATH PLEDGE: Latin words Mort-Gage Literally Translated Mort Means (Death) Gage Means (Pledge) "Debt Slavery=Human Mortgages=Debt Till Death!
@@atn2666 Absolutely. Except during the pandemic we had voted in politicians into our government that required owners to subsidize their renters by having to pay any expenses on the property while the renter stayed for free. Our government is shutting down small business (you being the corporation) when they pass these kinds of laws. We have to be careful to not vote for those that support this kind of law making. If we want to help the renter, the money needs to go directly to them to pay the owner, not change the rules on the owners. If this continues, it will continue to make things worse and worse for EVERYONE, not just owners. A few corporate landlords vs multiple private landlords, private wins every time, in spite of the bad apples. Meanwhile, I hope you make this happen for yourself while we still are free to.
Well, that or just never sell and finish your payments in 30 years. I think the idea of paying cash or paying more principal each time is also not a good solution. That money should be going toward interest bearing assets such as investments in S&P.
Wow! If I never got a 30 year mortgage, I could never buy my first house. Which I sold and bought a cheaper house and bought stock with the profit, which I made a fortune and paid off my mortgage in just 10 years. But you can just pay extra every month to cut interest.
The critical trick to refi is to get a lower interest rate, then pay the same amount as you did before. You will pay off your home faster than if you did not refi. You can always write a check for more to the bank each month.
I’ve always convinced renters to purchase a home especially during the start of Covid when prices were cheap and interest were hovering near low 2 percent. Some of my clients mortgages on a 30 year mortgage has already reached the break even point between interest and principle after one year due to the low interest rates. Housing prices always go up long term. There was extreme fear in the market at that time. Now they’re sitting nearly 1.5x in equity from the inflated prices alone, let alone the principle they have acquired in the last year-2years. Honestly if you have enough money and feel comfortable with the payments and can set aside money for repairs over the course of a few years it’s always a good investment. Home ownership gives people pride and happiness as well.
As I prepare for purchasing my first home, I would like to personally thank you for your content. Not only is your approach easy to understand, it allows enough room for me to do research on my own accord. I appreach the knowledge transfer, and I sincerely wish you the best. Rock on. 🤘
This happened to my Step dad when he refinanced my parents house and my mom didn’t know until my step dad had a major stroke and then turned on my mother which led to a divorce. That is when she realized what happened. A house that should have been close to being paid off, wasn’t even close!
So I watched this video TWICE, listening to what you said, paused the video and linked to my back for real world fiance numbers (current) and then went and produced my own Excel spreadsheet. I was BLOWN away by the results, confirmed numbers on your online calculator. This is the type of information one may hear and right away say it it BS. Hard to argue the numbers. I'm a fairly discipline dude and this should have my current mortgage paid in just over four years. I sincerely wish I knew this years ago. The KBros are amazing and deserves all the accolades, grace and success coming there way. A ugggge, I mean HUGE thank you! lol I"m a fan and a new subscriber.
I love rewatching your videos. Between your channel and 2 other channels I will be entirely debt free June 9th, 2023 or sooner. I only wish I saw these videos 1 month before our refinance last March, BUT our 30year will only be a 27 MONTH mortgage now! Thanks!
The secret: 1. Make a really big payment early on. 2. Also make a couple of extra regular payments early on, too. 3. And then pay about 10% to 20% more than the payment amount each month. You'll be surprised how early you'll pay off your mortgage!
I paid mine off in a little less than 3 years. I spent money on essentials and everything else went toward the mortgage. Home was 110k in 2013 now valued at 240k (another scam to get us to pay more property taxes). Been saving up Ca$h since then to buy my next (bigger) home in the next couple of years. Homes should be affordable but we live in a scam economy.
@@SolomonTheStoryTeller Good for you! Congratulations! But moving up to a more expensive house is another type of scam. Unless you really need more space, keep your house and enjoy not having a mortgage! Or if you must move because of your job, then buy another house of the same price and still have no mortgage or a negligible one. _(Uhm, you didn't sell yourself into slavery for the promise of nookie a couple times a year, did you?!?!)_
@@fredashay the goal is to move into a bigger home paid in full (cash) since space will be needed in the near future and rent my existing one which is already paid in full as well. Thankfully I got out of the debt circle a few years back and I have no intention of ever jumping in again.
This is not a good strategy. It's best to lump sum thr mortgage in a single mass payoff to avoid having lack of liquidity if you made a large payment early in. Example: You pay 50k early and then run into financial hardship. Home gets repossessed and your out 50k. If you held that 50k or invested it in thr meantime you'd have thar liquidity to fall back on and recover should anything happen. The payments per month don't change by paying a little more.
Most people obviously can’t do that. 90% of people mortgage as much home as they can and can barely make the payments. That’s why they are trapped. Also first time homebuyers like myself in Areas with high housing costs like Seattle are going to be stretched thin to purchase any home.
I couldn't find a lender to make a 1st position HELOC when there was already a loan in the first position. The HELOC would be in second position. So if the house was worth $200K and I owed $120k on the first, the HELOC would only be about $40k best case scenario. 80% of $200k is $160k (LTV) - $120k (1st mtg bal) = $40k (max HELOC amount)
Even worse, if your house was 200k and you still owe 120K, its likely that you already have paid the majority portion of the interest money that belongs to the intial interest heavy period.
When I bought my house in 1999 I set up a savings account and save a third of my mortgage payment over 20 years in 2019 I used that savings to pay off the mortgage and had some money left over. I did with out for those years but truely I needed a place to live so now I am debt free no car note no credit cards debt and no mortgage and I can save 80% of my income you all ways have to have a plan to defeat evil borrowing is evil because they will take advantage of you
Herman, congrats on the paid off house. If you would have applied that 1/3 of the saved mortgage payment directly to the home as additional principle. You would have paid it off sooner than 20 yrs.
@@minni1094 it was not easy lots times I had to pinch off the savings but I always tried my best to put it back and a little more thanks and best wishes 2 U
Nice math, but the shopper in my household would overspend without physical cash and come up short every month moving us backwards. I prefer to double my interest each month, cutting my mortgage interest in half. Especially impactful early on in the loan. I’m sure this works great for some, but those households with a tight budget, may break the rules and move backwards.
Some people who move every few years spend their whole life paying a mortgage and when they retire they still have a mortgage payment to pay. My plan was to have my mortgage payed off before I retire and so I have been living in the same house for 22 years and it’s payed off now I don’t have to spend my retirement money on the mortgage and I can save my money and sit or lay flat on it. Everyone is trying to buy my house all kinds of offers are coming in but I will never sale it. It is my investment in me.......
As age & infirmity happen, you might still benefit using a HELOC, to pay for needed remodeling to accommodate you living in your home as long as possible. Also, make sure the properties are protected from taxes & predatory taking, by (I think): 1) filing homestead paper on it with your jurisdiction, 2) setting up a Living Trust, so it goes direct to your heirs without Probate.
There are other things that might apply, but, those are more common. I listed the homestead paper, which most county staff will look surprised, & say, “nobody does those anymore”. But, I understood, that gives a layer of protection to the property, that MIGHT protect it from “equity scammers”.
Nationwide's mortgages in the UK are somewhere between a HELOC and a mortgage. You can overpay, and are able to borrow back whatever is overpaid. Interest is calculated daily. Owned my home outright in 15 years on a 25 year mortgage
My 10 year-old sat attentively throughout your entire presentation. She then turned to me and said “I didn’t know what he is talking about, but it sounds very interesting.” 😂😂😂
thumbs down?1? really?!? what this guy said is spot on... People don't care and willing to pay the banks interests. One way to turn this around against the bank is pay extra to the principal every month.
Why pay the principle when you can put the money in the stock market and make more return? I just refinanced my mortgage at 2.35% for 30 years. I'll make more than 2% in the stock market and even if you pay extra and "save" interest, you still would make more by "investing" in index funds long term. Sure paying your principle is better than spending that same money on toys, eating out, vacation, etc, but not better than index funds.
He wasn't spot on. He said you could take out a $270000 loan against the home and neglected that you have to subtract the amount you owe...which means you only get $70k.
