velocity banking | 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.
January 4, 2021

How to pay off a 30 year home mortgage in 5-7 years (2021)

How to pay off a 30 year home mortgage in 5 to 7 years. This is the most up to date version of our explanation on how you can pay off a 30-year mortgage in just 5 to 7 years on average. In the video, I will demonstrate how a banking strategy can be used to pay off a 30 year home mortgage in just 5-7 years without sending double payments, changing your current level of income, without refinancing, without loan modification, and without hurting your credit. Download Our FREE Strategy Calculator: https://chopmymortgage.com Key Parts: 0:00 Introduction 0:40 Disclaimer 0:54 Why is Your Mortgage Dangerous? 6:11 Why you should never Refinance!? 8:13 Intro to HELOC 8:32 HELOC vs Mortgage 11:19 Intro to Average Daily Interest 15:00 Intro to 1st Lien HELOC Strategy 22:52 Recession Impact on HELOC? 23:51 Free HELOC Calculator Download Disclaimer: I am not an attorney, accountant, or financial planner. This video is intended to be an educational video. This video should not be taken as financial, legal, and/or tax advice. Sam Kwak is a Certified Credit Counselor #11613. This is not a credit counseling session. I suggest that all viewers consult with professionals prior to implementing any or all parts of our strategy. RECAP OF THE VIDEO: I start this video with an explanation as to why a 30-year mortgage is like a trap for 21st-century homeowners. The reason being is that Americans (and Canadians) experience frequent life changes that cause them to move or they are eluded to refinancing because the refinance rates might be low. Unfortunately, such an event happens before 7-10 years into the mortgage. In the first 5-7 years, the vast majority of your mortgage payment goes straight to interest payment. A very small portion of your monthly payment actually goes to pay down the principal balance of the mortgage. Fortunately, there is a way to escape this. We’re going to introduce a new tool to help us with this called a Home Equity Line of Credit (HELOC) A HELOC is different than a traditional mortgage in several ways. The two main things to remember are (1) a HELOC is a revolving line of credit – which means you have the ability to pay back and re-use any available limit of the HELOC; and (2) a HELOC uses average daily interest calculation (simple interest) instead of an amortization interest calculation which is used by your 30-year mortgage. There’s a common myth out there saying that HELOC interest rates are always variable and higher. This isn’t true… There are HELOCs out there with fixed interests rate and some even have lower interest rates. Now, in 2021 – the best version of this strategy (in my opinion) is to use a 1st lien HELOC to completely replace your mortgage. By doing this, we now only have one debt against your home. No more 30 year amortized mortgage! Just a 1st lien HELOC. With the 1st lien HELOC, you’re now able to deposit all of your income (and event savings) into the HELOC balance to reduce the average daily balance – which ultimately means a lower interest amount you’ll pay on a daily basis. Doing this will keep the interest bill low while still being able to draw the funds out for expenses, emergencies, or even a rare investment opportunity. Now, you may have questions such as a.) couldn’t the banks freeze my HELOC? b.) are the banks still lending HELOCs? c.) how do you qualify for a HELOC? d.) What if I don’t have any equity? – I answer most of these questions on our […]
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

