the banks are lying to you in this video I'm gonna expose the truth behind what
your bankers and mortgage brokers are not telling you about refinance home
mortgage hey what's going on everyone this is Sam Kwak here one of the
Kwak Brothers and in this video I'm gonna go and expose some truth about refinance
home mortgage and what the true cost of refinancing your mortgage actually is
now before we get into the video be sure to subscribe to a channel if you want to
learn more about paying off your mortgage while saving money on your
interest now you may have been approached by a banker or a mortgage
broker that may have offered you a refinancing mortgage and they may tell
you that you can save money by refinancing to a lower rate or they may
have special discount program well I'm here to tell you guys that refinancing
your mortgage could end up costing you more money in the long haul than the
short term you see it might look like you're saving money by switching to a
lower rate but what they don't tell you is how am ization works which is the
math behind how mortgages calculate the interest payments and no I'm not a
mortgage broker I'm not a banker I'm just some random guy on YouTube that
once exposed the truth behind the refinance home mortgage industry so what
I'm gonna do is I'm gonna illustrate it on my whiteboard what actually happens
when you go and refinance your mortgage but first we have to understand how
mortgages work in the first place so what I'm drawing here for you guys is
called an amortization chart and this horizontal line that goes from left to
right represents the amount of year that you spend on paying off your mortgage so
if you have a 30-year fixed obviously right here is the zero year mark and on
the far right side is the thirty year mark which is when you actually get to
pay off the mortgage now this vertical line the line that goes from top to
bottom represents the amount of monthly payment that you pay on a given month so
let's say for example your monthly payment is thousand dollars a month and
a lot of you guys may pay more may pay less let's just stick with an example of
thousand dollars a month now I'm gonna use red to draw out the proportionate
amount of interest you pay over time so you can see that as soon as you get this
mortgage vast majority of your monthly payment
is actually going towards interests so this right here is interest okay and as
you progress and as you start to pay off more and more you actually get to pick
up more principle payment over time so when you get to past the halfway mark
depending on the interest rate where you have you'll actually end up paying more
principal with your monthly payment each month but in the beginning portion of
your mortgage let's say you just got your mortgage yesterday vast majority of
your monthly payment is going towards interest now the technical term for this
is called front-loaded intra sound so this zone right here right
this represents the front-loaded interest because vast majority of the
interest is being paid up front of the mortgage life cycle so vast majority of
your monthly payment right now if you just got your mortgage is going towards
the pocket of the banks now this is all fine and dandy if we can make it to the
30-year mark and pay off our mortgage completely but because of the current
social economical culture shift vast majority of the Americans today are
either moving or they're refinancing every seven to ten years so every seven
to ten years you either sell the house and move to a different area for a job
relocation or you're downsizing or maybe your kids are moving and you want to
follow follow them to new city or a new area or you again get approached by a
mortgage broker or a banker to persuade you to go and refinance your home
mortgage so about seven to ten year mark okay is when typically most Americans
today will sell their home or refinance so what happens to your mortgage when
you sell your house well vast majority of people don't understand this so what
they do is that they reset they go back to the beginning portion of their
mortgage get another 30-year fixed mortgage and what happens is they go
back into the front-loaded intro zone so when they make it to the seven-year ten
mark that's just when they're getting the start paying the principal payment
but guess what they just sold their home got another thirty-year mortgage now
they're starting all over and the problem is that they haven't even spent
enough time building up the equity the principal portion of the mortgage
because they moved out or sold their home too quickly so when you go and
refinance even at a lower rate back to a 30 or fix you go back to the
front-loader interest zone where bulk of your monthly
payment is going back to the interest and your contribution to the principle
is now limited unless you do extra payment now I do have another YouTube
video where I show you why extra payments to the mortgage is actually
risky versus another strategy that I teach here in the YouTube channel so
stick around if you want to learn more about the strategy now even worse I met
individuals that make it to their 20 year mark and because they need the
money they refinance back into a 30 year face and all the progress that they made
from here to here has been lost and they have to go back to this front-loaded
intro zone even if you go and get a 20-year amortization or 15-year
Immunization the front-loaded intro zone still applies because the amortization
schedule does rely on how seasons in the mortgages to get to the point where
you're at this part of the mortgage payoff schedule to have have mostly
mortgage payment go towards the principle payment so before you go and
refinance your mortgage even to a lower rate do consider the fact that you may
actually end up paying more interest over time because you're resetting
yourself back into the front-loaded inches own even worse some of you guys
are gonna end up paying large closing costs anywhere between five to seven
thousand dollars just to go back and reset your home mortgage and what
bankers and mortgage brokers often do is they tell you that you can save money on
the monthly payment now they'll tell you that when you get to this point and if
you refinance they may be able to get your $1,000 payments every month down to
maybe a $900 a month and unfortunately most uneducated people in the financial
world often see that number and say hey I'm saving hundred dollars a month but
end up paying as far as the interest payment goes when they refinance their
home mortgage so before you go refinance your home mortgage look at the
amortization chart and look at what's called the effective interest amount a
lot of people shop interest rates when they should be looking at how much
interests are gonna pay at the end of the thirty year cycle because a lower
rate doesn't always translate to automatic saving think of it this way if
you had a fifty year loan at one percent interest rate you're gonna end up paying
more interest than a five percent loan on a fifteen year a memorization so
interest rate isn't it sincerely everything it also has to do
with the timing as well as how amortization works now if you guys want
to learn a better strategy that doesn't involve in refinancing your home
mortgage and you can still save money on your interest I have a strategy that you
guys could go check out to learn how to pay off your mortgage within five to
seven years on average without making more money cutting back on your expenses
or having to refinance your home mortgage even better this strategy can
also help you protect yourself from a possible recession coming up in the next
ten years so if you guys are wondering what the strategy is I'm gonna go and
leave the link down below for another YouTube video that I made to explain how
that strategy works so what do you guys think do you want to still refinance
your mortgage or do you want to look at alternatives such as the strategy that I
just described I want to hear your thoughts so go and leave your comments
down below if you still want to refinance tell me why and I would love
to have a conversation with you but if I convinced you not to refinance to your
home mortgage go ahead and comment down below what your epiphanies wore and go
and smash that like button over the next few weeks I'm definitely gonna be
releasing more videos on mortgage payoff strategies as well as ways to save money
on your interest so be sure to subscribe to our Channel and I'll see you guys in