@@jameswalker590 Exactly! I was looking for anyone that posted a comment about this. These morons believing this crap and not knowing about opportunity cost. Paying off low interest loans gives away so much wealth to be made elsewhere.
The concept of paying off a home using a HELOC is great, except you have to be Disciplined in your finances. Avoid over spending, live below your means and constant check ups with your finances. I do agree, lenders want to keep you in debt until your last breath.😢 Thank you for videos like these that show people the options available. Wished, I would have known This over 20years ago. I’m on my 4th home and I refuse to be in debt for 30yrs. I purchased my home in 2018. If all goes as planned, we should have this debt completely gone in 2-3yrs. Can’t wait!!!
Hi I still don't understand it. He use heloc to pay off 200k mortgage. So he owe 200k in heloc. So how does he pay off his debt in heloc and how is it helping to lower interest we have to pay to the bank?
In the 1980s my dad bought 40 acres of land near a reasonably sized town. When I grew up, we built a smaller house ourselves on that land.. When I got a little older and started a family, I moved into the family home and my parents moved into the smaller bungalow. I've never had a mortgage in my life. My parents were my lender. I did not funnel reams of after tax earnings to a bank. As far as I am concerned, this way of thinking is the only way to protect yourselves against government today.
Completely agree! Good for you never having a mortgage. I never bought into the “good debt” idea. I’d much rather buy land and build my house like you guys did.
People need to look at amortization tables for a 30 year loan. You don't actually get to the point where more than half your payment is principal until about year 20. A 15 year mortgage you are immediately paying nearly 75% principal. It's not so much of a scam, it's about time value of money. If you can afford a 15 year, definitely go that route, rates are generally lower too.
It really depends on the loan % - lower interest rates = more principle paid out. Our 30yr mortgage is on 2.29% and we've been paying pretty much 50% interest / 50% principle from the start of the loan. My other property loan is around the 15yr mark, and is about 75% principle now on a 1.99% loan.
The same thing happens every time you renew your mortgage. Not only usually interest rate goes up but you start from the beginning whatever your balance is ...bigger portion goes towards interest same as at the beginning of getting your mortgage.
Leverage is not always bad. Buying and living in a home that you only paid 20% for, and benefiting from the upside, is a huge wealth creation opportunity that you won’t have if you had no debt homeownership.
Interest rates are at a 5000 year low. Today's real rate of a 30 year fixed mortgage is actually negative. Today's rising inflation will shred debt repayments in real, not nomianl terms. Combine with state tax interest deductions makes owning a long term fixed low rate mortgage a smart move.
@@blinks6736 the greatest financial guru Robert kiyosaki has predicting the crash since as early as 2013 or earlier. I remember driving out of town listening to one of his audio in 2013.
I stopped watching at 20:18. If there is a mortgage on the property, the bank that provided the mortgage will have 1st lien position - meaning if you default on the loan, that bank has the right to liquidate the asset and use the proceeds to cover your debt. In your example, the HELOC would have to be a 2nd lien for 80-90% x (270k - 200k). No one is going to lend you 270k if you “aren’t good for it”. So perhaps someone with a substantial brokerage account in custody of issuer of the HELOC could make this work, but this isn’t for Joe Smoe.
6:28 "Now, of course, you could get a shorter amortization." This is the solution. Whether you move into a new house or refinance, make sure you get a shorter new mortgage to continue your progress. It's simple.
@@TheKwakBrothers Let's say I've been paying down my 30-year mortgage for the last 10 years. Now, I refinance to get a lower rate. Can you explain how choosing a 30 year mortgage would allow me to be liquid, but choosing a 20 year mortgage would cause me to lose ALL liquidity? Please remember that shorter term mortgages come with an even lower interest rate.
It all depends on real interest rates. If inflation is 3-4% and you locked in 2.5% fixed rate - you are making a mistake to try to pay it off early. It's better to invest in other assets. If of course, interest rates are 9% and inflation is 2% then of course pay off the debt as soon as you can...
Don’t be house poor. Is the lesson I learned many years ago. We all have to pay for a place to live unfortunately. But don’t be in major debt accomplishing it!
The "bank calling you up to offer refinancing" is insidious. I had a friend who bought a fairly small, but appropriately sized house for himself. He paid a good price because he got into the market at a good time. At the time, I thought he made a great decision. But after a few years of owning the home, all of a sudden my not financially savvy friend was talking about "unlocking his equity" and "upgrading" his "starter" house. I asked him where he got that idea from and he told me "he has a guy" at the bank. I attempted to explain to him this exact scenario about restarting his mortgage with a much higher balance but he did not listen. Now he has a gigantic mortgage after his most recent rebuy into a bubble housing market and continues to slave away under his mortgage and I just laugh at him because I don't have one.
Banks are very aggressive rn in Florida i suppose nationally. Im not giving them another 5 to 7k to save a couple hundred i like the idea of paying in more toward principal each month cause that's where they put it right?
Sucks that he's slaving away... Average people don't know this stuff and banks don't tell you.... it does sound like he's trying to do better for himself and you tried to help but your having just as an okay time here in the UA-cam comment section basically talking behind his back which sounds like jealously.... glad you could you could vent though! Also I'm sure he's loving his new house either way!
Another risk factor using a HELOC to pay off mortgage, is the banks can discontinue your HELOC at anytime. Which would suck because you no longer can use it as a revolving credit, instead, it’s now a variable loan.
We are using our HELOC to build a second home, which will be off-grid with the only utility expense being satellite service. We did a cash out refi to buy the land. Now I know how I can further use the HELOC to my advantage. Thank you!
If you have 2.5 interest and inflation is nearly 10 percent isn’t it fine to sit back and pay the minimum so in 10 years your mortgage seems like nothing?
Salute for you telling the truth. So many groan adults are stupid if they do not know what they are doing. I literally is seeing people die before they can even pay the house off these days. Family members and friends are dying or suddenly start having financial issues are losing their homes after they have been living in them for 15 to 20 years. SMH
Awesome content. I just refinanced...i had to since i had an adjustable mortgage and just came out of being underwater. And I am just a few years from retirement. I now have an interest rate less than 3 percent, which makes me ecstatic but I did not understand this "scam." Thanks. My wife will need to up her principal only payments.
Pay cash, dont use a bank. Thats how. Banks use tricky words, they call you a homeowner the first day that you sign for a mortgage. You're not a homeowner until you pay off the mortgage 30 years later. The first day you are called the borrower, not a home owner.
Right at that point your only a tax payer. But not paying the bank and the govt, just taxes. And it depends on the state. Some states wont take your property if you dont pay taxes, they only put a lien against it.
If I don't have a mortgage, and I only pay taxes, $500 a year, and you pay $2000 a month for a mortgage, you are paying 50 times more than me per year to live, and you're probably not making 50 times more than me.
@@azwelke2638 Oh, I feel you...not having a mortgage is WAY better than having a mortgage. It's why my wife and I are doing everything we can to get out of debt, 8ncluding our home as soon as possible.
Really enjoy your channel. I've been interested in financial freedom techniques for a long time but my fear of risk is great so I mostly read about it & learn. I see from the comments that there are many different ways to achieve this depending on your level of knowledge & risk comfort. Your simply sharing a tool that others can learn about & use if the their situation is right for them. I think a 30 yr fix is appropriate for the set it & forget it crowd who are not paying attention to their finances nor are financially savvy, or need to deal with their spending habits first. Maybe I will be in a position to take advantage of this knowledge; but as one person I read about its simply a missed opportunity because I'm not ready to use it, but I have the knowledge in my tool kit when I am.
When refinancing, deduct the number of years you have paid mortgage from the new term (if 30 years) would erase the 'scam' (which is really not, it is based on your loan amount...)
Yeah it's not a scam. I agree. Heck I wouldn't put up my money for a measly 3% return. That would suck. I'd put someone else's though like the home's appreciation.
