Mortgage Rates: What the Banks AREN’T Telling You


hey what’s up you guys in this video
we’re gonna go and expose what the banks 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

10 thoughts on “Mortgage Rates: What the Banks AREN’T Telling You

  • Great point about refinancing to much leave you making mostly interest payments. I tell people only refinance once.

  • Can you do a video on getting commercial financing or refinancing for multifamily 10 unit. I’m about to refinance my 10 unit

    They’re only 5-7 years and amortized over 30 years. So you just have to keep refinancing every 3-7 years

  • As you said, it is just math. The banks are not being dishonest. The reason banks offer 30 year amortized loans is to lower the payments. Most borrowers can't afford a 7 year amortized loan. The monthly payments would be too high. Also, there is nothing wrong with refinancing a loan as long as the interest rate on the new loan is lower than on your old loan and you make at least the monthly payment you were making on the old loan. Please don't give bad info to your viewers.

  • With interest rates at historic lows, it does not make any sense to pay-off mortgages early. Nobody knows where interest rates will be after 7 to 10 years but they will certainly not be lower.

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