Accelerated Banking | The Kwak Brothers

Buy vs. Rent: Do You Know What's Better?

Buying a home has great benefits, but so does renting. In this article, we break down the financial pros and cons, and talk about common lifestyle differences to help you determine which is better; buying or renting.

Homeownership has long been considered an integral part of the American dream. However, deciding whether to buy or rent is not always an easy task. It largely depends on your lifestyle and financial ability. But both renting and home-buying demand a consistent source of income, and may also involve some effort to uphold. Which one is right for you?

We will cover the following topics:

  • Advantages of Homeownership
  • The Disadvantages of Homeownership
  • The Benefits of Renting
  • The Disadvantages of Renting
  • Buying a Property As An Investment
  • Conclusion

Of course, there are obvious differences between renting and owning property. There are benefits to each, and downsides to each. You may not have all of the responsibilities of homeownership when you rent a house, but you might find that you’ll have more free time since you are not tied with homeowner duties. On the flip side, owning a home allows for more freedom and customization, it also offers potential financial benefits, if done right.

Renting isn’t always a better option than owning a home, and owning a home isn’t always as simple as it appears. Let’s discuss some of the fundamental differences between renting and buying.

Advantages of Homeownership

While homeownership is costly, it comes with several benefits, here are the most common advantages of owning your own home. 

  1. Tax Advantages

Homeownership can qualify you for some tax benefits like the homestead exemption and federal tax deductions, which allow you to itemize your federal income taxes and deduct property taxes and mortgage interest, lowering your overall tax burden. When you own your home, you can deduct your property taxes and mortgage interest. However, the tax benefits are directed to your landlord when you rent.

  1. Increasing Your Investment Over Time

Buying a home, unlike renting, is an investment. That means you create equity as you pay off your loan; owning a little more of the house until it’s paid off in full. You also profit from the increase in value of your home over time. Home upgrades can enhance the overall value of your property, making it easier to refinance when you need more money and worth more in profit if you ever decide to sell.

  1. Potential Income Source

One of the most appealing aspects of owning a home is doing whatever you want with it, including using it for passive income. You can transform your home investment into a source of income by renting out rooms, floors, or even the entire house to renters if you’re comfortable with the idea. This creates additional cash which is great. Just make sure to pay attention to your local rental property requirements.

  1. Establish Your Roots in the Community

Because homeowners invest time and money in their property, they are more likely to stay longer than the average renter, establish roots in the neighborhood, start families, and participate in their communities than a temporary apartment renter. Owning a home will offer you a sense of belonging and motivate you to participate in community activities such as associations, clubs, volunteer organizations, businesses, and more.

  1. Your Home Can Be Customized To Suit Your Needs and Desires

Owning your own home opens up a world of creative and decorative possibilities, from painting and hanging art on your walls to DIY renovation projects. Your house is a blank canvas for you to paint on – it’s time to get creative with your home! In addition to this, you can finally get your “man cave” and garage the way you’ve always wanted, or a pool in your backyard.

The Disadvantages of Homeownership

Ok, so we’ve seen some pretty great aspects to owning a house, what could the drawbacks be?

  1. Maintenance and Repair Costs

Suppose you have a problem with plumbing, electricity, broken appliances, or other issues in your rental unit; you can contact your property manager responsible for handling and paying for maintenance and repairs. But as a homeowner, you are solely responsible for all expenses that come with repair and maintenance.

  1. High Upfront Costs

If you rent a house, you do not have to worry about high upfront costs, such as a down payment, earnest money, home assessment, and more, unlike if you buy a house. Although renting typically has a security deposit, a down payment on a house is much higher, and not everyone can afford right up front.

  1. The Risk of Financial Loss

The value of a home can rise over time. Or drop. While you have the opportunity to create equity and profit, you also face the danger of losing money on your investment if the value of your property drops, depreciating your assets according to the local or national market. Are you still paying off your mortgage? Check here to see if you can pay it off faster. 

