Sam Kwak, Author at The Kwak Brothers

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Pay Off Your Loan Or Invest? Know What’s Better For You

Time and time again, I see people choosing to focus either a mortgage or an investment but not both at the same time. But which option is better to start with? In this article, I will show you how you can invest AND pay off your mortgage without the diminishing effects of either process. I want to show you that it’s possible to pay off your mortgage and invest simultaneously. More often than not, such a decision often depends on your financial situation. While many people believe that paying off money is best since it saves on your interest payments, others may want to invest their extra

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BREAKING! The Eviction Problem Just Got WORSE 😧

The eviction moratorium has completely expired and the US Supreme Court ruled against the CDC wanting to extend the moratorium. In addition to this, recently the Federal Unemployment Benefit also expired this week and the Biden Administration has no intention of bringing the unemployment benefit back as the economy is starting to open up.  https://www.youtube.com/watch?v=uaTUQruQjKQ In this video, I’m going to unpack what this all means and how real estate investors could potentially benefit from the eviction

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July 6, 2023

Why Your 30 Year Mortgage Was Designed for you to NEVER Pay if Off

Let’s take a moment to turn the pages back to when you, as a sprightly young adult, stood on the doorstep of your very first home. There’s a unique kind of joy that comes with this moment, isn’t there? The smell of fresh paint, the echoes in the empty rooms, the shine of the unworn floors – all holding the promise of a future filled with happiness and security. At that moment, the 30-year mortgage contract you just signed seemed like a fair trade-off for the keys to your own slice of paradise. Understanding the 30-year Trap Today, as you inch closer to your golden years, your perspective might have undergone a significant shift. After all, those mortgage payments have become an all-too-familiar part of your monthly budget, almost as unavoidable as the sun rising each day. Think about it. Your 30-year mortgage was designed as a marathon, not a sprint. However, it’s a race where the course is uphill, and your shoes seem to be made of lead. The fact is, every dollar you pay in the initial years of your mortgage seems to disappear into the bottomless pit of compound interest, instead of meaningfully reducing your principal amount. The Ticking Clock of Financial Commitment How many moments of peace have been clouded by the nagging thought of your mortgage? How many family vacations, home upgrades, or opportunities to save for retirement have been sacrificed at the altar of monthly mortgage payments? The U.S Census Bureau data shows that on average, adults in the US move almost 12 times in their lifetime. If we do the math, that’s a move every 6-7 years for the average 80-year-old. In effect, you’ve likely been stuck in a cycle of amortization, paying mostly interest and making barely any dent in the principal. Your Hard-Earned Money, Their Profits To put it bluntly, every time you’ve moved and taken out a new 30-year mortgage, you’ve set the profit-making machine of banks into motion. Each new mortgage you sign up for is akin to restarting the vicious cycle of interest payments, making your hard-earned money a consistent stream of income for the lenders, while your principal debt stares you in the face, year after year. The Accelerated Banking Advantage After absorbing all these unsettling facts, you might wonder if there is a way to break free from this cycle of perpetual debt. This is where Accelerated Banking comes into play. This revolutionary approach is designed to help you navigate the murky waters of mortgage payments, and reach the shores of a mortgage-free existence faster. Our method isn’t a magic wand, but a strategic tool that empowers you to use your own income to combat interest and reduce your mortgage term drastically. We’re talking about going from 30 years to potentially 5-7 years! Just like Basil T, who was once in your shoes, burdened with a new car loan, credit card debt, and a 28-year mortgage. Today, using the Accelerated Banking system, he’s on the road to becoming completely debt-free in under five years! Your Key to a Mortgage-Free Future Imagine your life without the dark cloud of a mortgage looming over every financial decision. Imagine the relief, the freedom, and the satisfaction of knowing your home is truly yours. Isn’t that a dream worth fighting for? Take control of your financial destiny. With Accelerated Banking, you hold the power to transform your relationship with debt and work towards a future of true financial independence. No smoke and mirrors, no empty promises – just a strategy tailored to help homeowners like you shatter the chains of […]
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June 29, 2023

Paying Off Your Mortgage Earlier vs. Investing : What’s Better?