Also look at what using the monthly "grace period" does to a borrower does over the life of the loan. All those "grace days" add up and interest added on
Informative video, however I think this is only really beneficial to someone holding a lot of cash and in an instance where the Heloc rate and mortgage rate are about equivalent. Otherwise, you're basically just lowering the carried balance a few thousand dollars, but if the interest is higher via the Heloc (likely will be) you're actually costing yourself more interest than the lowered balance saves. A better strategy is take the lower interest rate mortgage and just pay it off quicker with additional principal
Most loans strictly control the additional payments to principal. Interest to a Heloc may be more, but it is not the front loaded criminal scam that banks perpetrate.
The value in this strategy is when you're an average American moving every 7-10 years like he says. If you're one of the rare few that stick in your house for 30 years, this will probably not be a useful strategy. The 30 year amortization on a typical mortgage means you've paid very little actual principle balance down when you sell in 7-10 years. Meaning you carry very little equity into the next house.
@@MaxRunia Disagree. I just bought a home in California with a conventional 30y 7/6 arm at 2.25% rate, no points. From day one my payment is already paying more to principal than interest (excluding tax and insurance of course, just talking loan here). I plan to keep the property 5-7 years and then sell it. After 7 years, I will have paid down about $112,000 of the original $548,250. While I do understand that I am paying a lot of interest up front, let's also think logically. I originated the loan in November 2021. A) I would seriously doubt any bank anywhere would originate a Heloc at 2.25%. B) Yes, if they did I could pay more than the normal balance each month, but I could also do that now as well. The debt still accrues daily, so interest I pay now is current. The amortization is to equalize the payment, but 2.25% interest is the same heloc or traditional mortgage (excluding compounding method differences but those aren't actually all that significant if you do the math). C) Good luck finding any seller/insurance/etc. who will like the heloc terms in this crazy market. Houses are getting ridiculous offers, and most sellers would probably skip a heloc home offer for traditional or jumbo. Effectively.. on paper, YES this method CAN make sense.. but we live in a place called realityland.. 99% of the time it's going to be more hassle/expense (due to higher rate) than it's worth.
The biggest benefit from this construction seems to be that you can put your savings into work to lower interest payments on your house loan - while still being able to withdraw these savings when needed. So no savings account with 10k or 20 or 30k needed but you can put that money to work. Over 10 or 20 year the compount interest adds up.
Mmmm I don’t noe , my home mortgage interest rate 3 percent, Home equity line of credit 5 percent,,, Why would I pay off my mortgage with my line of credit for a higher interest rate , , yes the home will be pay of only if you have enough Credict but then you will have another mortgage with Higher rate … I thing the best idea 💡 is to drop in extra money in to the principal plus find out how much the bank is charging you per day or per month or weekly for interest contributions will be a blessing..
You can pay off your mortgage, but that means actually paying and not refinancing (which resets your interest back to the front end), even if your rate is a bit higher, refinancing is the scam. We paid off our 30-year mortgage in 14 years, that took some sacrifice to make happen, but now our overhead is property tax and insurance, along with maintenance. A mortgage isn't necessarily a bad thing - it is a tool, and if you understand the mortgage is making others money work for them, your goal is to get it paid as quickly as possible so your money can start to work for you. You will always have to pay for a roof over your head - you'll either do that by paying cash outright, then taxes & insurance, or you'll pay someone else's mortgage for them via rent, or you'll take a mortgage that is well within your means, find a good rate, then pay it off as quickly as you can so you get it paid off and then own your house.
By a rental property using the HELOC as the down payment. Get a 30 year loan on both. Use the income from the rental to invest into something that also increases cash flow.
I bought a wrecked house that people where selling as is. had to tear down to studs in couple rooms, replace rotten floor, and jack up the sinking foundation. WAS ALot of work. but no mortgage and was cheap. took me 6 months of working all day errday to live in it now. good neighborhood in the burbs. Saved so much money its kinda crazy
I stumbled across your page while watching other videos (not financial ones). However, I have really enjoyed this and look forward to going through your library. My wife is a real estate agent I sent her one of your links. She is really enjoying your site. too. Thank you for this video.
This dude is leaving out some things like: When you sell your home you get paid…I got $31,000 selling my house and paid off my car. Now I don’t have a car note and a fairly new Toyota My new home I’ll pay the mortgage and then throw another $500-$1000 monthly toward the principal
I bought a Honda from the local dealership.... Made them think I was going to finance the balance after a low down payment... they thought they would make their money on interest... Got them to move on the price. Then went online to pay... Instead of a single payment I took 80% out of the loan principle.... Following couple of weeks, I etched the balance down the balance down to $1200. Honda closed out my account with the balance being waved.. And they transferred the title. Perhaps it was not economically viable for them to keep such a small loan on their books for 5 years. But it worked and I ended up saving money after the purchase.
If you don't pay on your principal, then your payments won't go down. For the first several your year's your paying strictly interest. So add some extra to go strictly to your principal & the more you can add to paying on your principal the faster your interest drops & the faster you can get your 30 yr lowered. We just bought our house 3 yrs ago & only was able to put 156 & change extra on the principal, but we've already taken close to 5 yrs off our loan & have refinanced 3 times to a lower interest rate. We're still paying the same payment we started off, BUT, our current payment is lower, so we're putting the "extra" on the principal.
Can you use a heloc from the start without getting a regular mortgage. Dose this mean i get to keep my money in my checking and not on a down payment ?
We use an offset account where the interest is calculated on the difference between the total mortgage amount minus the savings in the offset. If you have savings this can drastically bring down your interest.
Why aren't you telling them about bi monthly payments which lowers their interest cost. Or making extra additional principal deposits on their mortgage which drastically lowers interest rates. I paid $100 additional principal on every mortgage payment, which worked out to 5 extra mortgage payments going solely towards principal. and then threw any $100 chunks that I had from side work onto my mortgage. I paid off a 30-year mortgage in 11 years. Total cost of my mortgage including interest and early payoff penalty was 60,000 on $30,000 loan. And I just paid my payments it would have cost 90000.
It seems you're better renting for some years and investing the principle, use it later for a down payment for lesser amortization on a 15 year mortgage (or buy a house outright)
You have to have the equity already paid into it for them to lend it to you. For example if the house is appraised at 300k and you owe 200k they will lend you 80% of the 100k equity. So you will end up with an 80k heloc. Not enough to pay off your mortgage.... That's how it works here in Canada, not sure if the states are different.
Agree I don’t know how he gets $270k Heloc on top of existing mortgage of $200k. Makes no sense. It makes me feel he has never done it and this video is completely wrong
What does it matter? You have to live somewhere, pay rent and you can’t take it with you. Just plan to have the balance in life insurance to pay it off and pass the asset down. Not hard…
We all know that you will pay the bank about twice what you borrowed over 25 years. But when a flat in London costs £300000 or more, what choice do we have?
There is one HUGE missing item left out of "plan": The loan is not being paid off. He only addresses paying the interest. That $200k mortgage (plus the $70k in whatever it was spent on) is not being paid off. I just checked on HELOC options at my bank. They all have a maximum 20 year repayment term and the interest rates are 1.25% HIGHER than what my fixed mortgage rate is.
This just seems risky, if you lose your job you can't pay that HELOC when you could have done something with the mortgage like an emergency mortgage forbearance or hold. I would say just put extra into your principal, or get the 15 year loan instead.
the best thing you can do is get a “infinite banking” policy which yields about 5% annually. you put the extra cash into that and then if you do lose your job you start taking the money out of that. it grows faster than the mortgage interest, it’s tax free like the mortgage interest, and it leaves you a buffer to pay for anything you might need.
Actually, I had a client who did lose her job during the COVID pandemic. Thank God that she had her HELOC to pay for her expenses and bills. She was able to take additional cash out to make the minimum payment on the HELOC. She did get her job back in 2 months and was able to continue. Can you imagine what would have happened if she DIDN'T have her HELOC?