  1. Financial Long-Term Commitment

When you buy a home, you’re signing up for a long-term commitment to care for and pay for it. The purchase of a home is a substantial financial commitment. You’ll have to keep putting in money over time, from mortgage payments to maintenance, repairs, and upgrades. But it can be possible to cut your mortgage payments down significantly, but can you really pay off your mortgage in 5-7 years? Sam doesn’t just think so, he’s seen hundreds of people become debt free! 

  1. Long-Term Responsibbility Commitment

You might want to think twice before buying a house if you aren’t ready to put down a long-term commitment. A move in the future will also require you to go through a complicated selling process. You’ll put time, money, and maintenance into your new home.

The Benefits of Renting

Modern apartments are appealing to many people for obvious reasons. They offer a lot of flexibility and ease of transition. If you’re already renting a single family home, or apartment unit, you’ll know most of these, but here are some benefits and drawbacks to consider if you’re considering renting:

  1. It’s Easier to Relocate

Apartments provide an easier move-in and move-out procedure, which offers your lifestyle some freedom. There is no lengthy sales process if you need or want to move away at any point. It’s as simple as waiting until your lease expires and then departing.

  1. There Are No Costs For Repairs or Maintenance

If you’ve ever rented, one of the greatest things about not owning the property you’re living in is  not having to manage repairs. The downside is if you don’t have an attentive landlord, you may have to live with a broken faucet for your entire lease. But typically, you won’t have to worry about scheduling repairs or budgeting for costs if a plumbing burst or an appliance breaks down. Your property manager handles all maintenance and repairs, so all you have to do is make a phone call when you need help.

  1. More Flexible Credit Terms

While purchasing a home necessitates higher credit scores and more thorough background checks, renting an apartment is less strict. You’re likely to be authorized for the lease you desire if your credit score is good and you don’t have any bankruptcies on your record.

  1. Most Fees Are Clumped Into One Rent Payment

Most apartment complexes and units include utilities in the monthly fee, saving you money and time, while homeowners can pay hundreds of dollars per month for utilities. Utilizing the included utilities will make your life easier, trust me.

  1. Location, Location, Location

Apartment complexes are more likely to be found in great locations near the best shopping, attractions, nightlife, and other entertainment. Yes, those apartment units can be pricier, but you can get an apartment in places that buying is not possible, for example, the apartments above the shopping centers.

  1. Up-Front Costs Are Lower

Like mentioned before, apartment rentals do not include the upfront costs associated with buying a home. Yes there are costs up front, but typically the only thing you need to pay is the security deposit and the first month’s rent.

The Disadvantages of Renting

Aside from the numerous advantages of renting an apartment or single-family home, there are disadvantages, too:

  1. There Are No Federal Tax Advantages

Because your apartment isn’t your property, you won’t be able to claim any tax exemptions as a tenant. 

  1. There Is No Long-Term Accumulation of Equity

Homeowners bear a greater share of the costs of purchasing and maintaining their homes, but they can also benefit from accumulating equity. In contrast, renting an apartment may be more convenient but it does not provide you with the opportunity to invest in your home’s value over time. Some people consider this like “dumping money down the drain”.

  1. Less Oversight of Ongoing Costs

Your rent is fixed for the duration of your lease, but can vary if you renew or sign a new lease. You’ll have little say over how much you pay each month in the future. If you pay your rent on time, are a good tenant, and keep good terms with your leasing agent, you could possibly avoid hefty increases, but it isn’t up to you.

  1. Your Landlord is Gaining WhileYou Are Losing Financially

When you pay your rent, your landlord earns the equity the property gains. If you own your home, the benefits of your investment go directly toward your net worth. Rent will continue to increase, as your landlord is entitled to increase the rent as he wishes.

Comparison of Buying & Owning

Buying Property As An Investment

When you pay your mortgage, you build equity that builds on your financial wealth. As with any investment, success depends on a variety of things like location, economy, maintenance, and environmental issues that can all impact the house’s overall value. If you’re new to property management or real estate investing, make sure you get connected to groups, individuals, or nearby events. 

