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Dylan Lawrence Moore

Mortgages are bullshit!

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If I told you that you paid 80% interest on your mortgage, would you believe me?

Practical defense tactics against the dark banking arts. You will probably lose some sleep over this one.

(Information applies the same to student loans.)

 

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Ok, then save up the money to buy a house outright.

the reality, most people can buy a house with a mortgage and live in the house for 15-30yrs paying slightly more than rent on day 1, and a few yrs later the mortgage is less than rent. If you got a raise in the interim and have no other debt or tax benefit, you can start paying off the capital by year 5 and pay it off faster*. If you plan to do this, make sure the bank understands this and won’t charge you interest on money you paid back. 

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THANK YOU VERY MUCH!!! +1-million

While I am not yet wealthy enough to even get a loan to own a house, that part of my life isn't too far off. If I hadn't heard this video I might have gotten sucked up into the "we all do it" cult of stupid self-enslavement. I don't intend on doing much studying on the best way to finance my future house until I both have the money and the location (I don't intend to die in my current city that's for sure) but I definitely thank you in advance for potentially saving me decades of my and my future children's lives. 

 

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6 hours ago, Jsbrads said:

Ok, then save up the money to buy a house outright.

the reality, most people can buy a house with a mortgage and live in the house for 15-30yrs paying slightly more than rent on day 1, and a few yrs later the mortgage is less than rent. If you got a raise in the interim and have no other debt or tax benefit, you can start paying off the capital by year 5 and pay it off faster*. If you plan to do this, make sure the bank understands this and won’t charge you interest on money you paid back. 

That definitely works, but there are better ways to do it. The video wasn't about how to pay mortgages off faster, it was simply showing how much people pay 80% interest their whole lives because they don't understand how mortgages work.

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10 hours ago, Dylan Lawrence Moore said:

That definitely works, but there are better ways to do it. The video wasn't about how to pay mortgages off faster, it was simply showing how much people pay 80% interest their whole lives because they don't understand how mortgages work.

You may not understand how they work either. Since both the benefit over time of the asset purchased with the loan and the interest (and all future payments) is discounted over time to arrive at a present value of a net total cash stream, it is of only nominal concern what the total debt payments will be over time. The total payments are of minor concern when making decisions about the management of your financial short-term goals versus your long-term goals. If you had only interest-only loans and never paid a penny of the principal back, you would pay a lifetime of 100% of all your mortgage payments as interest. But it would not be 100% interest on the initial principal balance, rather it will still be something like today's 30-year average of only 4% interest. You would get monthly benefits from the assets controlled with the loans, which are the net side of the equation. Thus, it may still be rational to get value by taking out a lump sum in cash as a loan (in this case giving the bank a mortgage with the land and improvements as collateral). In short, low interest loans may be a very useful way to plan a long-term strategy, even if you re-finance them often along the way.

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1 hour ago, eschiedler said:

You may not understand how they work either. Since both the benefit over time of the asset purchased with the loan and the interest (and all future payments) is discounted over time to arrive at a present value of a net total cash stream, it is of only nominal concern what the total debt payments will be over time. The total payments are of minor concern when making decisions about the management of your financial short-term goals versus your long-term goals. If you had only interest-only loans and never paid a penny of the principal back, you would pay a lifetime of 100% of all your mortgage payments as interest. But it would not be 100% interest on the initial principal balance, rather it will still be something like today's 30-year average of only 4% interest. You would get monthly benefits from the assets controlled with the loans, which are the net side of the equation. Thus, it may still be rational to get value by taking out a lump sum in cash as a loan (in this case giving the bank a mortgage with the land and improvements as collateral). In short, low interest loans may be a very useful way to plan a long-term strategy, even if you re-finance them often along the way.

Definitely to all that. It doesn't contradict anything I said in the video. Notice I never said a person shouldn't get a mortgage, or should never refinance.

Cashflow is indeed the name of the game, but most middle class don't think that way. They think they're saving money refinancing every 5-7 years to get a lower interest rate/lower monthly payment/wrap up the credit card debt into the loan--which was the main thing I intended to address in the video.

(Title of video is purposefully inflammatory.)

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10 hours ago, Dylan Lawrence Moore said:

Definitely to all that. It doesn't contradict anything I said in the video. Notice I never said a person shouldn't get a mortgage, or should never refinance.

Cashflow is indeed the name of the game, but most middle class don't think that way. They think they're saving money refinancing every 5-7 years to get a lower interest rate/lower monthly payment/wrap up the credit card debt into the loan--which was the main thing I intended to address in the video.

(Title of video is purposefully inflammatory.)

Why would you make click bait titles?

Also, it's "principal" not "principle" as in some of the graphics.