The Payment problem is called Banking Rule #76, take the Interest first before the Principle, which is the reason why there are 76 bricks in the pyramid on the back of the 1 Dollar Bill. My dad told me about that when I was a kid. In Latin, Mort = Death, Gage = Grip; Mort+gage = Mortgage = Death Grip. When you put a vowel in front of a word it makes it mean the opposite or negative, example: Muse = To Think, A + Muse = Amuse = To NOT Think (A Place or Thing in Latin has the suffix -um attached to it: Muse + um = Museum = Place of Thinking; Ment = Mind, where we get our English words Mental, Mentality... and so A + Muse + Ment = Amusement = To Make the Mind NOT Think, and we have WHOLE parks dedicated to that!!) So think about these words: State-ment, (state = static = constant, not changing) govern-ment, de-part-ment (de = To Seperate, Part = Section, De+Part+Ment = To Separate the Mind, Don't Think, just do as you're told!!!) Environ-ment, conceal-ment, employ-ment, docu-ment, harras-ment, judge-ment, enforce-ment, commit-ment, require-ment, instru-ment, ele-ment-ary, assign-ment ... suddenly these words take on a whole different effect when you get into Etymology (the study of the history of words) and star seeing they are twisting the words being used to where THEY know the proper meanings, but YOU have a misunderstanding and so, YOU become "Disenchanted" with their "spells" called Word Art or "Legalese", and everyone has hear the rule "Ignorance of the law is no excuse" and they are not OBLIGATED to explain anything to you!!! YOU must ASK QUESTIONS to figure out their schemes. OR, just stay the hell away from debt!!! “Forfeiture should be an action of debt. ." -United States v. $5,372.85 United States Coin and Currency, 283 F.Supp. 904, 905-06 (S.D.N.Y. 1968)
Thank you for the education. I thought HELOC can potentially cause an owner to loose his/her house if for some reason an owner cannot pay it back on time.
My wife and I paid our dream home off by buying properties and selling at the right time. Took the profit and paid off the mortgage in 9 years. We still own several other properties that is gaining profit as I type. B1st
All good and fine until the Fed raises rates by 25 basis points or more every other month. Helocs are always variable interest. Just make sure you know what you are getting into.
This is good info, but not well taught, not bad, just it could be better (I'm a math teacher). I don't think most people would understand this. I would show an example over time, run through the first and show how much you can save, I think that would help a lot.
I have found a long time ago, that if you want to make progress on any loan or dept, you have to pay 3x per month what they bill you for. So if your monthly mortgage is 1,000..you have to pay 3,000 a month to put a decent dent in it.
Great! However your interest is not locked and payments can change over the life of the loan. People can pay as little as they want or as much as they want. A lot of people will get introuble with these loans just look at Australia.
⭐️⭐️⭐️COMMONLY ASKED QUESTIONS / ARGUMENTS ANSWERED HERE⭐️⭐️⭐️
👉 1. Why is this Better than Paying Extra into the Mortgage?
We call these people, "Extra Payment Pagans"... We have a special video that explains why our strategy is BETTER than extra payments:
ua-cam.com/video/BlqWO10PS5c/v-deo.html
👉 2. Where Can I get More information On This?
You can watch our followup webinar here that answers more questions and you can schedule a free consultation with us afterwards: acceleratedbanking.com/webinar?sl=chopmymortgage
We'll answer more quesitons such as "I don't have enough equity", "I have inconsistent income", etc.
👉 3. Where Can I Get the Calculator?
Right here: chopmymortgage.com
👉 4. How is it possible to Pay Off the entire Mortgage with a HELOC?
With a 2nd lien HELOC, it's hard to pay off the existing mortgage balance in full unless you have more than 50% equity. However, with a 1st lien HELOC.. you can completely replace the mortgage in full. It's technically a refinance to do so but you're going from a 30 year mortgage to a 1st lien HELOC instead of refinancing into another 30 year mortgage which resets your amortization clock.
👉 5. I still Don't Get This... How do I learn more?
You can watch our FULL 60 Minute Explanation Seminar here: acceleratedbanking.com/free-virtual-class?sl=chopmymortgage
👉 6. Doesn't this require a TON OF DISCIPLINE?
Actually, no! My team has created a complete system to either automate the entire process OR minimize the effort down to 30 minutes a month at most. There is an initial set up process but after that, there is little to no on-going maintenance. We do have software programs that can track results and progress for you.
👉7. What if the Bank SHUTS DOWN MY HELOC or FREEZE it?
So this happened quite a bit back in 2008-2012 market crash. It's first important to understand WHY banks close/freeze them. Back in 2008-2012, banks closed them on homeowners who were either underwater OR had TOO much debt with no asset. The other common reason why is that the homeowner either abandons the home, does something illegal with the property, or defrauds the bank with false information. Ever since 2012 Dodd-Frank Act, there are MORE protections for the consumers/borrowers of HELOCs. Plus, out of the 1000s of clients we have for the past 5 years, we had yet to have a client lose their HELOC due to shut downs or freezing. So it's VERY rare!
👉8. Why SHOULD You pay off your mortgage in the first place with really low rates?
Please watch 2:00 to 8:00 again because you definitely missed it...
At 23:00 u make a mistake I think. Should be on the balance, not the limit. Right? So $194k
As we have seen, governments and banks change the rules whenever it suits them to, and judges always side with the government. So you have no security whatsoever.
The Kwak Brothers are the smartest financial advisors I have ever seen. Better still, they are patriots who are not afraid to expose the agendas of the tyrannical globalists.
This is the BEST VIDEO EVER on how the MORTGAGE SCAM works and how to beat the scam.
I was lucky enough to escape from the scam by paying extra payments for principal-only to have my property become free and clear much sooner after I found out that most of the monthly mortgage payment I made went to interest payment and only a very small portion was for reducing the principal and the monthly interest payment. The banks try to keep people as their cows for milking money for as long as they can. That's why they don't want the borrowers to reduce their principals owned to the bank even when the borrowers are able to do so. Make sure that making principal-only payments are allowed by your lender without penalty or expensive fees when you sign up for a mortgage.
I owe 165k on my mortgage but the property is valued at 800k. Still have a 27 year loan left at 2.9%. Would doing a 225k HELOC and paying the mortgage off be wise? Then just pay towards the HELOC? Think the HELOC would be at around 7%
I paid off my house in 9 years, 8 months, 1 week and 6 days living in L.A., CA. I went from 30 years to refinancing to 25 yrs, to 23 yrs, to 20 yrs, to 18 yrs, and finally to 15 years. Now $650 is what I pay for my property taxes, homeowners insurance and earthquake insurance monthly. For $650, you cannot get a converted garage to live in much less a studio apartment. I paid my mortgage every 2 weeks instead on waiting on the statement to arrive and I paid additional principal every time with it.
Very good smart and intelligent we can enjoy life
Is there a 23yrs refinance option? Didn't you pay closing costs everytime you refinanced?
@@twincherry4958
Three did have closing costs built in. It came to .00125% to .00175 , which was not bad. No early pay off penalties. One can refinance from 29 years down to 7 years so long as it meets their dollar mortgage limits.
Excellent work. It is great to be mortgage free particularly if you are or close to retiring where income may be lower.
You have to be careful paying every 2 weeks because not all mortgage companies will except that, be sure to check with your mortgage company first.
The mortgage on my 3br house with 2 car garage, HOA, water and trash collection costs are less than I'd be paying for the one bedroom, 90 year old, roach interested bungalow I moved out of. Oh... My house had nearly doubled in value in the 7 years since I moved in. Message: You have to buy your house when the numbers work for YOU
Right
Mortgage is a scam. Renting is a$$ rape.
@@jholid6y live in the woods
My house has now more than doubled and is cheaper than the new studios and one bedrooms at the end of my block. I did refinance to get the 2.25% interest rate but I’m not touching it again. I’ll just try to pay it off sooner.
I took a 20 year mortgage and paid it off in 16 years by making overpayments. Owning a home and being debt free is a great feeling.
Fun Fact: The French/Latin word mort (death) is the root word in mortgage, therefore, when you sign a mortage contract it actually signifies signing a death pledge.
They love to gloss over that.
Contract until death. Life-long contract.
Gage also from the French, to engage. A deal to the death.
I suppose that's where we got the expression "sign your life away". lol
Yep deal dies whether paid or payment fails.