If you haven’t heard, real estate investing is a second language to Daniel and Sam, they have plenty of experience, and have used their knowledge and experience to train, coach, and educate many people to become successful in many areas of real estate and raising capital. Check out their book on how they went from 0 to 75 units in just one year!

Conclusion

So which is it? Is renting or buying property better? After looking at buying and renting from different angles, here are our final thoughts to help you decide if you’re ready to own a home of your own.

First and foremost, this decision really depends on you. If you want to stay in once area for several years, and more freedom to do as you please with your property, buying a house is most likely the best choice. Along with the physical benefits of tax deductions and equity, homeownership provides intangible benefits such as a sense of stability and the joys of ownership. But, if you like the freedom of moving around more often, and don’t want to be bogged down by legalities and homeowner responsibilities, renting is going to be your “happy place”. It really boils down to your financial situation , lifestyle, and personal aspirations, this will help you decide whether you rent or buy a property. 

Both offer you a place to live, which is the main function of a home, but both require that you have a steady source of income to make the payments. All that said, ultimately, you’re the best one to make the decision because you know what you want.

What is your style, owning or renting?

Sam Kwak talks about the difference between renting and buying. Watch it now! Be sure to subscribe to the channel!

What’s inside: Courses, downloadable content, forums, need I say more?

Lydia Wanjiku

Lydia is one of our content writers. She has experience in sales, social media, and in marketing communications. Her interests range from photography to writing, and entrepreneurship to the great outdoors.

Never miss out on a good read.​

By submitting your email, you agree to our Terms of Use and Privacy Policy, and you concent to recive promotional emails from us and our affiliates. You may opt out any time.

May 14, 2022

Buy vs. Rent: Do You Know What’s Better?

