heloc | 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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Older Posts

February 16, 2021

HELOC: Sam Kwak Reacts to Money Magazine Article

Money Magazine Article: https://money.com/youtube-mortgage-payoff-velocity-banking/ HELOC Strategy Explained: https://youtu.be/eGVn9iq1e6c So a few months ago, I was interviewed by Money Magazine writer, Samantha Sharf, about our strategy of using a HELOC to paying down your mortgage. She was certainly intrigued as many of you were and she asked me some really intelligent question. She did inform me that the article was put on hold and recently, she let me know that the article will be published. And it did! I really appreciated Samantha’s professionalism and she certainly had many good points. However, there are parts where I do disagree and I would like to provide my response and reaction! Feel free to read the article yourself and other articles that Samantha wrote! Now originally, this video was close to 45 minutes! (YIKES) So I did edited it down to 23 minutes. So unfortunately, I wasn’t able to include ALL of my reactions. But much of the points that were made by the article isn’t really new to me and I’ve heard many of these arguments before. First and foremost, the article never mentions the existence of a 1st lien position HELOC. For the entire article, it presents the strategy through the lense of a 2nd lien HELOC strategy. Therefore, the article fails to mention the full story of the strategy. The article also never mentions the fact that a 1st lien HELOC can be used as a “safety net” for individuals that undergo an emergency or even worse, loss of income for a period of time. So for the sake of making a valid reaction to this article, we’re going to stick to the 2nd lien position HELOC strategy and we’ll make a case for it. Now, on the positive note, the article does a good job articulating the general idea of using a 2nd lien HELOC and does a good job explaining the effects of the lowered average daily balane which ultimately has the effect of saving money on the interest side… But when the article begins make a comparison of using a $10,000 bonus to make a principal payment against the mortgage, it fails to understand the benefit of using a HELOC that ultimately lowers the average daily balance WITHOUT any excess cash/bonus introduced to the numbers.
September 29, 2020

HELOC Strategy: Is it Still Worth It? (SERIOUS UPDATE)

We’re back with the HELOC Strategy content! (Velocity Banking, Accelerated Banking, Pill Method, Mortgage Acceleration). As you know, we’re a huge fan of using a HELOC to pay off your mortgage. But with the changing financial climate in the mortgage and refinance realm of banking, banks like Chase, Wells Fargo, and Navy Federal Credit Union, tightened up their lending of the HELOC or even canceled the HELOC completely. But other HELOC Banks continued lending out HELOC products to consumers. We have been getting many questions lately about whether to refinance or to continue to try and get approved for a Home Equity Line of Credit (HELOC). (HELOC vs Refinance) Is it still worth it to get a HELOC to pay off the mortgage early? Can you still use a velocity banking model to pay off the mortgage early? In this video, I am going to unpack the latest update on the HELOC and if they are still lending out the Home Equity Line of Credit (HELOC)! With the interest rates on mortgages being historically low, is using a HELOC to pay off the mortgage early worth it? Why not just refinance at a lower rate? Refinance mortgage rates are super low! And is the home equity line of credit (HELOC) still available from banks? Well, 3 banks that we know are currently not approving HELOCS; Chase Bank, Wells Fargo, and Navy Federal Credit Union, while banks like Citi Bank are still lending the home equity line of credit. But the approval times have skyrocketed for the underwriting process and this applies for the home equity line of credit (HELOC) & when refinancing. Why is that? Well, this really all has to do with the market. Banks sell mortgage products and continue to try and get you to refinance every 7 years. This is because mortgage-backed securities are sold on Wall St. And right now, major investment funds have NOT been buying these MBS because of the current economic situation, so banks are hesitant to sell mortgages to consumers. Is a HELOC still worth trying to secure or should you refinance? YES, the home equity line of credit (HELOC) is still the best option when velocity banking to pay off the mortgage early & you can use the HELOC for an investment property. HELOC(s) can also provide financial safety nets. HELOC vs Refinance (Refinance vs HELOC) So is it still worth getting the HELOC to pay off your mortgage? The answer is Yes and No… 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 ridiculous low. So if your argument is, well Sam… I just want to refinance because the rates are low… Why not get a HELOC that also has a low interest rate. Some of my clients in our private membership got a 2.99% HELOC or 3.75% 1st lien HELOC. But using a HELOC to paying off your mortgage transcends playing the interest rate game because you’re driving the principal balance down so low that even at a higher rate, the effective interest amount on the HELOC is lower at the end of the day. PLUS… you can use the same HELOC to acquire investment opportunities such as buying rental properties and cash cow businesses that have higher return than the HELOC interest rate.
September 1, 2020

Velocity Banking vs Sending In Extra Payment | Which Is Better?

