aren't telling you about getting a new loan or a mortgage and we're gonna go

and talk about the truth of mortgage rates hey what's going on everyone this

is Sam Kwak one of the Kwak Brothers real estate investor and entrepreneur

and this video we're gonna go and expose some truth about the things that the

banks aren't telling you as well as mortgage rates how they can be dangerous

if you don't know this one concept now before I dive right in and be sure to

hit the subscribe button as well as the dul notification funds to get you

getting notified for our future videos let's go and dive right into your

mortgage rate now chances are you might be looking to buy a new house or you're

looking to refinance because your mortgage broker or your banker may say

well hey mister missus borrow we got a cheaper rate for you I can save you

money come back in we'll go and refinance your loan well before we do

that before you say yes I want you guys to pay attention to what the banks

aren't telling you and I'm gonna go and share what that is so first of all let's

go and talk about the mortgage rate and a lot of times when you go and refinance

or get a new loan when purchasing a new house your interest rate is gonna be

anywhere between three to five percent interest now some of you guys may have

less you know because your credit score is amazing or you have good financials

but a lot of times I look at interest rates they're gonna be anywhere between

3% to 5% interest depending on your credit score and varying financial

factors now three to five percent interest rate may not seem that

dangerous room may seem very small and you're like hey you know three to five

percent interest rate doesn't seem like a whole lot and you know you may argue

and say you know Sam three to five percent interest rate the interest rate

that we were seeing right now historically is very very low it's true

if you go back and look at 1980s and 1970s interest rates they were as high

as 18 percent 17% interest rate which is which is crazy right but we look at

three to five percent interest rate and I'm gonna tell you guys why this is

equally dangerous as 17 percent or 18 inch 18% interest rate because of the

Amma's a Shimin period and this is what the banks don't really talk about is the

amortization period a lot of people go in and assume that they're gonna get

a 30-year amortized loan and vast majority Americans today get a 30-year

amortized loan and I'm gonna show you guys why the 30-year amortization loan

plus the three to five percent interest rate really doesn't mix well together

especially if you're gonna save money on interest so let's look at the three

percent scenario let's say you did go down the bank and got a three percent

interest loan okay on let's say a $250,000 loan okay 20 $50,000 loan three

percent interest rate and 30-year amortization now I know some of you guys

may have more than $200,000 of loan that you need to go get or you can have less

right I'm just putting out what's average in terms of the nationwide

numbers so if you look at a 3 percent interest rate interest rate on a $50,000

loan I'm gonna go and put this on the screen notice not the interest rate but

I want you guys to pay attention to the accrued interest that you have to pay by

the end of 30 years you can see that you're paying a fairly large chunk of

money in terms of interest so that 3% interest loan came it may have seen

innocent right it may seem like it's not gonna hurt anybody but you can see here

already there you're gonna end up paying a good chunk of money for the interest

whenever you guys go and talk to a banker or a mortgage lender I want you

guys to pay attention to what is the accrued interest amount that's something

that the bankers are not gonna want to talk about because as soon as you as

soon as they know that you know what the interest amount is going to be do you

know you're gonna freak out so they don't want you to pay attention to the

crude interest amount they only want you to talk about or at least look at the

interest rate because they know just by looking at that 3% interest rate you're

like that's not too bad I'm just gonna go for this anyways now let's say worst

case scenario you get a 5% interest rate or greater and I'm gonna talk about 5%

interest rate because there's there's a significance with that 5% interest rate

loan so let's say you n at un and got a 5% interest loan on the same figure

$250,000 okay for 30-year amortization I'm gonna put this on the screen you'll

notice that you'll you're gonna actually pay close to the double the amount that

you initially borrow through the bank meaning if you borrow 2 or $50,000 at 5

percent interest for 30-year amortization you're gonna go and pay

close to two hundred two hundred fifty thousand dollars just in interest alone

which means your total payment is gonna come close to five hundred thousand

dollars so what you just did is you bought yourself a house and you also

bought your bank another house that's an equal value or close to the equal value

a lot of people when they don't pay attention to the accrued interest amount

they just go for the five percent interest rate because they think well

this is historically low it's not too bad I'm just gonna go in and pull the

trigger but I want you guys to pay attention to what is the accrued

interest amount again it's not necessarily about two interest rate it's

about how much you're actually gonna pay by the time you're done paying off the

loan so I know some some of you guys looking at this like oh my gosh like

that that 5% interest loan it's not as innocent that I it's not as innocent as

I previously thought right gives you as a second sort of

consideration as to why getting a 30-year mortgage or 30-year amortized

loan may not be the best idea the next thing that the banks don't really talk

about is the amortization chart this is what's called an amortization chart and