Paying Off Your Mortgage Earlier vs. Investing Introduction Paying Off Your Mortgage Earlier vs. Investing, what’s the clear winner? The debate between paying off your mortgage early and investing your surplus income has long been a topic of dispute in the world of personal finance. While investing potentially yields a higher return over time, the merits of reducing debt can’t be overlooked. In this article, we explore why prioritizing mortgage repayment could be the superior strategy for your long-term financial health. Understanding The Amortization Cycle The structure of a 30-year mortgage is such that the bulk of your initial payments predominantly cover interest, not the principal. This design is known as loan amortization, and while it might seem innocuous at first, it’s at the core of why paying off your mortgage early is so appealing. The Homeowner’s Dilemma Data from the 2010 U.S. Census Bureau indicates that the average American homeowner will relocate 11.7 times over their lifetime. This implies that every six to seven years, you could find yourself initiating a new 30-year mortgage, each time restarting the front-loaded interest cycle. Consequently, a considerable portion of your payments may never significantly lower your principal balance. The Case for Investing The argument favoring investing over early mortgage repayment often hinges on the higher return rate that investments can offer. However, this stance fails to consider the inherent risk. Unlike the volatility of investments, paying off your mortgage early presents a surefire return. The amount you save on future interest payments is a guaranteed figure. The Appeal of Mortgage Freedom In addition to the certainty of returns, there’s the undeniable appeal of financial stability that comes with being mortgage-free. Should the market plummet or personal financial emergencies arise, the absence of mortgage pressure provides a comforting safety net. That’s why companies like Accelerated Banking is a huge advocates for helping you pay off your mortgage faster. They have a free video that you can watch on YouTube that explains how they can help you pay off your mortgage in as early as 5-7 years: https://youtu.be/eGVn9iq1e6c  Conclusion While investing undeniably has its place in wealth-building, the advantages of paying off your mortgage sooner can outweigh potential investment returns. Breaking free from the relentless cycle of interest payments leads to financial stability and enhanced future cash flow. It’s vital to examine your unique circumstances, weigh the pros and cons, and arrive at an informed decision aligned with your financial objectives.
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June 29, 2023

Why You SHOULD Pay Off Your Mortgage (Not What you Think)

One of the long-standing debates in personal finance is whether you should pay off your mortgage early or invest the surplus money. While both strategies have their merits, there’s a compelling argument for prioritizing mortgage payoff – escaping the cycle of endless interest payments. (And it’s not what you think) Let’s delve into why this might be the most sensible approach for many homeowners. Front-Loaded Interest: A Costly Beginning In a standard mortgage payment schedule, your initial payments are predominantly servicing the interest on your loan. This is because the amortization schedule – how your payments are spread out over the loan term – is front-loaded with interest. If you take out a 30-year mortgage, the bulk of your monthly payments for about the first decade will go towards paying interest rather than reducing the principal balance. Only a minuscule portion chips away at the loan principal. This schedule keeps you in a state of perpetual debt, paying more to the lender than towards your home’s actual cost, especially in the early years of your mortgage. The Average American Move: A Costly Cycle Here’s where the statistics from the U.S. Census Bureau come into play. The average American moves 11.7 times in their lifetime, roughly every six to seven years. This means that by the time you’ve made significant headway into paying off the principal of your mortgage, you’re likely to move and start a new 30-year mortgage cycle. Starting a new mortgage resets the amortization schedule, pushing you back into a period of interest-heavy payments. The pattern of frequent moving and resetting mortgages leaves most homeowners stuck in a cycle of endless amortization, thus multiplying their total lifetime interest costs by three to four times! The Cost of Never-Ending Amortization By continually restarting the mortgage cycle, you can end up paying several times the cost of your homes in interest alone over your lifetime. This endless cycle of amortization keeps homeowners trapped in a perpetual state of debt, which can be both financially and emotionally draining. Paying off your mortgage early allows you to break free from this cycle. It reduces the overall interest paid, offers peace of mind, and can contribute to a secure financial future. Besides, owning your home outright is a significant milestone that provides a sense of stability and security. You also have to remember WHO benefits from having your money contributed to an IRA or a 401(k). Most financial firms and custodians make 1-3% off of YOUR retirement funds with wide-ranging “management fees”. So it’s no surprise that financial advisors and professionals DON’T want you to pay off your mortgage earlier because by you doing so, they make less money from selling you investment products. I’m not saying all financial advisors are evil or greedy. What I am saying is that there’s a clear factual conflict of interest for the financial advisor if more of your dollars are used to pay off your mortgage. I’m also not anti-investments either. I believe you should always factor in the opportunity cost, risk tolerance, and what ultimately makes sense for your financial future. But my goal by writing this is to highlight a less-known problem that most financial advisors or so-called experts don’t talk about. I want you to make well-informed decisions by looking at all pros and cons. Breaking the Cycle Paying off a mortgage early isn’t always easy, but it’s worth considering, especially given the cycle of perpetual interest payments and the financial burden that comes with it. Strategies such as making extra payments, refinancing for a shorter term, or utilizing methods like the Accelerated […]
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May 30, 2023

1st Lien vs 2nd Lien HELOC? What are the Differences?

