Why Homeowners Lose Money: 5 Mistakes You Can Avoid

"for example let's assume that you get a $400,000 loan you lock it in for 30 years at a 7% mortgage rate Year One $27,800 is going to interest and only $4,000 is going to principal and it kind of stays like that until you're 21 in the mortgage your 21 in this mortgage is when you finally are paying more money towards your principal balance than you are your interest for the first 20 years of your 30-year mortgage more than half of your mortgage payment is going directly into your Banker's pocket with interest"

"by the way if we haven't joined Market briefs Market briefs is my free financial newsletter where every day my team is breaking down what's happening in things like the economy the housing market the stock market the crypto market and the global economy into a fun and witty and easy to read newsletter you can read it in less than 5 minutes every morning and we have hundreds of thousands of investors that read marketpl every morning so if you have not joined yet I got the link for you to join down in the description below here's why this matters your house is only worth what somebody else is willing to pay so you buy this house for $400,000 you build $100,000 worth of equity and now you start spending that Equity well what happens if we start to see home prices fall because we have seen that happen before and now if you can't sell your house for say $400,000 now you can be in trouble because you've spent a lot of your Equity if your home value drops down to let's say $300,000 but now you owe a $300,000 mortgage plus a $20,000 home equity line of credit now you're underwater you don't have enough collateral to pay off that debt and if you can't make the payments well now you're really in trouble"

"home prices don't always go up remember the 2008 housing market crash"

"so let's assume that you get a $400,000 loan you lock it in for 30 years at a 7% mortgage rate Year One $27,800 is going to interest and only $4,000 is going to principal and it kind of stays like that until you're 21 in the mortgage your 21 in this mortgage is when you finally are paying more money towards your principal balance than you are your interest for the first 20 years of your 30-year mortgage more than half of your mortgage payment is going directly into your Banker's pocket with interest"

"well what happens if we start to see home prices fall because we have seen that happen before and now if you can't sell your house for say $400,000 now you can be in trouble because you've spent a lot of your Equity if your home value drops down to let's say $300,000 but now you owe a $300,000 mortgage plus a $20,000 home equity line of credit now you're underwater"

"almost 133% of homeowners in America do not carry any form of homeowners insurance which means if somebody crashes into your house you got to pay for it out of your pocket your home becomes worthless and now is an expense that you got to pay for"

"I want you to do the ref strategically because what most people do when they refinance is they're wanting to pull cash out you're trying to pull cash out of the house you can buy a boat or buy some clothes or buy a vacation you're taking out debt so you can fund another liability I don't want you to do that I want you to try to pay off the house as fast as possible so if you're refinancing the goal is now to not pull up more money than you need and now you have a lower mortgage payment but you continue making the previous mortgage payment that you had before"

"if we start to see home prices fall because we have seen that happen before and now if you can't sell your house for say $400,000 now you can be in trouble"

"buy a house that you can afford why does this matter because when things happen you're protected when bad things happen you're okay because you can afford the house when good things happen and your house jumps up in value from $400,000 to million well now you have higher property taxes you have higher Insurance costs but you at least you can afford it"

"if you can afford the mortgage payment here and your other lifestyle costs here then you can afford it if you have to dig into your investment money or you have to dig into your savings money to make a mortgage payment you cannot afford it"

"almost 133% of homeowners in America do not carry any form of homeowners insurance which means if somebody crashes into your house you got to pay for it out of your pocket"