/*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=”.svg”]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block} /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px} Buy vs. Rent: Do You Know What’s Better? Buying a home has great benefits, but so does renting. In this article, we break down the financial pros and cons, and talk about common lifestyle differences to help you determine which is better; buying or renting. Homeownership has long been considered an integral part of the American dream. However, deciding whether to buy or rent is not always an easy task. It largely depends on your lifestyle and financial ability. But both renting and home-buying demand a consistent source of income, and may also involve some effort to uphold. Which one is right for you? We will cover the following topics: Advantages of Homeownership The Disadvantages of Homeownership The Benefits of Renting The Disadvantages of Renting Buying a Property As An Investment Conclusion Of course, there are obvious differences between renting and owning property. There are benefits to each, and downsides to each. You may not have all of the responsibilities of homeownership when you rent a house, but you might find that you’ll have more free time since you are not tied with homeowner duties. On the flip side, owning a home allows for more freedom and customization, it also offers potential financial benefits, if done right. Renting isn’t always a better option than owning a home, and owning a home isn’t always as simple as it appears. Let’s discuss some of the fundamental differences between renting and buying. /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-social-icons.elementor-grid-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-mobile-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-tablet-0 .elementor-widget-container{line-height:1;font-size:0}.elementor-widget-social-icons:not(.elementor-grid-0):not(.elementor-grid-tablet-0):not(.elementor-grid-mobile-0) .elementor-grid{display:inline-grid}.elementor-widget-social-icons .elementor-grid{grid-column-gap:var(–grid-column-gap,5px);grid-row-gap:var(–grid-row-gap,5px);grid-template-columns:var(–grid-template-columns);-webkit-box-pack:var(–justify-content,center);-ms-flex-pack:var(–justify-content,center);justify-content:var(–justify-content,center);justify-items:var(–justify-content,center)}.elementor-icon.elementor-social-icon{font-size:var(–icon-size,25px);line-height:var(–icon-size,25px);width:calc(var(–icon-size, 25px) + (2 * var(–icon-padding, .5em)));height:calc(var(–icon-size, 25px) + (2 * var(–icon-padding, .5em)))}.elementor-social-icon{–e-social-icon-icon-color:#fff;display:-webkit-inline-box;display:-ms-inline-flexbox;display:inline-flex;background-color:#818a91;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-ms-flex-pack:center;justify-content:center;text-align:center;cursor:pointer}.elementor-social-icon i{color:var(–e-social-icon-icon-color)}.elementor-social-icon svg{fill:var(–e-social-icon-icon-color)}.elementor-social-icon:last-child{margin:0}.elementor-social-icon:hover{opacity:.9;color:#fff}.elementor-social-icon-android{background-color:#a4c639}.elementor-social-icon-apple{background-color:#999}.elementor-social-icon-behance{background-color:#1769ff}.elementor-social-icon-bitbucket{background-color:#205081}.elementor-social-icon-codepen{background-color:#000}.elementor-social-icon-delicious{background-color:#39f}.elementor-social-icon-deviantart{background-color:#05cc47}.elementor-social-icon-digg{background-color:#005be2}.elementor-social-icon-dribbble{background-color:#ea4c89}.elementor-social-icon-elementor{background-color:#d30c5c}.elementor-social-icon-envelope{background-color:#ea4335}.elementor-social-icon-facebook,.elementor-social-icon-facebook-f{background-color:#3b5998}.elementor-social-icon-flickr{background-color:#0063dc}.elementor-social-icon-foursquare{background-color:#2d5be3}.elementor-social-icon-free-code-camp,.elementor-social-icon-freecodecamp{background-color:#006400}.elementor-social-icon-github{background-color:#333}.elementor-social-icon-gitlab{background-color:#e24329}.elementor-social-icon-globe{background-color:#818a91}.elementor-social-icon-google-plus,.elementor-social-icon-google-plus-g{background-color:#dd4b39}.elementor-social-icon-houzz{background-color:#7ac142}.elementor-social-icon-instagram{background-color:#262626}.elementor-social-icon-jsfiddle{background-color:#487aa2}.elementor-social-icon-link{background-color:#818a91}.elementor-social-icon-linkedin,.elementor-social-icon-linkedin-in{background-color:#0077b5}.elementor-social-icon-medium{background-color:#00ab6b}.elementor-social-icon-meetup{background-color:#ec1c40}.elementor-social-icon-mixcloud{background-color:#273a4b}.elementor-social-icon-odnoklassniki{background-color:#f4731c}.elementor-social-icon-pinterest{background-color:#bd081c}.elementor-social-icon-product-hunt{background-color:#da552f}.elementor-social-icon-reddit{background-color:#ff4500}.elementor-social-icon-rss{background-color:#f26522}.elementor-social-icon-shopping-cart{background-color:#4caf50}.elementor-social-icon-skype{background-color:#00aff0}.elementor-social-icon-slideshare{background-color:#0077b5}.elementor-social-icon-snapchat{background-color:#fffc00}.elementor-social-icon-soundcloud{background-color:#f80}.elementor-social-icon-spotify{background-color:#2ebd59}.elementor-social-icon-stack-overflow{background-color:#fe7a15}.elementor-social-icon-steam{background-color:#00adee}.elementor-social-icon-stumbleupon{background-color:#eb4924}.elementor-social-icon-telegram{background-color:#2ca5e0}.elementor-social-icon-thumb-tack{background-color:#1aa1d8}.elementor-social-icon-tripadvisor{background-color:#589442}.elementor-social-icon-tumblr{background-color:#35465c}.elementor-social-icon-twitch{background-color:#6441a5}.elementor-social-icon-twitter{background-color:#1da1f2}.elementor-social-icon-viber{background-color:#665cac}.elementor-social-icon-vimeo{background-color:#1ab7ea}.elementor-social-icon-vk{background-color:#45668e}.elementor-social-icon-weibo{background-color:#dd2430}.elementor-social-icon-weixin{background-color:#31a918}.elementor-social-icon-whatsapp{background-color:#25d366}.elementor-social-icon-wordpress{background-color:#21759b}.elementor-social-icon-xing{background-color:#026466}.elementor-social-icon-yelp{background-color:#af0606}.elementor-social-icon-youtube{background-color:#cd201f}.elementor-social-icon-500px{background-color:#0099e5}.elementor-shape-rounded .elementor-icon.elementor-social-icon{border-radius:10%}.elementor-shape-circle .elementor-icon.elementor-social-icon{border-radius:50%} Facebook Instagram Twitter Reddit Mail-bulk Advantages of Homeownership While homeownership is costly, it comes with several benefits, here are the most common advantages of owning your own home.  Tax Advantages Homeownership can qualify you for some tax benefits like the homestead exemption and federal tax deductions, which allow you to itemize your federal income taxes and deduct property taxes and mortgage interest, lowering your overall tax burden. When you own your home, you can deduct your property taxes and mortgage interest. However, the tax benefits are directed to your landlord when you rent. Increasing Your Investment Over Time Buying a home, unlike renting, is an investment. That means you create equity as you pay off your loan; owning a little more of the house until it’s paid off in full. You also profit from the increase in value of your home over time. Home upgrades can enhance the overall value of your property, making it easier to refinance when you need more money and worth more in profit if you ever decide to sell. Potential Income Source One of the most appealing aspects of owning a home is doing whatever you want with it, including using it for passive income. You can transform your home investment into a source of income by renting out rooms, floors, or even the entire house to renters if you’re comfortable with the idea. This creates additional cash which is great. Just make sure to pay attention to your local rental property requirements. Establish Your Roots in the Community Because homeowners invest time and money in their property, they are more likely to stay longer than the average renter, establish roots in the neighborhood, start families, and participate in their communities than a temporary apartment renter. Owning a home will offer you a sense of belonging and motivate you to participate […]
May 3, 2022