When considering a Home Equity Line of Credit (HELOC), two types come to mind: a 1st lien HELOC and a 2nd lien HELOC. Both can offer financial leverage, but the difference between the two lies primarily in their placement in the financial hierarchy of your debt obligations. Here, we delve into these two kinds of HELOCs to help you make an informed decision. A 1st lien HELOC replaces your existing primary mortgage. It’s essentially a refinancing strategy where the HELOC becomes the primary loan secured against your property. This type of HELOC typically offers the largest credit limit because it’s based on the total equity of your home. It also holds the first position in line to be paid off in case of default or sale, hence the term “1st lien”. A 2nd lien HELOC, on the other hand, comes into play while leaving your existing mortgage intact. As the name implies, it is a secondary line of credit secured against your home’s equity, supplementary to the existing mortgage. This means in the event of a foreclosure, the 2nd lien HELOC will be paid off only after the 1st mortgage has been fully settled. The choice between a 1st and 2nd lien HELOC is dependent on individual financial situations, goals, and risk tolerance. If you have a low-interest first mortgage, you may want to keep it and choose a 2nd lien HELOC to tap into your home equity without disturbing your first mortgage. This could be a smart move if you only need a smaller amount or if you want to keep your existing low mortgage rate intact. On the contrary, if you have significant home equity and your primary mortgage rate is higher than the current HELOC rates, a 1st lien HELOC might be a better option. This can provide a larger credit limit and potentially lower your overall interest costs. Remember, both forms of HELOCs involve risk, as your home serves as collateral. Therefore, it’s crucial to weigh your options, consider your ability to pay, and consult with a financial advisor or professional to make a decision that best suits your personal financial landscape. Understanding the nuances between a 1st lien and 2nd lien HELOC empowers you to leverage your home equity in a way that aligns with your financial goals. At the end of the day, it’s all about creating a strategy that enables financial growth and stability, while safeguarding your most valuable asset—your home.
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May 30, 2023

Paying Extra Into the Mortgage vs. Using a HELOC? Which is Better?

You may have recently been introduced to the idea of using a HELOC, a Home Equity Line of Credit, to pay off your mortgage faster. But you’re wondering ‘why is this better or any different than just sending in extra payments to your mortgage?’. But, is this the most optimal route to financial liberation? Let’s dive into the comparison of “Paying Extra versus HELOC,” specifically exploring the transformative power of the Home Equity Line of Credit (HELOC) strategy, also known as the Accelerated Banking method. The Traditional Approach: Paying Extra on the Principal The principle is straightforward – the more you pay, the faster you chip away at your mortgage. Additional payments go directly toward the principal, reducing the amount of interest accrued over time. On the surface, it seems like a sensible way to reach financial freedom sooner. However, it presents a few fundamental drawbacks. The main problem with this approach lies in the rigidity of the mortgage contract. Money paid into the mortgage cannot be easily accessed again, thus your capital is locked away until the home is sold or refinanced. During financial emergencies, liquidity is crucial, but with this method, your hard-earned money is inaccessible. The Accelerated Banking Method: Utilizing a HELOC In contrast, the Accelerated Banking strategy (also known as Velocity Banking) utilizes a Home Equity Line of Credit. A HELOC is a revolving credit line secured against the equity in your home. With a HELOC, you pay down the principal rapidly, thereby saving a substantial amount in interest payments. Unlike the “extra payments” approach, funds deposited into a HELOC remain accessible. This feature provides the flexibility to deal with emergencies or seize investment opportunities as they arise. Unlocking the Power of Reduced Average Daily Balance with Accelerated Banking Central to the Accelerated Banking strategy is a powerful, yet often overlooked concept: the reduction of the average daily balance. With a HELOC, interest is calculated based on this balance, rather than the principal. This unique feature can be maximized to great advantage through Accelerated Banking. By depositing your entire income or savings into the HELOC, you immediately reduce the average daily balance, thereby lowering the interest you owe. Think of it as a strategic game where your money is working for you round the clock. Since every dollar in your HELOC counts against your debt every day, your money is constantly chipping away at the balance, regardless of how long it stays there. Even if you have to withdraw money to pay for expenses, the time your income spent in the HELOC has already contributed to reducing the balance and, consequently, the interest. So, while the balance will fluctuate with deposits and withdrawals, the key is that it’s generally lower than it would be otherwise. This aspect of Accelerated Banking supercharges your ability to pay off your mortgage faster, while maintaining the flexibility and control that traditional methods lack. With this strategy, you effectively turn your mortgage into a tool that can expedite your journey towards financial freedom. The Accelerated Banking method, thus, is not just about making smart payments; it’s about creating an intelligent system where every dollar works towards your financial liberation. Remember, in the battle against your mortgage, it’s not just about how much you pay—it’s about how and where you keep your money before you pay it. The Power of Flexibility and Control By consolidating your income, expenses, and debt into one account, the Accelerated Banking strategy offers a holistic financial management system. The key advantage lies in its dynamic adaptability – the HELOC acts as a checking account where you deposit […]
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