You don't know how most middle class think - as consumers, they see value in what they buy with the loan money. The most important use of mortgages on land is the creation of new capital for the economy to start new businesses, pay for education, make an investment. The home mortgage is some of the cheapest investment money available to most people, period. It's linked to their primary asset, which is their labor, with the land as collateral. 

Oh, and if they're refinancing for lower payments, uhm, they ARE saving money.

Now if you made a video of pad-day loan scams, then it'd be a different story, due to the hidden fees. 

Edited by eschiedler
a few typos "but" = "buy"; "the" = "they"

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10 hours ago, Dylan Lawrence Moore said:

"It doesn't contradict anything I said in the video."

Ok, here's something you said in the video, "What we thought was a 400,000 debt instrument is really a 778,000 debt instrument." No, it is a 400,000 debt instrument and it works exactly like that... people are told in writing the total interest they will pay over the life of their loan. These types of statements are mis-leading and false definitions of how mortgages work as a strategic tool for planning control over assets. Having worked in real estate for 30 years and a background in economics, I cannot endorse this video for various statements you made like this one - this one alone is enough to not endorse the video.

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1 hour ago, eschiedler said:

Ok, here's something you said in the video, "What we thought was a 400,000 debt instrument is really a 778,000 debt instrument." No, it is a 400,000 debt instrument and it works exactly like that... people are told in writing the total interest they will pay over the life of their loan. These types of statements are mis-leading and false definitions of how mortgages work as a strategic tool for planning control over assets. Having worked in real estate for 30 years and a background in economics, I cannot endorse this video for various statements you made like this one - this one alone is enough to not endorse the video.

Have you ever met someone who never realized how much the interest adds up to in a loan? I have met many. This video is aimed at them, not savvy investors.

 

1 hour ago, eschiedler said:

No, it is a 400,000 debt instrument and it works exactly like that... people are told in writing the total interest they will pay over the life of their loan. 

I don't understand your logic. If I'm liable, per the terms of the written agreement, for $778k, why can I not consider it a $778k debt instrument? I find the $400k to be misleading, especially as people rarely read the Truth in Lending papers that show the payment breakdowns.

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The vast majority of people I meet are very well aware that they will pay a lot of interest. They understand that and read the documents particularly in preliminary meetings and they do so in detail afterwords. They've educated themselves quite a bit before signing the loan, and I've met very poor people who are almost illiterate who learn a lot about mortgages.

The problem is rarely in their understanding of interest, but mostly in that both wealthy and poor people are illogical at making strategic plans to improve their lives and carry those plans out. The mortgage is simply a tool that is quite useful if they can use it for a useful goal and rarely hinders them by itself. On the contrary stable mortgages have lifted more people out of poverty and into the middle-class and upper-class than any other debt instrument.

You are in debt for the principal, disregarding other terms, which may be numerous and complicated. The interest is across time. So it is important to conceptualize the payments and loan across time and keep it quite clear what is separate, the principal and interest. You could say it was a 778K debt instrument but that would be logical ONLY if you immediately pointed out that it was discounted at 11% for 30 years - subject to tremendous discounts for pre-payment; thus immediately notifying people that they could pay it off RIGHT NOW for $400K. It is redundant and confusing to keep switching the time perspective, especially since the discount from future to the present is intuitively backward.

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Debt in general is awesome IF it provides a return. If it doesn't its BAD.

Getting a mortgage for a house that the mortgage is cheaper than the rent is GOOD.

Getting a mortgage on a house that is twice the rent you would normally pay is BAD.

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On 2/10/2018 at 7:33 AM, eschiedler said:

Why would you make click bait titles?

For fun?

On 2/10/2018 at 7:33 AM, eschiedler said:

Also, it's "principal" not "principle" as in some of the graphics.

Oops. I always screw that one up.

On 2/10/2018 at 7:33 AM, eschiedler said:

You don't know how most middle class think - as consumers, 

And you do?

On 2/10/2018 at 7:33 AM, eschiedler said:

The most important use of mortgages on land is the creation of new capital for the economy to start new businesses, pay for education, make an investment. The home mortgage is some of the cheapest investment money available to most people, period. It's linked to their primary asset, which is their labor, with the land as collateral. 

Completely agree. Nothing here contradicts what I said in the video.

On 2/10/2018 at 7:33 AM, eschiedler said:

Oh, and if they're refinancing for lower payments, uhm, they ARE saving money.

They are increasing cashflow, yes. But if they just keep reverting their payments to consist of 80% interest and 20% principal, over the long-term, they are not. The important thing is the consumer being aware of what they prefer. This is why I specifically say in the video: do the math and ask yourself, "Am I really saving money?" 

On 2/11/2018 at 4:09 PM, eschiedler said:

The vast majority of people I meet are very well aware that they will pay a lot of interest.