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

/*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=”.svg”]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block} /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px} Pay Off Your Loan Or Invest? (Know What’s Better For You) Advantages Paying off your mortgage early is generally a good thing. Having debt is something none of us want to have on our “to-do” list. But if you’re trying to increase your financial peace of mind, maybe it’s not the right first step, but maybe it is. How would you know? It’s advised to pay at least slightly more per month on your mortgage, especially for individuals who have just received a raise in their income. This method will help you finish early. But, what are other benefits of paying off your mortgage early? Savings on your interest. You get to make potential interest savings on a reduced principal amount that could have accrued earlier You become debt-free! Paying off your mortgage early means no more interest payments, no more debt! It is very liberating to have a home that you can call 100% your own. You can invest the interest amount that you are making in the monthly payments on other projects You mature into financial independence. By becoming debt-free, you can prioritize your investments and channel your funds to other various projects You become creditworthy. By becoming debt-free your credit score definitely goes up, how great is that?! There are other methods, too. If you want to know how you can pay off your mortgage faster, The Kwak Brothers have developed a method, and many of their clients have benefited greatly from it. It’s called Accelerated Banking, and you can read more about how to pay off your mortgage faster here.   Disadvantages With that settled, paying off your mortgage is not always a walk in the park. Here are some of the disadvantages associated with early mortgage repayment. Reduces your savings. Speeding up clearing your loan may force you to cut back on the amount of savings you have. It means that you may lack some cash to cater to your financial emergencies at the end of it all You may be missing out on important tax deductions. Yep, that’s right! You may be forced to miss out on important tax deductions on your mortgage interest payments by making early payments. Such write-offs increase your capability of a refund and lower your taxable income for those paying a mortgage You cut back on other types of investment choices. You may risk cutting back on meaningful investment decisions that would ultimately reap better returns in the future. These include the stock market and other riskier investment choices but have better returns for you. You may be forced into making prepayment penalties. Depending on the type of lender, you may realize that you are making payments on your penalties for early payment. While this is usually dependent on your mortgage lender, it may compromise your pay since such payment may reduce the payment pegged on the outstanding balance so definetly ask your lender if this applies to you /*! elementor – v3.6.5 – 27-04-2022 */ .elementor-widget-social-icons.elementor-grid-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-mobile-0 .elementor-widget-container,.elementor-widget-social-icons.elementor-grid-tablet-0 .elementor-widget-container{line-height:1;font-size:0}.elementor-widget-social-icons:not(.elementor-grid-0):not(.elementor-grid-tablet-0):not(.elementor-grid-mobile-0) .elementor-grid{display:inline-grid}.elementor-widget-social-icons .elementor-grid{grid-column-gap:var(–grid-column-gap,5px);grid-row-gap:var(–grid-row-gap,5px);grid-template-columns:var(–grid-template-columns);-webkit-box-pack:var(–justify-content,center);-ms-flex-pack:var(–justify-content,center);justify-content:var(–justify-content,center);justify-items:var(–justify-content,center)}.elementor-icon.elementor-social-icon{font-size:var(–icon-size,25px);line-height:var(–icon-size,25px);width:calc(var(–icon-size, 25px) + (2 * var(–icon-padding, .5em)));height:calc(var(–icon-size, 25px) + (2 * var(–icon-padding, .5em)))}.elementor-social-icon{–e-social-icon-icon-color:#fff;display:-webkit-inline-box;display:-ms-inline-flexbox;display:inline-flex;background-color:#818a91;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-ms-flex-pack:center;justify-content:center;text-align:center;cursor:pointer}.elementor-social-icon