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Mortgage Rates: What the Banks AREN'T Telling You - YouTube
Channel: The Kwak Brothers
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hey what's up you guys in this video
we're gonna go and expose what the banks
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aren't telling you about getting a new
loan or a mortgage and we're gonna go
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and talk about the truth of mortgage
rates hey what's going on everyone this
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is Sam Kwak one of the Kwak Brothers
real estate investor and entrepreneur
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and this video we're gonna go and expose
some truth about the things that the
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banks aren't telling you as well as
mortgage rates how they can be dangerous
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if you don't know this one concept now
before I dive right in and be sure to
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hit the subscribe button as well as the
dul notification funds to get you
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getting notified for our future videos
let's go and dive right into your
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mortgage rate now chances are you might
be looking to buy a new house or you're
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looking to refinance because your
mortgage broker or your banker may say
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well hey mister missus borrow we got a
cheaper rate for you I can save you
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money come back in we'll go and
refinance your loan well before we do
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that before you say yes I want you guys
to pay attention to what the banks
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aren't telling you and I'm gonna go and
share what that is so first of all let's
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go and talk about the mortgage rate and
a lot of times when you go and refinance
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or get a new loan when purchasing a new
house your interest rate is gonna be
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anywhere between three to five percent
interest now some of you guys may have
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less you know because your credit score
is amazing or you have good financials
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but a lot of times I look at interest
rates they're gonna be anywhere between
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3% to 5% interest depending on your
credit score and varying financial
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factors now three to five percent
interest rate may not seem that
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dangerous room may seem very small and
you're like hey you know three to five
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percent interest rate doesn't seem like
a whole lot and you know you may argue
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and say you know Sam three to five
percent interest rate the interest rate
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that we were seeing right now
historically is very very low it's true
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if you go back and look at 1980s and
1970s interest rates they were as high
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as 18 percent 17% interest rate which is
which is crazy right but we look at
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three to five percent interest rate and
I'm gonna tell you guys why this is
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equally dangerous as 17 percent or 18
inch 18% interest rate because of the
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Amma's a Shimin period and this is what
the banks don't really talk about is the
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amortization period a lot of people go
in and assume that they're gonna get
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a 30-year amortized loan and vast
majority Americans today get a 30-year
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amortized loan and I'm gonna show you
guys why the 30-year amortization loan
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plus the three to five percent interest
rate really doesn't mix well together
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especially if you're gonna save money on
interest so let's look at the three
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percent scenario let's say you did go
down the bank and got a three percent
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interest loan okay on let's say a
$250,000 loan okay 20 $50,000 loan three
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percent interest rate and 30-year
amortization now I know some of you guys
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may have more than $200,000 of loan that
you need to go get or you can have less
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right I'm just putting out what's
average in terms of the nationwide
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numbers so if you look at a 3 percent
interest rate interest rate on a $50,000
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loan I'm gonna go and put this on the
screen notice not the interest rate but
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I want you guys to pay attention to the
accrued interest that you have to pay by
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the end of 30 years you can see that
you're paying a fairly large chunk of
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money in terms of interest so that 3%
interest loan came it may have seen
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innocent right it may seem like it's not
gonna hurt anybody but you can see here
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already there you're gonna end up paying
a good chunk of money for the interest
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whenever you guys go and talk to a
banker or a mortgage lender I want you
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guys to pay attention to what is the
accrued interest amount that's something
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that the bankers are not gonna want to
talk about because as soon as you as
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soon as they know that you know what the
interest amount is going to be do you
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know you're gonna freak out so they
don't want you to pay attention to the
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crude interest amount they only want you
to talk about or at least look at the
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interest rate because they know just by
looking at that 3% interest rate you're
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like that's not too bad I'm just gonna
go for this anyways now let's say worst
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case scenario you get a 5% interest rate
or greater and I'm gonna talk about 5%
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interest rate because there's there's a
significance with that 5% interest rate
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loan so let's say you n at un and got a
5% interest loan on the same figure
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$250,000 okay for 30-year amortization
I'm gonna put this on the screen you'll
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notice that you'll you're gonna actually
pay close to the double the amount that
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you initially borrow through the bank
meaning if you borrow 2 or $50,000 at 5
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percent interest for 30-year
amortization you're gonna go and pay
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close to two hundred two hundred fifty
thousand dollars just in interest alone
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which means your total payment is gonna
come close to five hundred thousand
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dollars so what you just did is you
bought yourself a house and you also
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bought your bank another house that's an
equal value or close to the equal value
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a lot of people when they don't pay
attention to the accrued interest amount
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they just go for the five percent
interest rate because they think well
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this is historically low it's not too
bad I'm just gonna go in and pull the
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trigger but I want you guys to pay
attention to what is the accrued
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interest amount again it's not
necessarily about two interest rate it's
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about how much you're actually gonna pay
by the time you're done paying off the
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loan so I know some some of you guys
looking at this like oh my gosh like
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that that 5% interest loan it's not as
innocent that I it's not as innocent as
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I previously thought
right gives you as a second sort of
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consideration as to why getting a
30-year mortgage or 30-year amortized
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loan may not be the best idea the next
thing that the banks don't really talk
