hey what's going everyone this is Sam Kwak one of the Kwak Brothers and I've
been getting a lot of questions about our HELOC strategy our accelerate debt
reduction strategy now if you don't know what the strategy is you're like what is
he talking about I'm gonna go ahead and leave the the original strategy training
video down below in the comments section but this video is particularly for those
who have checked it out you guys know what the HELOC strategy is and I've been
getting a lot of questions and I'm gonna pin out three questions that I've gotten
so far number one being well Sam why don't we just make extra payments to our
mortgage then having to go through this hopes HELOC strategy mess right that's
that's a question that I get a lot the second thing I get a lot is well Sam
aren't he locks variable don't they have higher interest rate well I'll go and
tackle that and respond to in just a sec and a lot of you guys also said hey this
stuff sounds risky like how do we mitigate this hot like is there a way to
go around like can we actually do this so I'll cover all three things before I
do you guys go and subscribe to our YouTube channel it helps us a lot to
push out more videos out and give you guys value and if you have if you have
any questions go and leave them down below I do pay attention and do respond
to as much as I can so go ahead and leave out any questions if you have so
the first thing I get a lot this is like number one myth slash is like skeptical
questions is Sam why don't we just make extra payments to our mortgage instead
of just doing the he laughing so I'm going to show you guys why the HELOC
strategy is far more superior than just doing the extra payment number one when
you make an extra payment on the he log and that's literally what you have left
over at the end of the month what happens if you have an emergency right
what if what happens like you know you're you need a new roof or you need a
new car tires blown out whatever don't don't you want some backup right and you
might be saying well that's where the savings come from well the idea here
guys is you kind of have a dual effect with the HELOC strategy your HELOC
essentially becomes your new quote-unquote savings and checking
account and any extra payment you put in to the he log you can always get it back
for those emergencies all right so let's go and talk about the extra payment
versus a HELOC strategy and this is something that I get a lot so people ask
me Sam why don't we just put the f money that we have and throw it into the
mortgage right so two things I have to say about that
number one what happens if you like if you make the extra payment and you have
an emergency right if you guys are doing the extra payment with everything that's
left over after expenses or paying the bills and all you're doing is taking
that into the mortgage well what happens there's an emergency where your car's
blown out you need a new roof something happens to these kids life happens right
especially if you have a 30-year mortgage okay
anything can happen and within 1530 years so the beautiful thing about the
HELOC is that a HELOC is an open open term open revolving loan so you can go
ahead and put the money into the HELOC and you can take the money back out for
later use a mortgage on the other hand okay it's closed ended meaning you throw
you put the money into the mortgage you can't get it back okay belongs to the
banks it's gone poof okay so that's one reason why I'm not a big fan of the
extra payment the second reason why I'm not a big fan of the extra payment we
think with the he laughs strategy what we're doing is we're taking all of our
income and putting it in the HELOC right so you guys might be asking well why are
we doing that the reason being is that we do this so that we can lower the
average daily balance on the HELOC when we lower the average daily balance we
also lower the amount of interest our you have to pay so what we're doing is
we're taking all of our money putting the HELOC lower than the average daily
balance okay but we still have access to the HELOC to be able to pay for our
bills or expenses and so on so there's a there's a detailed strategy and there's
a detailed method for this I'm not going to go into that today but if you guys
want to check out more I'll go and leave the link down below for you guys to go
and check out even more okay so that's the extra payment number two he lost
their variable and tends to have higher interest rate now not all he locks are
created equal he locks are known as non-qm loans which means it's not it's
not regulated like a mortgage okay with a mortgage it's government regulated so
there's a lot of things that have to be uniform they have to be same and banks
have to offer very similar types of features and functions with the hue ah
it's not regulated as such so that banks have the more freedom as to what
can offer you and what they don't want to offer you so you can go to Bank a
baby bank see and they'll all offer different types of helots so when you
guys are shopping for a HELOC make sure you go you go and check out different
places because you get you guys are going to hear different things from
different banks so that being said part of that difference is that he locks can
be variable but they can also be fixed okay so a lot of people are exposed to
the variable stuff that's why they believe oh maybe all he lost our
variable well it's not true he laughs can be fixed now our he locks do he
locks have higher interest rate sure right but remember going back to my
point one if you lowered the average daily balance in such ways that the
interest rate really can't catch up to the principal balance then you're gonna
actually end up paying significantly lower amount of interest so the brain
that the the bank's got you got your brain to think you know got you trained
to think that interest rate matters a lot well I'm here to tell you guys that
yes it does matter but when you're using the strategy in the context of the
strategy it doesn't really matter as much because you're killing down the
principal balance SuperDuper fast where the interest rate really doesn't matter
at that point cool number three I get Sam this he laugh stuff sounds super
duper risky why do we want to get into it well for one guys a lot of things
like we do in the life is risky such as driving flying airplanes so when you
weren't like say 12 13 years old driving a car was risky right you have an
impaired judgment you don't really know how to do it because you don't know how
to drive you weren't supervised you weren't trained so much like driving the
HELOC strategy is the same way okay the more you learn the more you understand
the more you understand the mathematics behind a strategy it becomes
significantly less risky okay so you probably wouldn't want your 12 year old
or 13 year old driving around with your car right well same thing here guys the
12 year old is later turn 1617 it's gonna go ahead and take driver's
education is gonna get supervised driving time right all those things lead
to your your kid that 16 year old becoming less of a riskier driver does
that make sense so with the HELOC strategy the more you learn the more you
get you dive into the details and you Stan how the math works the HELOC
strategy can definitely be a very effective strategy to help you pay off
your mortgage your student loans your credit cards whatever loans you guys
meant you guys have the Keelung strategy is far far better it's a superior
strategy than anything that I've seen so guys if you have comments questions if
you're still skeptical go and leave them down below and I'll be more than happy
to address them and I'll tell you guys what I do see the the comments and if
you guys want me to respond definitely can and again just to remind you guys be
sure to subscribe to our YouTube channel give us a thumbs up I add in and I'll go
ahead and Eve some other videos down below for you guys to watch about the
strategy all right guys thanks for watching and I'll see you in the next
video hey guys it's Daniel and this is Sam we are the Koch brothers I hope you
guys enjoyed that video if you want to see more content value that we put out
like this what should they do Sam go and hit the subscribe button and also hit
the bell icon so you guys get notification for our upcoming videos
that's right