i{color:var(–e-social-icon-icon-color)}.elementor-social-icon svg{fill:var(–e-social-icon-icon-color)}.elementor-social-icon:last-child{margin:0}.elementor-social-icon:hover{opacity:.9;color:#fff}.elementor-social-icon-android{background-color:#a4c639}.elementor-social-icon-apple{background-color:#999}.elementor-social-icon-behance{background-color:#1769ff}.elementor-social-icon-bitbucket{background-color:#205081}.elementor-social-icon-codepen{background-color:#000}.elementor-social-icon-delicious{background-color:#39f}.elementor-social-icon-deviantart{background-color:#05cc47}.elementor-social-icon-digg{background-color:#005be2}.elementor-social-icon-dribbble{background-color:#ea4c89}.elementor-social-icon-elementor{background-color:#d30c5c}.elementor-social-icon-envelope{background-color:#ea4335}.elementor-social-icon-facebook,.elementor-social-icon-facebook-f{background-color:#3b5998}.elementor-social-icon-flickr{background-color:#0063dc}.elementor-social-icon-foursquare{background-color:#2d5be3}.elementor-social-icon-free-code-camp,.elementor-social-icon-freecodecamp{background-color:#006400}.elementor-social-icon-github{background-color:#333}.elementor-social-icon-gitlab{background-color:#e24329}.elementor-social-icon-globe{background-color:#818a91}.elementor-social-icon-google-plus,.elementor-social-icon-google-plus-g{background-color:#dd4b39}.elementor-social-icon-houzz{background-color:#7ac142}.elementor-social-icon-instagram{background-color:#262626}.elementor-social-icon-jsfiddle{background-color:#487aa2}.elementor-social-icon-link{background-color:#818a91}.elementor-social-icon-linkedin,.elementor-social-icon-linkedin-in{background-color:#0077b5}.elementor-social-icon-medium{background-color:#00ab6b}.elementor-social-icon-meetup{background-color:#ec1c40}.elementor-social-icon-mixcloud{background-color:#273a4b}.elementor-social-icon-odnoklassniki{background-color:#f4731c}.elementor-social-icon-pinterest{background-color:#bd081c}.elementor-social-icon-product-hunt{background-color:#da552f}.elementor-social-icon-reddit{background-color:#ff4500}.elementor-social-icon-rss{background-color:#f26522}.elementor-social-icon-shopping-cart{background-color:#4caf50}.elementor-social-icon-skype{background-color:#00aff0}.elementor-social-icon-slideshare{background-color:#0077b5}.elementor-social-icon-snapchat{background-color:#fffc00}.elementor-social-icon-soundcloud{background-color:#f80}.elementor-social-icon-spotify{background-color:#2ebd59}.elementor-social-icon-stack-overflow{background-color:#fe7a15}.elementor-social-icon-steam{background-color:#00adee}.elementor-social-icon-stumbleupon{background-color:#eb4924}.elementor-social-icon-telegram{background-color:#2ca5e0}.elementor-social-icon-thumb-tack{background-color:#1aa1d8}.elementor-social-icon-tripadvisor{background-color:#589442}.elementor-social-icon-tumblr{background-color:#35465c}.elementor-social-icon-twitch{background-color:#6441a5}.elementor-social-icon-twitter{background-color:#1da1f2}.elementor-social-icon-viber{background-color:#665cac}.elementor-social-icon-vimeo{background-color:#1ab7ea}.elementor-social-icon-vk{background-color:#45668e}.elementor-social-icon-weibo{background-color:#dd2430}.elementor-social-icon-weixin{background-color:#31a918}.elementor-social-icon-whatsapp{background-color:#25d366}.elementor-social-icon-wordpress{background-color:#21759b}.elementor-social-icon-xing{background-color:#026466}.elementor-social-icon-yelp{background-color:#af0606}.elementor-social-icon-youtube{background-color:#cd201f}.elementor-social-icon-500px{background-color:#0099e5}.elementor-shape-rounded .elementor-icon.elementor-social-icon{border-radius:10%}.elementor-shape-circle .elementor-icon.elementor-social-icon{border-radius:50%} Facebook Instagram Twitter Reddit Mail-bulk Investing Before Paying Off Your Mortgage Investing extra cash in savings can lead to a better and more stable financial future. Savings can be in bonds or other forms of retirement funds. Monetary savings are an investment for your future or in case of any emergencies. We live in unprecedented times, […]
August 5, 2021

