Epic Real Estate Investing - The SNEAKY Bank SCAM That’s Stealing Your Equity and How to Protect Yourself | 1381

Episode Date: November 12, 2024

In this eye-opening episode, we dive deep into the hidden dangers of refinancing your home mortgage and how banks use this common financial tool to quietly erode your hard-earned equity. Refinancing can seem like a quick fix, but it often leads to long-term financial setbacks. We'll expose the deceptive strategies that banks use to lure homeowners in, such as flashy advertisements promising lower monthly payments, while in reality, they’re resetting your debt terms and locking you into higher interest rates over the life of your loan. You'll learn how refinancing can trap you in a cycle of mounting interest payments, draining your equity and delaying your financial freedom. But don't worry, we won’t leave you stranded. We’ll offer practical alternatives to refinancing, such as home equity lines of credit (HELOCs), that allow you to tap into your home’s value without losing control of your financial future. By keeping your equity intact, you can make smarter decisions, invest wisely, and grow your wealth. Additionally, we’ll show you how to leverage your home equity to build additional streams of income—such as purchasing rental properties—which can pave the way toward financial independence. You’ll also discover why the upcoming interest rate cuts in 2025 present a unique opportunity for homeowners and investors to make strategic moves. If you're tired of being taken advantage of by banks and want to start taking control of your wealth, this episode is a must-watch. Join us as we explore how you can avoid the refinancing trap, retain your equity, and unlock the financial freedom you deserve. Don’t miss out—make informed decisions today and take the first step toward a brighter financial future. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-i-a-s.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Imagine this. You've spent five years paying you. your mortgage faithfully. You've poured in over $145,000 in payments, thinking you're building equity and getting closer to financial freedom. Then one decision wipes out all of that progress. You lost it all, sending you back to square one. What happened? More than two million property owners fall for this every single year because it's sold as the ultimate financial hack. But the truth, it's a track by design. And the worst part, you feel like you're winning.

It's the perfect crime. I'm going to show you how banks will use refinancing in 2025 to steal your equity and then how you can avoid being their next victim. And then I'm going to show you how you can actually tilt the playing field in your favor. So here's how the scam works. It begins with feel-good ads about saving money. Banks make refinancing look like it's a smart move. In their ads, they're crafted to really hit you where it hurts, your financial stress. They make it sound like a win, you know, lower payments, better terms.

less hassle. But what they're really doing is weaponizing your trust. Every smiling family in those ads, every happy couple that they show is carefully chosen to convince you that refinancing is the responsible thing to do. But in reality, it's just a sophisticated trap designed to keep you in their system. So the typical time frame, the average between refinances for property owners in the United States, is four to six years. And if you take a look at the amortization schedule of your traditional third-year fixed mortgage, the type of mortgage that everyone gets. During these first six years, approximately 75% of your payments will go straight to interest. And here's what that means. I mean, think of a mortgage like an onion. In the first several years, you're peeling back

very thin layers, layer after layer of interest, barely touching the core. Each layer that you peel, it feels productive, but the truth is, it's not in the beginning. After several years, you're still very far from the core of the onion. Banks do the same thing with your mortgage. You feel that your monthly payment to them is productive, but like peeling the outer layers of that onion, it's not. You're still very far away from the core of your loan. And when you refinance, it's like putting all those layers right back on the onion, putting all that interest right back on the loan, leaving you right where you started. Let's break it down with wheel numbers. All right, we'll use the median priced home in America as an example. And right now,

as I'm recording this, it sits at right about $420,000. Most people will put 20% down and borrow the rest. And at a 6% interest rate, that would give you a monthly payment of $214.14. Now, after six years, you've made $145,08 in payments. And here's where it gets frustrating. Only $28,426 went toward your principal, paid down the loan. A whopping $114,602 went straight to $1. interest. After making all those mortgage payments, your balance is now only $307,573. But then the bank

comes along, suggesting that you refinance because rates, they've dropped to 5%. And it sounds like a great deal, right? Lower payments, more cash flow, except here's what really happens. First, your debt clock, it resets from 24 years back to 30 years. The second thing is, you lose the $114,602 in interest that you've already paid. And the third thing, over the life of your new loan, you'll pay $869,769 more in interest, additional interest. So you've traded over $200,000 in costs just to save $363 a month. That's a deal so bad.

It would take you $315 years just to break even. Banks aren't promoting refinancing because it's good for you. They push it because it's a recurring revenue. gold mine for them. Every time you refinance, they lock in fresh interest payments and tack on fees, all while resetting your loan. It's a system designed to benefit the banks, not the borrowers. Now I get it. Life happens. You might be thinking, hey, but Matt, what if I really need the cash? Well, that's a fair question. Here's the smarter move. Instead of refinancing, consider a home equity line of credit. A he lock. A he lock lets you tap into your equity without resetting your mortgage.

It works like a credit card secured by your home. You borrow only what you need and you pay it back on flexible terms. This way, you keep your current mortgage intact, avoid the extra fees, and preserve the progress that you've already made. You see, it's easier for banks to sell you the same product over and over and over again than it is for them to go out and find a new customer. Every time you refinance, they lock in more interest payments right up front and collect more fees.

It's a recurring revenue model for them. But you can turn the take. with the smart money move of your own and turn it into a recurring revenue model for yourself. Instead of falling into their trap, you can use their system to set yourself free by leveraging the equity in your property to invest in another. And it would look like this. That $420,000 property in six years, add an average annual appreciation of 3% would now be worth $501,501, giving you $193,928 of equity. able to access about $100,000 of that when you refinance, and then use that as a down payment

for an income property. So yes, you do reset the loan on your first property, but now you own two properties. That gives you the appreciation, the cash flow, depreciation and deductions, amortization, and a hedge against real inflation on two properties instead of one. And here's where it gets really exciting. The equity you used, it's not your money. It's borrowed money. That means you've invested nothing out of pocket into the second property. Every dollar it generates in appreciation, cash flow, and tax savings is a pure return on borrowed money. That is called infinite ROI, infinite return on investment.

And over time, the second property can fund a third, then a fourth. And before you know it, your portfolio is growing exponentially, and your tenants, not you, are paying off all of that borrowed money. There's no other asset class available to $1,000. the average person that buys itself, that self-liquidates the debt used to acquire it. This is the same strategy the banks use against you, only now you're the one collecting recurring income. They use refinancing to enslave you, but you can use it to free you. And here's the opportunity for 2025. The Federal Reserve has already signaled multiple rate

cuts over the next 18 months or so. Refinancing is going to dominate the headlines in 2025, and millions of homeowners will face a critical decision. Stand by or refi. If you're sitting on equity in your home or any property that you own and you choose to leave it there, that's a choice to retire your money before you retire yourself. And if you're okay with that, hey, then stay the course. But if you'd rather be sitting on the beach with a fruity drink as opposed to your money doing so while you go to work every day, don't let the banks play you.

Turn the tables and play them. And this isn't just about owning a bunch of things. property. It's about taking control of your financial freedom. And you don't have to go it alone. In fact, it's probably better that you don't. Underestimating a strong community and support system that can cost you years in your journey. In next month, a small group of aspiring investors are getting together to take control of their financial freedom. If you'd like to join us, learn how at epicapprentice.com. The biggest financial mistake isn't making the wrong move. It's making no move at all. You're losing out if you're sitting on equity and not putting it to work.

Every year, inflation eats away at the purchasing power of that equity. Meanwhile, real estate values continue to rise. The question isn't whether you can afford to act. It's whether you can afford not to. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us. We got to cash flow.

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