Below is a transcript of the following video. I probably need to edit it, but I don’t know when I’ll get time. But it’s pretty important IMO.
Can you SAVE $69,000 within 24 Months? YOU CAN with this trick.
Welcome back to my channel. I am Kristy Vann with VANNtastic finances and on this channel I teach Velocity Banking. Today I wanted to talk about ... home loans. ... I am getting clients coming to me about every week now saying hey, we bought a home and we have a 7% interest charge. ... I want to explain to you when they say I'll go get you a little 4% mortgage don't pay percent line of credit. Let's go get a little 4% mortgage. I wonder if you know what they're saying. A 4% mortgage what does that really equal? Well, take 4 * 2. That equals 8, right? Mm-hmm. Now add a zero to that you are paying 80% interest on a mortgage when you now I'm going to show you the difference between a 12% line of credit and a 7.35% mortgage interest loan that they are giving you right now to buy your home. So I'm gonna do a comparison. This is a $500,000 home at 7.35%. Now I'm doing this because I actually have a client that just did this a $500,000 home at 7.35%. Like I said, I wanted to sit and cry with him but he wasn't even aware because we haven't been told. We just don't know any better but after this video is over, you're going to know better. You're going to know why when I say a line of credit at 12% is much healthier for your finances than this baby 7.35% they tricked you into. So let's talk about it. If you have a $10,000 line of credit and you decide, hey I want to put this down on the principle of my home which interest would that save me if I put $10,000 on the principle of my home? So we take the $10,000, we put it on the $500,000 home, and let's just say that our payments begin July the 1st of 2023. OK, so you take the 10,000, you put it into the home and you're at $490,000 now. Now remember, you're still making your mortgage payments without taxes and insurance.
The mortgage payment on this loan is $3441.46 a month. It's just a baby payment, but you got this huge home right. So you brought the 10,000, now your home balance is at 490,000. What if you just decided to go ahead and make the payments on that mortgage and just see how long that took you to get to 490,000? Well, if you paid your payments for 23 months to June 1st 2025 you are going to be at $490,000 balance approximately. So it took you 23 months to get there making $3441.00 in payments every month, right, But how much? Interest that you pay to pay that 23 months. So if you take the 10,000 and you put it directly on the $500,000 home, when is it $490,000? Today. Today 1st 2023 when your first mortgage payment is due, you took the 10,000, you put it on your loan, you're now at $490,000 and it didn't take you 23 months to do it but how much interest did you pay on this? I mean, this is a 12% line of credit, right? Let's see, SO 10,000 times 12% equals what? $1200 right? Now remember, that's a year this is simple interest. So 10,000 Titans 12% is $1200 a year now what if you said, well, I'm not even gonna pay on this, I'm just gonna leave that sitting at 10,000, I'll just pay the interest yeah, it's like $100 a month, right? So if you divide 1200 by 12 months, you're going to get $100 yeah, I don't even care. I'll just. I'll just leave it sitting there. Or you could take your of $10,000, this person makes $10,000 in income, has $8000 in expenses. He could say, you know what, I'm just gonna use this line of credit as my checking account and I'm gonna put my $10,000 in here. Well, what did that do to your balance as soon as you put in your income? Exactly what is the payment on this line of credit? Exactly when you put in your income into a line of credit, you have just satisfied that payment. And how much interest is on this loan now that he has put in his $10,000? 0 right. So yes, his expenses could come out of that. Now he could pay his expenses which is $8000 a month. Use this account at payment to do so now let's talk about what happened over here with the 23 months that you paid on the mortgage remember, it took you 23 months just to get to 490,000. Here you go there in one day pay it. You paid $1200 a year right in interest if you let this run through June of 2025, you are going to pay $69,230 in interest alone think about that 23 months of these $3441.00 payments, 3000 of that is going to buy the bank a house. It is not going to pay for your home. Your little $400.00 here that's all that's going into your home $29,230 Oh you paid 79,000 plus in payments for 23 months, but 69 of that plus went to the bank, not to your home. Do you know that if you let this alone run out for 30 years? That you're gonna pay $1,238,924.00 in payments? Do you know that you're going to pay $738,924.00 in interest alone? How many homes did you just buy the bank? Exactly? You paid for the bank's home first. You paid for the bank a home and almost 1/2 just to get your $500,000 home over here you saved yourself 23 months. You actually cut 23 months off of this mortgage you actually saved yourself $69,230 in interest in 23 months all in doing one $10,000 chunk. If you don't believe me, pull up a Carl's Mortgage calculator or any Mortgage calculator. Put in the numbers 500,000 at 7.35% and see if I'm wrong no payments here baby interest. If you do blessed making right, you'll pay very very little interest at making $10,000 a month and let me tell you what's even worse, on top of this, 69,000 for 23 months is when you get to about 48 months, if that far, you're gonna start getting letters from your bank that hold your mortgage and they're gonna say, hey, you've done real good on making your payments for 48 months we want to give you $25,000 of equity in your home. Why don't you refinance? And if you refinance, we'll even take a percent. We'll knock you down to 6%. We're going to do you a favor do you know what they just did if you refinance? You are paying this all over again it's a trick you already bought him a home in the first four years. This is just 23 months 23 months of interest that could be in your pocket, this hard earned money or you need to support your family. You just supported the bank and their family this could have been in your pocket and they'll do it to you again if you refinance that home. So you have to make a decision. Am I going to adult up and decide, hey, wait a minute, what? There's no excuses after seeing this video? I don't even care if you got a 2.35% mortgage, you are still getting hit with interest that you do not deserve. This little trick right here I've taken at a 12% oh, they'll tell you all day long. I can't tell you how many clients in a week I talk to that tell me they went into the bank to get a line of credit, and the line of credits are usually like 9% right now in the high 9% and then when they ask for a line, they will try to throw them in a loan every single time. And what do they say You don't want No 9% line, We can give you this loan over here for 5% right, because that's amortized too, just like the mortgage, all of that interest is front loaded to hit you so that you have to pay the bank first then as it trickles down, you get to add a little bit more to pay for your motorcycle, your car, your home with a mortgage when you get to the 15 year mark. Now, if you're in a 30 year and you get by the refi and you don't do it and you keep struggling on through in year 15, you're going to start breaking even with your payments so if you're paying a $3000 payment on a mortgage in 15 years, about 1500 of that is now going to your home and 1500 of that is still going to the bank i get angered when I hear that our young people in America are getting loaned 7% mortgages right now 7% literally highway robbery. It's been going on since 1929 and now you know how to fix the problem. You have to go get you a line of credit. I don't care if it's at 18%, you're going to beat this 'Cause 7 * 2 is 14, add a zero to that 140%. This one's paying over 140% 'cause they're at 7.35. That's a lot of money just to throw out the window. Throw it over here to me if you're just wanting to give away money. I'll take it guys. We need to get smarter than the paper that that dollar bill is printed on because it is worth nothing oK i've got a problem that I'm pretty sure you can help we have young American families that are going into this debt not knowing there's a better way and I want to spread the word to anybody and everybody that will listen. Please know what you're doing when you buy a mortgage, please just have a line of credit ready for you to take control of your debt because it's going to control you if you go into stuff like this. And I don't want to see that happen thank you guys for joining me today.