on the bottom you got time and we're gonna express this in ears 30 years and

this is zero and on top this the the vertical line is the amount of monthly

payment every month on that mortgage so let's assume that your mortgage payment

is about you know let's say thousand dollars I know some of you guys pay more

so you guys pay less and I'm gonna change the color up here okay all right

this line here I'm gonna draw a little bit better of a curve there you go this

line right here represents the interest so red is interest and going to change

my color again this blue line represents principal now principal is what we

actually want to pay off that's the actual loan amount that we're seeking to

pay off to build equity to build wealth on your home now you can see here ride

around here okay at this point you're picking up more equity right you're

picking up more you're paying off more of your your

balance now what I want you guys to pay attention is this portion right here

okay you notice that you're paying very little in principle towards the

beginning part of your mortgage lifecycle and vast majority of what

you're actually paying in the beginning is the interest so I don't have thousand

dollars and this I'm just giving you an illustration this may not be accurate

out of the thousand dollars about eight hundred dollars initially is gonna go

towards interest and about two hundred dollars is gonna go towards principal

and this is on a 30-year amortized loan so what that basically means is that

towards the earlier part of your mortgage the bank's are profiting off of

your mortgage they're getting their profit they're pocketing their money

first until right around about eight to ten year mark this is when you start to

go in and start paying your proportion to the principal portion first now

here's the issue when it comes to the 30-year mortgage and here's something

that the banks aren't telling you and they all they tell you is hey listen

you're saving money you're getting a better interest rate your monthly

payments going to go down but this is something that your banks aren't telling

you if you choose to go get a refinanced loan or if you choose to refinance

because your bank's trying to convince and convince you that you're actually

saving money but I tell you guys right now that you're actually not saving much

money at all so let's say you know banker or whoever calls you and says hey

mister mrs. Barr you know you've been paying this mortgage for the last eight

to ten years you've been doing really really really really great

congratulations hey listen now we have this sweet promotional interest rate

that we can save you money come back in let's go and refinance your loan instead

of paying a thousand dollars let's get you to start paying you know $800

instead okay and of course a lot of people

because they don't know much they'll say hey that's $200 less than I got to pay

every month and that sounds amazing that's that's this is a this is great

and they come back in and they go give refinance now here's the issue with us

when you go in refinance do you get to continue the progress and capture all

this principal no what happens is when you refinanced yet

start all over back into square one okay and you're back into this this zone this

period where we have to pay more in interest than actually paying the

principal so what happens is a lot of Americans and and this is true

internationally people refinance every eight to ten years and they perpetually

get stuck in the zone where all they do is just refinance over and over they've

never made it to this part where they're building up equity and actually paying

off their house this is one of the big reasons why I believe that a lot of

people are in debt because they keep getting convinced right by the banks and

mortgage lenders and brokers that they're saving money by refinancing

droughts you know lowering D monthly payment which actually in the long run

you're never getting to pay the principal portion okay

the bank's never want you to go into this zone because as soon as that you go

to the principal pay off zone okay they're not making money off of you they

I mean they have no they don't have the ability to charge you interest so the

banks don't want you to get to this zone right here where you're paying a bulk of

your bulk of your payment towards principal so next time you go get a loan

or you're looking at shop you know you're looking to get a refinance do

reconsider and I know a lot of you guys are considering getting a refinance I'm

going to show you guys that a better option I'm gonna show you guys a better

alternative instead of refinancing to save quote-unquote money my brother and

I developed a strategy where we're gonna show you guys how to pay off your

mortgage within five to seven years on average without making any more money

without cutting back on expenses without ever refinancing with this one little

strategy so I'm gonna go ahead and ahead and actually put that video right here

so that you guys can go and click on it watch that video and learn to pay off

your mortgage within five to seven years on average and literally bypass the need

to be in this trap right don't fall into the trap of the banks and the mortgage

brokers are setting up for all they care is that they want you to stay in this

zone right right here where bulk of your monthly payment is going towards

interest not principal so guys if you fall if you felt like this video is

helpful in any way go and make sure to subscribe to this channel and be sure to

hit the like button and as well as fellow I can't so

they get notified for our future videos and of course check out the video on how

to pay off a mortgage in five to seven years and we're gonna show you guys some

really cool tricks it's not magic it's just math okay and going to definitely

check out that video cool I'll see you guys in the next video