How To Pay Off Your Mortgage FAST | SECRET Bank Loophole

How to pay off your mortgage fast without making an extra payment or cutting down your expenses! This is the LATEST version of how I show you, paying off your mortgage, we always are improving our method of paying off mortgages early and in today’s video, I will show you our most up-to-date strategy! Ever wonder how you may be able to pay off your mortgage less than the designated terms of the mortgage (typically 30 years)? Well, depending on your situation, you may be able to pay it off if your serious within 5-8 years without sending double payments to the bank, changing your current level of income, or refinancing? If you want to learn how to pay off your mortgage fast or earlier, I am going to show you a strategy in how you can use a different method/instrument to pay off your mortgage quicker! This strategy is called the “Accelerated Banking” Strategy. This strategy has many other names such as “Velocity Banking”, “Mortgage Acceleration”, “Accelerated Debt Reduction”, “HELOC Strategy”, and more! Download Our FREE HELOC Calculator: Visit https://acceleratedbanking.com When it comes to paying off your mortgage faster, We first need to understand how mortgages work. In this strategy, we are using a Home Equity Line of Credit (HELOC) as a leverage to pay off the mortgage quicker and still maintaining our income and expenses as how they are. You can also use other instruments such as Business Line of Credit, Personal Line of Credit, or Credit Cards for the purpose of this strategy. The beautiful thing about this strategy is that it allows us to take an inefficient debt and convert it over to a much efficient debt. So yes, you CAN use a HELOC to pay off your mortgage faster if you use it the smart way. The emphasis on this strategy is mainly on cash flow and principal balance reduction. The adage strategy of taking the hard-earned money you earn and paying extra toward the principle is an old school strategy. While it works, the Accelerated Banking Strategy is a much more efficient way of paying off an amortized debt because it takes advantage of the maximum income utilization. This strategy will also work on Student loans, car loans, personal loans, and so forth! Don’t let the banks trick you with their amortized products!!! Paying Off Your Mortgage Faster could mean that you can retire faster, invest more, or just create the time freedom to spend your precious time with your family. While there are arguments as to why you shouldn’t pay off your mortgage faster, I ultimately believe it’s up to the persons’ overall financial goals and what they want to achieve. I encourage all homeowners to use this strategy to pay off the mortgage faster so you can enjoy more freedom and build personal wealth.
June 29, 2020

Velocity Banking: HELOC to Pay off Your Mortgage FASTER (Step-By-Step)

Velocity Bank! Does it ACTUALLY help you pay off your mortgage faster using a HELOC? Can you use a HELOC to pay off your mortgage? In this video, we’re going to explain the Velocity Banking Strategy Step by Step. We’ll illustrate how does the Velocity Banking concept work, how it ACTUALLY saves you money and time, and at the end of the video, I’ll leave you with a FREE Velocity Banking Calculator to download: FREE VELOCITY BANKING HELOC CALCULATOR: http://chopmymortgage.com So how does the Velocity Banking Strategy actually works? Here in the Kwak Brothers, we call it the Accelerated Banking Strategy. To start off, this strategy does rely on having a line of credit – like a Home Equity Line of Credit (HELOC) This strategy WILL work with a 1st lien HELOC, 2nd lien HELOC, Personal Line of Credit (PLOC), and even some cases – credit cards. A HELOC has features that mortgages don’t and the BIG feature is the “Open-Ended” feature. So here’s the “traditional” version of the velocity banking strategy: (2nd Lien HELOC Version) You take a chunk of a HELOC and do a principal payment against the mortgage. Essentially, you did a balance transfer from the mortgage to the HELOC. From there, you’re going to put ALL of your income and savings into the HELOC. Remember, you can ALWAYS draw the money back out from the HELOC anytime you want. Think of the HELOC as your new savings account. This effect allows for the average daily balance to go down – thus you pay less interest. With the money you DIDN’T pay for interest – now goes to principal which pays down the HELOC faster than the mortgage. The next version of the Velocity Banking Strategy is using a 1st lien HELOC instead. With this version of the Velocity Banking strategy, you’re completely replacing your mortgage with a 1st lien HELOC. Once you replace your mortgage with a HELOC, you do a similar pattern with the 2nd lien HELOC Velocity Banking. You’ll dump all of your income into the HELOC to lower the average daily balance. Here’s a bit of a bonus tip that I DON’T regularly share on YouTube… I only share this with my students and coaching clients… You can also use a credit card to hold all expenses and operating expenses for 30 days while your income stays parked in the HELOC. This allows for the HELOC balance to stay low for a long time which means you’ll end up paying less interest. After the 30 day period, you’ll use the HELOC to completely pay off the credit card so that you don’t end up paying any interest on the credit.