2021 Housing Market: The 40 Year Mortgages are Coming…

FREE Book: “Break Free From Your Mortgage” – https://acceleratedbanking.com/book Housing Market | YES! The 40 Year Mortgage is HERE! With mortgage forbearance ending in September, many homeowners need to find an exit to the forbearance. One option that mortgage brokers and banks are looking at is the 40 year mortgage. On the surface, it sounds good, lower monthly payment, an extra 10 years to pay off the mortgage. Well let us tell you, with us being experts in the field of accelerated mortgage payoff, a 40 year mortgage is a TERRIBLE idea. In this video, we break down WHY it’s a TERRIBLE idea and stick around to the end of the video where we show you the first step into paying off your mortgage
October 3, 2020

Can You STILL Use a HELOC to Pay Off Your Mortgage?

Hey what’s going on guys, it’s Sam Kwak here one of the Kwak Brothers… And I’m finally coming back to writing about HELOCs! With the mortgage interest rates being at an all-time low and the economy at its slowdown, you might be wondering… Is it still worth it to get a HELOC to start paying off your mortgage? Wouldn’t it be better to refinance? Now, if you want to watch and listen to this blog instead of reading it, check out this video: https://www.youtube.com/watch?v=PVmAml9jyiw This is probably the question running through your head. So I’m going to unpack the latest updates to HELOCs, what the banks are doing, and why I ultimately believe using a HELOC transcends other options such as a refinance. So let’s start with the latest update on HELOCs and what the banks have been doing since COVID-19… But first, don’t forget to subscribe to our channel if you want more HELOC content, Housing Market News, and how to invest in real estate. Earlier this year when the COVID-19 situation blew up, 3 major banks and institutions shut their Line of Credit Department down. Those were Chase, Wells Fargo, and Navy Federal FCU. But pretty much every other bank operated their lending procedures like nothing really happened. And then on April-May, banks were experiencing a major slowdown on processing applications and that is due to bankers and underwriters working from home – causing a communication meltdown. But so I thought… While the work-from-home situation may have caused part of the slowdown, I think the bigger contributor came from the lack of buyers of the underlying notes. As the market started tumbling down, investors and investment bankers started to sell and stripped cash out of their investment. Why this is important is that when mortgages are created at the bank level, these mortgages are often packed and sold to the market as a Mortgage-Backed Securities. This is how the banks make their money by creating mortgages and selling them in bulk to investors for a “guaranteed” return. Because of the wave of sellouts and cashing out investments, there were fewer investors buying these Mortgage Backed Securities – causing the banks to slow down on processing the mortgages. This is also true with certain HELOC products – such as a 1st lien HELOC and ultimately, I believe that’s happening right now at this moment… The interest rates are ridiculously low which is leading the consumers to refinance or buy a new home… Which if you guys don’t know, refinances are literal financial suicide. I have a separate video to explain why (point) With a huge demand for new mortgage loans and not enough investors buying the mortgage backed securities, the banks have ultimately slowed down the entire process to make sure that they’re not creating mortgages without ever being sold. It’s kinda like your local highway during the rushhour but all the exits are blocked yet the on-ramp to the highway is open. The bottom line, it’s now taking 45-60 days for the banks to process loan applications when it comes to mortgages. Okay now moving over to THE question… Is it still worth getting a HELOC to pay off your mortgage despite the low-interest rates? Wouldn’t it better to just refinance? Yes… And… No… Learn How to Pay Off Your Mortgage with a HELOC: https://www.youtube.com/watch?v=3f-ebCjeH8o Now, remember, HELOC interests also ride on the WSJ Prime Rate. In fact, some HELOCs are based on LIBOR but next year, it’ll be phased out to SOFR (Secured Overnight Financing Rate) The current SOFR is at 0.10% which is ridiculously low. So […]
May 27, 2020