Not to mention among those 30 years with your loan, in this economy you might lose a job. The bank can take away your home, even though you were making payments for YEARS.
So do you get any portion of the money paid back? No! It is like a bit car repo! All the product resold, you would have lost it, and the credit to engage in any other adventure! Sadly, it happens a lot. Example: Year 2008. Well, that is the worst case scenario. On the positive side, say, you ever keep up with your income for decades, you may actually own the house, even avoiding refinance at all costs!!!
You need to make sure that you are the titled holder, not the bank. But most likely if you know that and confront that they will not lend you as you know the scam.
Even if you pay it off, you still pay property tax, so the government actually owns your property.
@@draelmun6056 I swear.
someone opened a mortgage loan under my name in a town I don't go to. I don't buy houses. Wells Fargo notified me
Years ago banks helped me buy my first home. It was a good arrangement, they lent me money and I paid them back with interest. Over the years I realised that wasn’t enough for the banks and noticed them becoming predatory. I realised they didn’t really want people to be successful and independent.
This is a fantastic video. Ive always seen mortgages as a scam unless you can pay it off earlier.
It is in the name: MORTGAGE = DEATH PLEDGE: Latin words Mort-Gage Literally Translated Mort Means (Death) Gage Means (Pledge) "Debt Slavery=Human Mortgages=Debt Till Death!
So isn’t that why we should be the corporation and buy to rent out ?
You are correct my friend.
@@atn2666 Absolutely. Except during the pandemic we had voted in politicians into our government that required owners to subsidize their renters by having to pay any expenses on the property while the renter stayed for free. Our government is shutting down small business (you being the corporation) when they pass these kinds of laws. We have to be careful to not vote for those that support this kind of law making. If we want to help the renter, the money needs to go directly to them to pay the owner, not change the rules on the owners. If this continues, it will continue to make things worse and worse for EVERYONE, not just owners. A few corporate landlords vs multiple private landlords, private wins every time, in spite of the bad apples. Meanwhile, I hope you make this happen for yourself while we still are free to.
Well, that or just never sell and finish your payments in 30 years. I think the idea of paying cash or paying more principal each time is also not a good solution. That money should be going toward interest bearing assets such as investments in S&P.
Wow! If I never got a 30 year mortgage, I could never buy my first house. Which I sold and bought a cheaper house and bought stock with the profit, which I made a fortune and paid off my mortgage in just 10 years. But you can just pay extra every month to cut interest.
The critical trick to refi is to get a lower interest rate, then pay the same amount as you did before. You will pay off your home faster than if you did not refi. You can always write a check for more to the bank each month.
I’ve always convinced renters to purchase a home especially during the start of Covid when prices were cheap and interest were hovering near low 2 percent. Some of my clients mortgages on a 30 year mortgage has already reached the break even point between interest and principle after one year due to the low interest rates. Housing prices always go up long term. There was extreme fear in the market at that time. Now they’re sitting nearly 1.5x in equity from the inflated prices alone, let alone the principle they have acquired in the last year-2years. Honestly if you have enough money and feel comfortable with the payments and can set aside money for repairs over the course of a few years it’s always a good investment. Home ownership gives people pride and happiness as well.
As I prepare for purchasing my first home, I would like to personally thank you for your content. Not only is your approach easy to understand, it allows enough room for me to do research on my own accord. I appreach the knowledge transfer, and I sincerely wish you the best. Rock on. 🤘
Look out for the consolidation if your money is in a bank you will lose.
This happened to my Step dad when he refinanced my parents house and my mom didn’t know until my step dad had a major stroke and then turned on my mother which led to a divorce. That is when she realized what happened. A house that should have been close to being paid off, wasn’t even close!
Forwarded this to my daughter they just bought a house
Youre a hater
You should of given her the money for the house so she wouldn’t need to borrow from a bank
Well damn👀🙄😂😂😂
So I watched this video TWICE, listening to what you said, paused the video and linked to my back for real world fiance numbers (current) and then went and produced my own Excel spreadsheet. I was BLOWN away by the results, confirmed numbers on your online calculator. This is the type of information one may hear and right away say it it BS. Hard to argue the numbers. I'm a fairly discipline dude and this should have my current mortgage paid in just over four years. I sincerely wish I knew this years ago. The KBros are amazing and deserves all the accolades, grace and success coming there way. A ugggge, I mean HUGE thank you! lol
I"m a fan and a new subscriber.
I've always thought amortization was a scam. I did this exact thing years ago to get rid of my mortgage, and it does work.
I love rewatching your videos. Between your channel and 2 other channels I will be entirely debt free June 9th, 2023 or sooner. I only wish I saw these videos 1 month before our refinance last March, BUT our 30year will only be a 27 MONTH mortgage now! Thanks!
What are the other 2 channels if ya don't mind?
The secret:
1. Make a really big payment early on.
2. Also make a couple of extra regular payments early on, too.
3. And then pay about 10% to 20% more than the payment amount each month.
You'll be surprised how early you'll pay off your mortgage!
I paid mine off in a little less than 3 years. I spent money on essentials and everything else went toward the mortgage. Home was 110k in 2013 now valued at 240k (another scam to get us to pay more property taxes). Been saving up Ca$h since then to buy my next (bigger) home in the next couple of years.
Homes should be affordable but we live in a scam economy.
@@SolomonTheStoryTeller Good for you! Congratulations! But moving up to a more expensive house is another type of scam. Unless you really need more space, keep your house and enjoy not having a mortgage! Or if you must move because of your job, then buy another house of the same price and still have no mortgage or a negligible one. _(Uhm, you didn't sell yourself into slavery for the promise of nookie a couple times a year, did you?!?!)_
@@fredashay the goal is to move into a bigger home paid in full (cash) since space will be needed in the near future and rent my existing one which is already paid in full as well.
Thankfully I got out of the debt circle a few years back and I have no intention of ever jumping in again.
This is not a good strategy. It's best to lump sum thr mortgage in a single mass payoff to avoid having lack of liquidity if you made a large payment early in.
Example: You pay 50k early and then run into financial hardship. Home gets repossessed and your out 50k. If you held that 50k or invested it in thr meantime you'd have thar liquidity to fall back on and recover should anything happen.
The payments per month don't change by paying a little more.
Most people obviously can’t do that. 90% of people mortgage as much home as they can and can barely make the payments. That’s why they are trapped. Also first time homebuyers like myself in Areas with high housing costs like Seattle are going to be stretched thin to purchase any home.
I heard of this strategy before but the way you broke it down really gave me a full understanding of how to use it.
Thanks!
I couldn't find a lender to make a 1st position HELOC when there was already a loan in the first position. The HELOC would be in second position. So if the house was worth $200K and I owed $120k on the first, the HELOC would only be about $40k best case scenario. 80% of $200k is $160k (LTV) - $120k (1st mtg bal) = $40k (max HELOC amount)
Even worse, if your house was 200k and you still owe 120K, its likely that you already have paid the majority portion of the interest money that belongs to the intial interest heavy period.
When I bought my house in 1999 I set up a savings account and save a third of my mortgage payment over 20 years in 2019 I used that savings to pay off the mortgage and had some money left over. I did with out for those years but truely I needed a place to live so now I am debt free no car note no credit cards debt and no mortgage and I can save 80% of my income you all ways have to have a plan to defeat evil borrowing is evil because they will take advantage of you
Good for you
How much did your house appreciate? how much did inflation erode your debt, only an Idiot would call a fix rate mortgage a scam!
Herman, congrats on the paid off house. If you would have applied that 1/3 of the saved mortgage payment directly to the home as additional principle. You would have paid it off sooner than 20 yrs.
@@minni1094 it was not easy lots times I had to pinch off the savings but I always tried my best to put it back and a little more thanks and best wishes 2 U
@@hermanrogers1325 Huge accomplishment I meant no disrespect just spreading good information.
The ideas are really great. The only problem is you need total discipline to do this. I find most people don't have that.