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about is the amortization chart this is
what's called an amortization chart and
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on the bottom you got time and we're
gonna express this in ears 30 years and
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this is zero and on top this the the
vertical line is the amount of monthly
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payment every month on that mortgage so
let's assume that your mortgage payment
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is about you know let's say thousand
dollars I know some of you guys pay more
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so you guys pay less and I'm gonna
change the color up here okay all right
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this line here I'm gonna draw a little
bit better of a curve there you go this
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line right here represents the interest
so red is interest and going to change
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my color again this blue line represents
principal now principal is what we
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actually want to pay off that's the
actual loan amount that we're seeking to
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pay off to build equity to build wealth
on your home now you can see here ride
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around here okay at this point you're
picking up more equity right you're
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picking up more
you're paying off more of your your
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balance now what I want you guys to pay
attention is this portion right here
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okay you notice that you're paying very
little in principle towards the
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beginning part of your mortgage
lifecycle and vast majority of what
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you're actually paying in the beginning
is the interest so I don't have thousand
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dollars and this I'm just giving you an
illustration this may not be accurate
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out of the thousand dollars about eight
hundred dollars initially is gonna go
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towards interest and about two hundred
dollars is gonna go towards principal
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and this is on a 30-year amortized loan
so what that basically means is that
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towards the earlier part of your
mortgage the bank's are profiting off of
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your mortgage they're getting their
profit they're pocketing their money
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first until right around about eight to
ten year mark this is when you start to
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go in and start paying your proportion
to the principal portion first now
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here's the issue when it comes to the
30-year mortgage and here's something
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that the banks aren't telling you and
they all they tell you is hey listen
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you're saving money you're getting a
better interest rate your monthly
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payments going to go down but this is
something that your banks aren't telling
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you if you choose to go get a refinanced
loan or if you choose to refinance
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because your bank's trying to convince
and convince you that you're actually
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saving money but I tell you guys right
now that you're actually not saving much
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money at all so let's say you know
banker or whoever calls you and says hey
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mister mrs. Barr you know you've been
paying this mortgage for the last eight
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to ten years you've been doing really
really really really great
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congratulations hey listen now we have
this sweet promotional interest rate
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that we can save you money come back in
let's go and refinance your loan instead
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of paying a thousand dollars let's get
you to start paying you know $800
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instead
okay and of course a lot of people
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because they don't know much they'll say
hey that's $200 less than I got to pay
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every month and that sounds amazing
that's that's this is a this is great
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and they come back in and they go give
refinance now here's the issue with us
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when you go in refinance do you get to
continue the progress and capture all
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this principal no what happens is when
you refinanced yet
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start all over back into square one okay
and you're back into this this zone this
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period where we have to pay more in
interest than actually paying the
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principal so what happens is a lot of
Americans and and this is true
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internationally people refinance every
eight to ten years and they perpetually
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get stuck in the zone where all they do
is just refinance over and over they've
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never made it to this part where they're
building up equity and actually paying
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off their house this is one of the big
reasons why I believe that a lot of
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people are in debt because they keep
getting convinced right by the banks and
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mortgage lenders and brokers that
they're saving money by refinancing
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droughts you know lowering D monthly
payment which actually in the long run
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you're never getting to pay the
principal portion okay
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the bank's never want you to go into
this zone because as soon as that you go
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to the principal pay off zone okay
they're not making money off of you they
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I mean they have no they don't have the
ability to charge you interest so the
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banks don't want you to get to this zone
right here where you're paying a bulk of
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your bulk of your payment towards
principal so next time you go get a loan
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or you're looking at shop you know
you're looking to get a refinance do
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reconsider and I know a lot of you guys
are considering getting a refinance I'm
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going to show you guys that a better
option I'm gonna show you guys a better
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alternative instead of refinancing to
save quote-unquote money my brother and
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I developed a strategy where we're gonna
show you guys how to pay off your
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mortgage within five to seven years on
average without making any more money
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without cutting back on expenses without
ever refinancing with this one little
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strategy so I'm gonna go ahead and ahead
and actually put that video right here
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so that you guys can go and click on it
watch that video and learn to pay off
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your mortgage within five to seven years
on average and literally bypass the need
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to be in this trap right don't fall into
the trap of the banks and the mortgage
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brokers are setting up for all they care
is that they want you to stay in this
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zone right right here where bulk of your
monthly payment is going towards
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interest not principal so guys if you
fall if you felt like this video is
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helpful in any way go and make sure to
subscribe to this channel and be sure to
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hit the like
button and as well as fellow I can't so
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they get notified for our future videos
and of course check out the video on how
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to pay off a mortgage in five to seven
years and we're gonna show you guys some
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really cool tricks it's not magic it's
just math okay and going to definitely
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check out that video cool
I'll see you guys in the next video
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