Velocity Banking vs Sending in Extra Payment… Which is Better? What does the math say? and How? In this video, we’re going to break down the difference between Velocity Banking Vs Sending In Extra Payment. We’ll talk about how both can save money but we’ll see which one comes out on the top in terms of saving MORE money and time in terms of interest. So let’s do the comparison, Velocity Banking vs. Sending in Extra Payment… Which is Better? Enjoy! FREE Velocity Banking Calculator: https://acceleratedbanking.com Okay, so let’s get to the bottom of Velocity Banking vs Sending In Extra Payment comparison. Which is better… The Velocity Banking Strategy? or simply doing extra payments into the mortgage principal. Well, we can tell you that both can possibly save you some money and time. The velocity banking strategy has many names. We call it “Accelerated Banking” but some people call it the heloc method, heloc strategy, heloc to pay off your mortgage, debt acceleration, mortgage acceleration, or pill method. Let’s dive into how the strategy works… velocity banking strategy explained. The way that the Velocity Banking Strategy works is that we’re changing how our interest is first being calculated. The first main difference between a traditional mortgage and a HELOC is that a HELOC uses simple interest (average daily interest) and a mortgage uses amortized interest (interest accrued based on monthly balance). That’s the first difference when we’re looking at velocity banking vs sending in extra payment. The next big difference is that we’re sending in ALL of our income and savings into the HELOC to lower the average daily balance. Which ultimately means that we’re paying less of interest since the principal balance is lowered. On the flipside, sending in extra payment only causes us to save money by what we actually send in… not by the full income amount. That’s the next big difference when it comes to comparing velocity banking vs. sending in extra payment. A HELOC also allows us to draw the money whenever we want in a matter of seconds. Whereas with a traditional mortgage, we’re unable to do so. This is why we can send in all of our income into the HELOC and still be able to use the HELOC to pay for our expenses and accidentals. That’s HUGE when it comes to the difference between sending in extra payment vs velocity banking. Also with a HELOC, you can almost treat it like a savings account where by parking your excess cash can save you 3-6% interest on the HELOC vs. trying to earn money on a savings account that may pay out 0.5 ~ 1.5% APY. (this is really low). So those are some of the comparisons when it comes to velocity banking vs sending in extra payment. When done right, velocity banking can help you save more money and time when paying off your mortgage faster.
September 1, 2020

HELOC: SECRET To 0% Interest To Pay Off Mortgage!

HELOC: SECRET STRATEGY To Get 0% Interest To Pay Off Mortgage! 0% HELOC! In this video, I’m going to show you how to take any HELOC and turn it into a 0% if not, close to 0% interest when using it to pay off your mortgage. If you’re looking into using a HELOC to pay off your mortgage faster, well.. I’m going to show you how to turn your HELOC into 0% interest throughout this video. And if you didn’t know that you can use a HELOC to pay off your mortgage faster, well… You should check out a video where I explained the entire strategy where not only can you pay off your mortgage faster and potentially save a boatload of interest… but it can actually help you protect your income during the recession. I’ll leave that video link right here: https://youtu.be/3f-ebCjeH8o Okay so! I’m going to show you how to turn a HELOC into 0% interest. This is something that many of our clients of the Kwak Brothers are using and I want to give you a little taste of the action. For the premise of this tactic, we’re working with a 2nd lien HELOC for paying off your mortgage. The downside to doing this tactic is that it takes an incredible amount of work and energy to pay attention to what’s going on. Secondly, 2nd lien HELOCs are harder to get approved these days due to the pandemic that we’re dealing with but as the economy draws back to being somewhat normal, it should get easier. You can actually do the same tactic with a 1st lien HELOC where your HELOC is essentially the only loan on the property. Of course, for that… you need to be our client 😉 Btw, if you want to download our FREE Calculator on what it’s like to use a HELOC to pay off your mortgage faster – how much money and time you can potentially save using this method. Link: www.chopmymortgage.com
August 18, 2020

Cash Out Refinance VS HELOC: Which is BETTER for Real Estate Investing?

Cash Out Refinance VS Home Equity Line of Credit (HELOC) which one is better in the context of real estate investing? In this video, I am going to talk about the differences between cash out refinance and the home equity line of credit (HELOC), what are the pros and cons when it comes to using it for real estate investing, and what are some of the things you should watch out for when using a cash out refinance or HELOC. A brief summary of what both cash out refinance and a home equity line of credit involves taking the equity out from a real estate property and turning it into reusable cash, essentially borrowing from how much equity you own in a property. BUT cash out refinance and a HELOC are structured differently AND it affects the cost of borrowing! A cash out refinance, for example, for real estate investing purposes, benefits those in a high equity position in their property, meaning, upwards 80%-100% in order to have enough cash to use as investment capital. A cash out refinance works the same way as a regular mortgage. During the process of getting a cash out refinance, the bank requires a property appraisal so they can value the home properly. Just like getting a traditional mortgage, the bank looks at FICO scores and credit rating to determine your interest rate. And then typical costs associated with closing on a typical mortgage. Once all the documents are signed and good to go, the bank will cut you a check and send you on your way! A home equity line of credit is similar to a cash out refinance in the sense that you are borrowing from your property’s equity, but instead of refinancing, a HELOC is a line of credit, so its revolving debt as compared to a cash out refinance, where it’s installment debt. So it’s essentially a line of backed by your property’s equity. So one of the big differences between a cash out refinance and a HELOC is the way the debt is structured. A cash out refinance, being an installment debt, is a one-time use type of loan. So once you get that check from the bank, after being approved for a cash out refinance, you can only use it once. On the flip side with a HELOC, it’s a line of credit, so you can continue to use that line of credit since it is revolving debt. So when it comes to using either for real estate investing, the HELOC can be used again and again! So in conclusion, I choose getting a HELOC over a cash out refinance in regards to real estate investing, more flexibility, more opportunity for investing The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)📧 Get Our 1:1 Real Estate Investing Coaching and Mentoring: https://52.54.205.26.104.nip.io/thekwakbrothers