Nice math, but the shopper in my household would overspend without physical cash and come up short every month moving us backwards. I prefer to double my interest each month, cutting my mortgage interest in half. Especially impactful early on in the loan. I’m sure this works great for some, but those households with a tight budget, may break the rules and move backwards.
Yeah my parents would do just that. For me I think the HELOC would be a great option
Paying extra on your mortgage accomplishes exactly the same thing.
Some people who move every few years spend their whole life paying a mortgage and when they retire they still have a mortgage payment to pay. My plan was to have my mortgage payed off before I retire and so I have been living in the same house for 22 years and it’s payed off now I don’t have to spend my retirement money on the mortgage and I can save my money and sit or lay flat on it. Everyone is trying to buy my house all kinds of offers are coming in but I will never sale it. It is my investment in me.......
As age & infirmity happen, you might still benefit using a HELOC, to pay for needed remodeling to accommodate you living in your home as long as possible.
Also, make sure the properties are protected from taxes & predatory taking, by (I think): 1) filing homestead paper on it with your jurisdiction, 2) setting up a Living Trust, so it goes direct to your heirs without Probate.
There are other things that might apply, but, those are more common. I listed the homestead paper, which most county staff will look surprised, & say, “nobody does those anymore”. But, I understood, that gives a layer of protection to the property, that MIGHT protect it from “equity scammers”.
Nationwide's mortgages in the UK are somewhere between a HELOC and a mortgage. You can overpay, and are able to borrow back whatever is overpaid. Interest is calculated daily.
Owned my home outright in 15 years on a 25 year mortgage
My 10 year-old sat attentively throughout your entire presentation. She then turned to me and said “I didn’t know what he is talking about, but it sounds very interesting.” 😂😂😂
thumbs down?1? really?!? what this guy said is spot on... People don't care and willing to pay the banks interests. One way to turn this around against the bank is pay extra to the principal every month.
Why pay the principle when you can put the money in the stock market and make more return? I just refinanced my mortgage at 2.35% for 30 years. I'll make more than 2% in the stock market and even if you pay extra and "save" interest, you still would make more by "investing" in index funds long term. Sure paying your principle is better than spending that same money on toys, eating out, vacation, etc, but not better than index funds.
He wasn't spot on. He said you could take out a $270000 loan against the home and neglected that you have to subtract the amount you owe...which means you only get $70k.
@@jameswalker590 Exactly! I was looking for anyone that posted a comment about this. These morons believing this crap and not knowing about opportunity cost. Paying off low interest loans gives away so much wealth to be made elsewhere.
Its a scam, not as much as a scam as student loans and university businesses as I like to call them
The concept of paying off a home using a HELOC is great, except you have to be Disciplined in your finances. Avoid over spending, live below your means and constant check ups with your finances. I do agree, lenders want to keep you in debt until your last breath.😢 Thank you for videos like these that show people the options available. Wished, I would have known This over 20years ago. I’m on my 4th home and I refuse to be in debt for 30yrs. I purchased my home in 2018. If all goes as planned, we should have this debt completely gone in 2-3yrs. Can’t wait!!!
Hi I still don't understand it. He use heloc to pay off 200k mortgage. So he owe 200k in heloc. So how does he pay off his debt in heloc and how is it helping to lower interest we have to pay to the bank?
In the 1980s my dad bought 40 acres of land near a reasonably sized town. When I grew up, we built a smaller house ourselves on that land.. When I got a little older and started a family, I moved into the family home and my parents moved into the smaller bungalow. I've never had a mortgage in my life. My parents were my lender. I did not funnel reams of after tax earnings to a bank. As far as I am concerned, this way of thinking is the only way to protect yourselves against government today.
Absolutely!!
Completely agree! Good for you never having a mortgage. I never bought into the “good debt” idea. I’d much rather buy land and build my house like you guys did.
Absolutely love this 💕
You're fortunate your dad took that step and it worked to all your benefits
People need to look at amortization tables for a 30 year loan. You don't actually get to the point where more than half your payment is principal until about year 20. A 15 year mortgage you are immediately paying nearly 75% principal. It's not so much of a scam, it's about time value of money. If you can afford a 15 year, definitely go that route, rates are generally lower too.
It really depends on the loan % - lower interest rates = more principle paid out. Our 30yr mortgage is on 2.29% and we've been paying pretty much 50% interest / 50% principle from the start of the loan. My other property loan is around the 15yr mark, and is about 75% principle now on a 1.99% loan.
The same thing happens every time you renew your mortgage. Not only usually interest rate goes up but you start from the beginning whatever your balance is ...bigger portion goes towards interest same as at the beginning of getting your mortgage.
Again, THANK YOU for sharing your knowledge and sharing your insight into PAYING OFF one’s MORTGAGE FASTER!!!!💪🏻💰🏦💵
Leverage is not always bad. Buying and living in a home that you only paid 20% for, and benefiting from the upside, is a huge wealth creation opportunity that you won’t have if you had no debt homeownership.
Interest rates are at a 5000 year low. Today's real rate of a 30 year fixed mortgage is actually negative. Today's rising inflation will shred debt repayments in real, not nomianl terms. Combine with state tax interest deductions makes owning a long term fixed low rate mortgage a smart move.
hahaha this wont age well I promise you...Edit: Don't bother responding now, do so in the next few months when the economy crashes.
@@Rolls....Royce.... heard the “crash” prediction since 2016 😁
@@blinks6736 I mean it's bound to crash at some point. whatever goes up won't keep going up forever.
@@Rolls....Royce.... there's no need to fear, the orange man will reappear!
TRUMP 2024!
@@blinks6736 the greatest financial guru Robert kiyosaki has predicting the crash since as early as 2013 or earlier. I remember driving out of town listening to one of his audio in 2013.
I own my home and tell everybody about this and they say I’m crazy
I stopped watching at 20:18. If there is a mortgage on the property, the bank that provided the mortgage will have 1st lien position - meaning if you default on the loan, that bank has the right to liquidate the asset and use the proceeds to cover your debt. In your example, the HELOC would have to be a 2nd lien for 80-90% x (270k - 200k). No one is going to lend you 270k if you “aren’t good for it”. So perhaps someone with a substantial brokerage account in custody of issuer of the HELOC could make this work, but this isn’t for Joe Smoe.
On my morgage contract, they were chargin a FINE for paying off more or in advance...
6:28 "Now, of course, you could get a shorter amortization." This is the solution. Whether you move into a new house or refinance, make sure you get a shorter new mortgage to continue your progress. It's simple.
And then you lose ALL liquidity... Ouch
@@TheKwakBrothers Let's say I've been paying down my 30-year mortgage for the last 10 years. Now, I refinance to get a lower rate. Can you explain how choosing a 30 year mortgage would allow me to be liquid, but choosing a 20 year mortgage would cause me to lose ALL liquidity? Please remember that shorter term mortgages come with an even lower interest rate.
It all depends on real interest rates. If inflation is 3-4% and you locked in 2.5% fixed rate - you are making a mistake to try to pay it off early. It's better to invest in other assets. If of course, interest rates are 9% and inflation is 2% then of course pay off the debt as soon as you can...
Don’t be house poor. Is the lesson I learned many years ago. We all have to pay for a place to live unfortunately. But don’t be in major debt accomplishing it!
The "bank calling you up to offer refinancing" is insidious. I had a friend who bought a fairly small, but appropriately sized house for himself. He paid a good price because he got into the market at a good time. At the time, I thought he made a great decision. But after a few years of owning the home, all of a sudden my not financially savvy friend was talking about "unlocking his equity" and "upgrading" his "starter" house. I asked him where he got that idea from and he told me "he has a guy" at the bank. I attempted to explain to him this exact scenario about restarting his mortgage with a much higher balance but he did not listen. Now he has a gigantic mortgage after his most recent rebuy into a bubble housing market and continues to slave away under his mortgage and I just laugh at him because I don't have one.
Banks are very aggressive rn in Florida i suppose nationally. Im not giving them another 5 to 7k to save a couple hundred i like the idea of paying in more toward principal each month cause that's where they put it right?
