In the early 1900s, mortgages were the biggest money maker for banks, but buying a home was only reserved for the upper class. Even with a mortgage, homeownership was really rare, and even sell the mortgages back then were pretty bad.
If banks make mortgages more accessible to the common men, they will make more money and be able to talk to the government about getting mortgages for the public health.
Most people who have a mortgage right now are never going to own their homes, and when they die, they will simply pass on their debt to their kids.
President Roosevelt created the Federal Housing Administration (Fha) to boost the economy and promote consumerism. The Fha created the first home loans that were guaranteed by the government to encourage people to buy homes.
FHA Mortgage Insurance changed the game for banks because they could freely dish out more loans to White poor people. These new mortgages were very different from the old five-year mortgage system where people would make a smaller down payment and then make monthly payments.
With the new 10-year mortgage, you would only need to put two thousand dollars down and pay 88 every month for the next 10 years. This allowed more people to buy homes, but at the same time it increased demand.
With home prices going up increasingly, people couldn't afford 15-year mortgages any more, so the 30-year mortgage was introduced. But if you run the numbers, a 30-year mortgage is actually a horrible deal because most of your monthly payments goes towards paying off interest instead of actually paying down the principal.
On a 5 10 15 year mortgage, the vast majority of what you pay is going towards principal payment, there's very little interest. On a 30 year mortgage, the interest is compounding longer, which is actually working against you as a homeowner.
If you get a hundred thousand dollar loan on a five or six percent interest rate on a 30-year mortgage, you’re gonna pay a hundred thousand dollars of Interest. If you get the same interest rate on a 10-year mortgage, you’re gonna pay 93 256 dollars of Interest. It's not the rate that's the enemy, it's the time that you allow for your principal balance to compound over the last 30 years. People oftentimes choose short-term games and sacrifice long-term gain.
Most Americans only cared about whether they would be able to make the monthly payments, and didn't do the math. The 30-year mortgage convinced the masses that they didn't want to own a home, they had to own a home.
You did everything in your power to push the appeal of owning a home, and everyone fell for it. But 30-year mortgages were never meant to be paid off, so The House Always Wins.
If you have three kids and a two bedroom house, and you decide to sell it, you will have made pretty much hardly any contribution to actually paying down your principal balance of the mortgage to actually build equity.
Most of your monthly payment is going towards interest in the first seven to ten years of a 30-year mortgage, so when you choose to move out of your home, get a brand new mortgage, you've just tapped on more debt than ever before.
Most Americans are in a vicious cycle right now because they are more mobile than ever. They switch jobs more frequently and the odds of having to move or relocate to another city or place is rather High these days. Most U.S. adults will have three, four, even five mortgages for their personal residence, and each time they get a new mortgage, they reset the 30-year amortization clock, meaning they still have 30 years left to go.
The average American becomes like indentured servants to the banks, paying off interest for the rest of their life, and no one even realizes it. The banks hire people who graduate from Mit, Harvard, and all these fancy schools. Most people don't really ask themselves how the banks are getting away with such low interest rates, but they're making more money now because they've figured out that most American homeowners are moving five times their lifetime whereas 100 years ago it was only once or twice.
The banks are using the interest rate as a marketing tool, not necessarily a way for you to save or make money, so don't play that game because that's what the banks want you to play.
The banks have created a world for their benefit and they're for their profit. If you follow the bank's rules you've lost because banks have one more trick up their sleeves to get you as well.
The magic of refinancing allows you to trick plebs into being your slice forever by lowering their monthly payment by a few hundred dollars. Banks offer incentives to first-time home buyer customers to get them to buy and get mortgages from them six to seven years later. This is more profitable than people buy like first time home buying business.
If Bob Joe got their mortgage at six percent, let's wait five years, collect some interest right and then tell them hey, we have a five percent program, you're saving a whole one percent.
A refinance is a very profitable business for mortgage brokers, banks, and investment bankers because this is the mechanism to create more mortgage-based Securities. The banks spend billions of dollars on advertising promo incentives to get people to take out loans.
Mortgage brokers make two to three percent commissions on 30-year conventional Fannie Mae a fairy Mac backed Fha mortgages, and they get to go home with a four thousand dollar commission check if they sell you a hundred thousand dollar Fha loan.
If you want to beat the banks, you have to understand how the system works, and then you can quickly figure out how to win.
Most Americans don't know how to play the game of wealth, and they're playing it the same way the system has been set up for them. There are alternative ways to make money and grow your wealth, including paying off your mortgage early.
I teach my clients a cash flow strategy that allows them to pay off their mortgage in as early as five to seven years without paying any extra into the existing mortgage. This is done by careful allocation of where you put where you store your money.
If you have money sitting in your checking account at zero percent, the bank is taking your money and making a lot of money with it. Instead, use other vehicles to save money on interest and pay off your mortgage faster.
If you know for sure that you're gonna live somewhere for at least 10 years, do not get a mortgage. If you feel like you're gonna do some hopping going from one area to another area to another area, probably not the smartest thing to buy just yet.
There are ways to pay down your mortgage faster so that you can get out of this trap as soon as possible, and if you want to learn more, scroll down and click the link below. jake tran viedo same title
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