HELOC Interest… Is it Tax Deductible?

Is HELOC Interest deductible for taxes? In this article, I’m going to answer that question as well as dispel some common myths about HELOCs not being tax-deductible! – Especially when using a HELOC to pay off your mortgage Watch this Article on our YouTube Channel: https://youtu.be/SKMnUEmDjlU Hey what’s going on everyone, it’s Sam Kwak here and chances are, you’ve seen some of our other videos about using a HELOC or any line of credit to pay off your mortgage. And I often get this question quite a bit… “But Sam, using a HELOC to pay off mortgage could mean that I wouldn’t be able to deduct the interest I’m paying, therefore, I don’t think it makes sense to use a HELOC to pay off my mortgage faster and save money on interest” I probably get this question nearly everyday so I’ll answer this question once and for all By the way, if you want more videos about HELOCs, paying off your mortgage faster, and even buying rental properties, subscribe to our YouTube channel! Disclaimer And as always, just as a disclaimer – I’m not a CPA nor an accountant so don’t take any of this as tax advice. This is simply my interpretation and my commentary on what the tax laws say about HELOCs. 2nd Lien HELOCs Now right out of the gate, when people often ask me about the tax deductibility on HELOCs, they’re often referring to a 2nd lien position HELOC. People automatically assume that HELOCs are not tax-deductible because they heard some other YouTubers say this. Now, it is true that interest on 2nd lien position HELOC is not deductible when used to pay off the mortgage faster. Prior to 2018, the tax laws were different to where the interest could have been deducted for a 2nd lien HELOC. However, my argument to this is that if you’re using the accelerated banking strategy to pay down your mortgage faster and saving large sum of money, wouldn’t it be better that you pay a little bit of taxes to have saved thousands; potentially several hundred thousands of dollars. Remember, a loan that has a 30 year amortization can cost quite a bit of money on interest. For example, a $100,000 loan with a 3% interest amortized out to 30 years equals to about 51,000. That’s a 51% effective interest rate. Unfortunately the logic for some people are to pay the interest just so that they can get a write off… It’s kinda like my friend who bought a $45,000 truck just to get a tax-write off on this business. He said it saved him couple thousand of dollars… First of all, he lives in the city… And he drives it like once a month. It was a needless expense and he would have had more money for other investments even after paying little bit of taxes. He would have been better off using that money to have bought a rental property for example. So bottom-line, do you really want to waste potentially hundred thousands of dollars on interest just to save a few thousands? This is the classic saying of tripping over over a quarter to pick up a penny. 1st Lien HELOCs But there is a way of making all of your HELOC interest deductible… Again, I’m not a CPA so be sure to consult with your own CPA. There’s a little less known version of the HELOC which is the 1st lien HELOC. If there’s a 2nd lien HELOC, well… There’s also gotta be a first. A 1st lien HELOC is essentially the only loan on […]