Sucks that he's slaving away... Average people don't know this stuff and banks don't tell you.... it does sound like he's trying to do better for himself and you tried to help but your having just as an okay time here in the UA-cam comment section basically talking behind his back which sounds like jealously.... glad you could you could vent though! Also I'm sure he's loving his new house either way!
That was a serious amount of salt 🧂
Another risk factor using a HELOC to pay off mortgage, is the banks can discontinue your HELOC at anytime. Which would suck because you no longer can use it as a revolving credit, instead, it’s now a variable loan.
2% inflation?! Try 5-13.3% aver.! Nobody likes to calculate the COMPOUNDING effect of 2% inflation each year 🙅♂️
Keeping this in mind for when I begin my real estate journey hopefully by the end of the year. Thank you Mr. Kwak
Another scam out there is you need to have a credit score in order to get A house. Look for a mortgage company that does their own underwriting.
Even if they do their own. They still assess risk, no?
We are using our HELOC to build a second home, which will be off-grid with the only utility expense being satellite service. We did a cash out refi to buy the land. Now I know how I can further use the HELOC to my advantage. Thank you!
Thank you for sharing such actionable content. Great advice and great delivery. Could not have been more timely as I'm preparing to buy.
I think the banks should be made to allow people to pay off the principal first. It is a rort that they make mortgagees pay the interest first.
If you have 2.5 interest and inflation is nearly 10 percent isn’t it fine to sit back and pay the minimum so in 10 years your mortgage seems like nothing?
Salute for you telling the truth. So many groan adults are stupid if they do not know what they are doing. I literally is seeing people die before they can even pay the house off these days. Family members and friends are dying or suddenly start having financial issues are losing their homes after they have been living in them for 15 to 20 years. SMH
Awesome content. I just refinanced...i had to since i had an adjustable mortgage and just came out of being underwater. And I am just a few years from retirement. I now have an interest rate less than 3 percent, which makes me ecstatic but I did not understand this "scam." Thanks. My wife will need to up her principal only payments.
Pay cash, dont use a bank. Thats how.
Banks use tricky words, they call you a homeowner the first day that you sign for a mortgage. You're not a homeowner until you pay off the mortgage 30 years later. The first day you are called the borrower, not a home owner.
You're never a homeowner. You rent from the government in perpetuity. Don't pay your property taxes and see how much being a "homeowner" gets you.
Right at that point your only a tax payer. But not paying the bank and the govt, just taxes.
And it depends on the state. Some states wont take your property if you dont pay taxes, they only put a lien against it.
If I don't have a mortgage, and I only pay taxes, $500 a year, and you pay $2000 a month for a mortgage, you are paying 50 times more than me per year to live, and you're probably not making 50 times more than me.
@@azwelke2638 Oh, I feel you...not having a mortgage is WAY better than having a mortgage. It's why my wife and I are doing everything we can to get out of debt, 8ncluding our home as soon as possible.
I cringe everytime I hear someone proudly say they are a new homeowner.
Really enjoy your channel. I've been interested in financial freedom techniques for a long time but my fear of risk is great so I mostly read about it & learn. I see from the comments that there are many different ways to achieve this depending on your level of knowledge & risk comfort. Your simply sharing a tool that others can learn about & use if the their situation is right for them. I think a 30 yr fix is appropriate for the set it & forget it crowd who are not paying attention to their finances nor are financially savvy, or need to deal with their spending habits first. Maybe I will be in a position to take advantage of this knowledge; but as one person I read about its simply a missed opportunity because I'm not ready to use it, but I have the knowledge in my tool kit when I am.
When refinancing, deduct the number of years you have paid mortgage from the new term (if 30 years) would erase the 'scam' (which is really not, it is based on your loan amount...)
Yeah it's not a scam. I agree. Heck I wouldn't put up my money for a measly 3% return. That would suck. I'd put someone else's though like the home's appreciation.
Now your payment will be higher
Good advice!
Also look at what using the monthly "grace period" does to a borrower does over the life of the loan.
All those "grace days" add up and interest added on
Informative video, however I think this is only really beneficial to someone holding a lot of cash and in an instance where the Heloc rate and mortgage rate are about equivalent. Otherwise, you're basically just lowering the carried balance a few thousand dollars, but if the interest is higher via the Heloc (likely will be) you're actually costing yourself more interest than the lowered balance saves. A better strategy is take the lower interest rate mortgage and just pay it off quicker with additional principal
Most loans strictly control the additional payments to principal. Interest to a Heloc may be more, but it is not the front loaded criminal scam that banks perpetrate.
The value in this strategy is when you're an average American moving every 7-10 years like he says. If you're one of the rare few that stick in your house for 30 years, this will probably not be a useful strategy. The 30 year amortization on a typical mortgage means you've paid very little actual principle balance down when you sell in 7-10 years. Meaning you carry very little equity into the next house.
@@MaxRunia Disagree. I just bought a home in California with a conventional 30y 7/6 arm at 2.25% rate, no points. From day one my payment is already paying more to principal than interest (excluding tax and insurance of course, just talking loan here). I plan to keep the property 5-7 years and then sell it. After 7 years, I will have paid down about $112,000 of the original $548,250. While I do understand that I am paying a lot of interest up front, let's also think logically. I originated the loan in November 2021. A) I would seriously doubt any bank anywhere would originate a Heloc at 2.25%. B) Yes, if they did I could pay more than the normal balance each month, but I could also do that now as well. The debt still accrues daily, so interest I pay now is current. The amortization is to equalize the payment, but 2.25% interest is the same heloc or traditional mortgage (excluding compounding method differences but those aren't actually all that significant if you do the math). C) Good luck finding any seller/insurance/etc. who will like the heloc terms in this crazy market. Houses are getting ridiculous offers, and most sellers would probably skip a heloc home offer for traditional or jumbo.
Effectively.. on paper, YES this method CAN make sense.. but we live in a place called realityland.. 99% of the time it's going to be more hassle/expense (due to higher rate) than it's worth.
@@BC-yd6dl I'm sorry but that's just factually false.
The biggest benefit from this construction seems to be that you can put your savings into work to lower interest payments on your house loan - while still being able to withdraw these savings when needed. So no savings account with 10k or 20 or 30k needed but you can put that money to work. Over 10 or 20 year the compount interest adds up.
Thank you for sharing your knowledge~I'm glad this kind of information are now more accessible to the public for free😍 keep up the good work^^
Mmmm I don’t noe , my home mortgage interest rate 3 percent, Home equity line of credit 5 percent,,,
Why would I pay off my mortgage with my line of credit for a higher interest rate , , yes the home will be pay of only if you have enough Credict but then you will have another mortgage with Higher rate … I thing the best idea 💡 is to drop in extra money in to the principal plus find out how much the bank is charging you per day or per month or weekly for interest contributions will be a blessing..
You can pay off your mortgage, but that means actually paying and not refinancing (which resets your interest back to the front end), even if your rate is a bit higher, refinancing is the scam. We paid off our 30-year mortgage in 14 years, that took some sacrifice to make happen, but now our overhead is property tax and insurance, along with maintenance. A mortgage isn't necessarily a bad thing - it is a tool, and if you understand the mortgage is making others money work for them, your goal is to get it paid as quickly as possible so your money can start to work for you. You will always have to pay for a roof over your head - you'll either do that by paying cash outright, then taxes & insurance, or you'll pay someone else's mortgage for them via rent, or you'll take a mortgage that is well within your means, find a good rate, then pay it off as quickly as you can so you get it paid off and then own your house.
By a rental property using the HELOC as the down payment.
Get a 30 year loan on both.
Use the income from the rental to invest into something that also increases cash flow.
I bought a wrecked house that people where selling as is. had to tear down to studs in couple rooms, replace rotten floor, and jack up the sinking foundation. WAS ALot of work. but no mortgage and was cheap. took me 6 months of working all day errday to live in it now. good neighborhood in the burbs. Saved so much money its kinda crazy
You guys are next level thinking!
I've added an extra amount toward principal with every single payment, thus shaving off 10 yrs of my mortgage.
amazing thank you so much for explaining this.
I stumbled across your page while watching other videos (not financial ones). However, I have really enjoyed this and look forward to going through your library. My wife is a real estate agent I sent her one of your links. She is really enjoying your site. too. Thank you for this video.
Brilliant! From a CPA.
This dude is leaving out some things like:
When you sell your home you get paid…I got $31,000 selling my house and paid off my car. Now I don’t have a car note and a fairly new Toyota
My new home I’ll pay the mortgage and then throw another $500-$1000 monthly toward the principal
Most people dont do this i congratulate you smart enough to do this
You gotta evaluate your refinance figures very carefully. This video shed light on the Heloc strategy much better than what I've been seeing.
I bought a Honda from the local dealership....
Made them think I was going to finance the balance after a low down payment... they thought they would make their money on interest...
Got them to move on the price.
Then went online to pay...
Instead of a single payment I took 80% out of the loan principle....
Following couple of weeks, I etched the balance down the balance down to $1200.
Honda closed out my account with the balance being waved..
And they transferred the title.
Perhaps it was not economically viable for them to keep such a small loan on their books for 5 years.
But it worked and I ended up saving money after the purchase.
If you don't pay on your principal, then your payments won't go down. For the first several your year's your paying strictly interest. So add some extra to go strictly to your principal & the more you can add to paying on your principal the faster your interest drops & the faster you can get your 30 yr lowered. We just bought our house 3 yrs ago & only was able to put 156 & change extra on the principal, but we've already taken close to 5 yrs off our loan & have refinanced 3 times to a lower interest rate. We're still paying the same payment we started off, BUT, our current payment is lower, so we're putting the "extra" on the principal.
Can you use a heloc from the start without getting a regular mortgage. Dose this mean i get to keep my money in my checking and not on a down payment ?
I sent this to so many ppl. Ty ty! For all you do! I hope it can do some good for them.
take your monthly payment..divide by 12 and send that extra amount in each month and you will knock off 5-7 years off the top...
Won't work for me I have a 0% interest rate
Thanks for the info 👍
We use an offset account where the interest is calculated on the difference between the total mortgage amount minus the savings in the offset. If you have savings this can drastically bring down your interest.
Thank you! I really enjoy this video and the past one I just ingested!!! This was great! Learned a lot
Even if you make it through the 30 year scam, it was at a very high cost.
Pretty straight forward. Thanks for sharing.
Why aren't you telling them about bi monthly payments which lowers their interest cost. Or making extra additional principal deposits on their mortgage which drastically lowers interest rates. I paid $100 additional principal on every mortgage payment, which worked out to 5 extra mortgage payments going solely towards principal. and then threw any $100 chunks that I had from side work onto my mortgage. I paid off a 30-year mortgage in 11 years. Total cost of my mortgage including interest and early payoff penalty was 60,000 on $30,000 loan. And I just paid my payments it would have cost 90000.
Thank you for all your help. Very insightful!
The breakdown of the word mortgage is "death pledge" lol tells us a whole lot
It seems you're better renting for some years and investing the principle, use it later for a down payment for lesser amortization on a 15 year mortgage (or buy a house outright)
15 year mortgage you build equity really fast. it's like a savings account on steroids.
@@Kelly-rt4kz seems true this year so far 👍
@@Kelly-rt4kz I guess that depends on where you rent and how much you're getting from your capital.
Brilliant Presentation. Banking....a device with which those with math skills take money from those without them.
Glad you liked it!
You have to have the equity already paid into it for them to lend it to you. For example if the house is appraised at 300k and you owe 200k they will lend you 80% of the 100k equity. So you will end up with an 80k heloc. Not enough to pay off your mortgage.... That's how it works here in Canada, not sure if the states are different.
Agree I don’t know how he gets $270k Heloc on top of existing mortgage of $200k. Makes no sense. It makes me feel he has never done it and this video is completely wrong
What does it matter? You have to live somewhere, pay rent and you can’t take it with you. Just plan to have the balance in life insurance to pay it off and pass the asset down. Not hard…
We all know that you will pay the bank about twice what you borrowed over 25 years. But when a flat in London costs £300000 or more, what choice do we have?
There is one HUGE missing item left out of "plan": The loan is not being paid off. He only addresses paying the interest. That $200k mortgage (plus the $70k in whatever it was spent on) is not being paid off. I just checked on HELOC options at my bank. They all have a maximum 20 year repayment term and the interest rates are 1.25% HIGHER than what my fixed mortgage rate is.
This just seems risky, if you lose your job you can't pay that HELOC when you could have done something with the mortgage like an emergency mortgage forbearance or hold. I would say just put extra into your principal, or get the 15 year loan instead.
the best thing you can do is get a “infinite banking” policy which yields about 5% annually. you put the extra cash into that and then if you do lose your job you start taking the money out of that. it grows faster than the mortgage interest, it’s tax free like the mortgage interest, and it leaves you a buffer to pay for anything you might need.
Actually, I had a client who did lose her job during the COVID pandemic. Thank God that she had her HELOC to pay for her expenses and bills. She was able to take additional cash out to make the minimum payment on the HELOC. She did get her job back in 2 months and was able to continue. Can you imagine what would have happened if she DIDN'T have her HELOC?
@@TheKwakBrothers 😱😱😱
Just found and subscribed to your channel. Great info and great presentation.
The Payment problem is called Banking Rule #76, take the Interest first before the Principle, which is the reason why there are 76 bricks in the pyramid on the back of the 1 Dollar Bill. My dad told me about that when I was a kid.
In Latin, Mort = Death, Gage = Grip; Mort+gage = Mortgage = Death Grip. When you put a vowel in front of a word it makes it mean the opposite or negative, example: Muse = To Think, A + Muse = Amuse = To NOT Think (A Place or Thing in Latin has the suffix -um attached to it: Muse + um = Museum = Place of Thinking; Ment = Mind, where we get our English words Mental, Mentality... and so A + Muse + Ment = Amusement = To Make the Mind NOT Think, and we have WHOLE parks dedicated to that!!) So think about these words: State-ment, (state = static = constant, not changing) govern-ment, de-part-ment (de = To Seperate, Part = Section, De+Part+Ment = To Separate the Mind, Don't Think, just do as you're told!!!) Environ-ment, conceal-ment, employ-ment, docu-ment, harras-ment, judge-ment, enforce-ment, commit-ment, require-ment, instru-ment, ele-ment-ary, assign-ment ... suddenly these words take on a whole different effect when you get into Etymology (the study of the history of words) and star seeing they are twisting the words being used to where THEY know the proper meanings, but YOU have a misunderstanding and so, YOU become "Disenchanted" with their "spells" called Word Art or "Legalese", and everyone has hear the rule "Ignorance of the law is no excuse" and they are not OBLIGATED to explain anything to you!!! YOU must ASK QUESTIONS to figure out their schemes. OR, just stay the hell away from debt!!! “Forfeiture should be an action of debt. ." -United States v. $5,372.85 United States Coin and Currency, 283 F.Supp. 904, 905-06 (S.D.N.Y. 1968)
Thank you for the education. I thought HELOC can potentially cause an owner to loose his/her house if for some reason an owner cannot pay it back on time.
My wife and I paid our dream home off by buying properties and selling at the right time. Took the profit and paid off the mortgage in 9 years. We still own several other properties that is gaining profit as I type. B1st
All good and fine until the Fed raises rates by 25 basis points or more every other month. Helocs are always variable interest. Just make sure you know what you are getting into.
This is good info, but not well taught, not bad, just it could be better (I'm a math teacher). I don't think most people would understand this. I would show an example over time, run through the first and show how much you can save, I think that would help a lot.
I have found a long time ago, that if you want to make progress on any loan or dept, you have to pay 3x per month what they bill you for. So if your monthly mortgage is 1,000..you have to pay 3,000 a month to put a decent dent in it.
Thanks for this life changing information.
Great! However your interest is not locked and payments can change over the life of the loan. People can pay as little as they want or as much as they want. A lot of people will get introuble with these loans just look at Australia.
.... take the ... and multiply it by the ...
( Not "times it"
transitive & intransitive verbs
the difference between do & happen )
This was really informative TY