And vast majority I meet don't. Thus I made a video.

On 2/11/2018 at 4:09 PM, eschiedler said:

The problem is rarely in their understanding of interest, but mostly in that both wealthy and poor people are illogical at making strategic plans to improve their lives and carry those plans out. The mortgage is simply a tool that is quite useful if they can use it for a useful goal and rarely hinders them by itself. On the contrary stable mortgages have lifted more people out of poverty and into the middle-class and upper-class than any other debt instrument.

Completely agree. Nothing here contradicts what I said in the video. I literally said "a mortgage is just a tool" in my video.

On 2/11/2018 at 4:09 PM, eschiedler said:

You could say it was a 778K debt instrument but that would be logical ONLY if you immediately pointed out that it was discounted at 11% for 30 years - subject to tremendous discounts for pre-payment; 

That's... kind of the whole point of the video.

On 2/11/2018 at 4:09 PM, eschiedler said:

It is redundant and confusing to keep switching the time perspective, especially since the discount from future to the present is intuitively backward.

Guess I'll have to tell that to all the people who have thanked me for helping them understand mortgages better.

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[from video]: "where I live real estate is going crazy, paying $500,00 for a house is normal"

That's pretty good, compare that to Sydney and it's heavenly. The average house price in Sydney is about 1.2million dollars, and taxes are still the biggest expense...

Also, I think you're well spoken in your videos, do you improv the video or do you write a script to follow? 

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15 hours ago, Spladam said:

[from video]: "where I live real estate is going crazy, paying $500,00 for a house is normal"

That's pretty good, compare that to Sydney and it's heavenly. The average house price in Sydney is about 1.2million dollars, and taxes are still the biggest expense...  

Yea I live about an hour out of Seattle. Go inside Seattle and the prices start to look more like what you said about Sydney.

15 hours ago, Spladam said:

Also, I think you're well spoken in your videos, do you improv the video or do you write a script to follow? 

Thanks! For this video, the beginning was scripted and I followed a fairly strict outline. Generally I have to do an outline because I have a hard time getting to a conclusion without one.

I never, however, stick to the script or the outline. I'm always adjusting it as I go.

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Just now, Dylan Lawrence Moore said:

Go inside Seattle and the prices start to look more like what you said about Sydney.

Geesh, I though the USA was better for buying than AUS, but obviously not then. How long have house prices been that high for? In Sydney it's a more recent thing due to the influx of East Asians into the housing market, and I'm guessing it's the same for Seattle too, but tell me if I'm wrong.

 

Just now, Dylan Lawrence Moore said:

Thanks! For this video, the beginning was scripted and I followed a fairly strict outline. Generally I have to do an outline because I have a hard time getting to a conclusion without one.

I never, however, stick to the script or the outline. I'm always adjusting it as I go.

No worries, and thanks for the advice, I'm trying to make some YT vids myself so I need all the advice I can get :happy: 

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7 hours ago, Spladam said:

Geesh, I though the USA was better for buying than AUS, but obviously not then. How long have house prices been that high for? In Sydney it's a more recent thing due to the influx of East Asians into the housing market, and I'm guessing it's the same for Seattle too, but tell me if I'm wrong.

Seattle is the hottest market in the US right now. East Asian influx, Amazon and Google keep growing, Microsoft and Boeing are here, too. Drive across the mountains into eastern WA and the housing prices are like 1/5 that they are on this side.

 

7 hours ago, Spladam said:

No worries, and thanks for the advice, I'm trying to make some YT vids myself so I need all the advice I can get :happy: 

Just start making them. Fuck up and call it practice.

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On 2/9/2018 at 5:30 AM, Siegfried von Walheim said:

THANK YOU VERY MUCH!!! +1-million

While I am not yet wealthy enough to even get a loan to own a house, that part of my life isn't too far off. If I hadn't heard this video I might have gotten sucked up into the "we all do it" cult of stupid self-enslavement.

 

Welcome. :)

Like I said in the video, there's nothing wrong with a mortgage as long as you use it correctly and understand what you're getting yourself into. It's a great tool for getting into a house. As far as I can tell, there are two big issues to deal with: first is the 30 year mortgage. If you play with a mortgage calculator, you'll find that the interest totals aren't that bad until you start getting into the 20+ year range. 30 years REALLY stretches that interest out. The impact of my video would have been minuscule if we most of us still used 15 or 10 year mortgages. Second, as was one of the main points of the video, people have a tendency to keep refinancing themselves into the "expensive principal zone".

One thing I've heard, and I agree with this, is that a huge problem with the way banks make mortgages is that they take your GROSS income instead of your NET. Additionally, because most people will "get the most they can afford" (at least the people in my life lived that way), they crank up the debt level just to where they can barely handle it. What happens then is any negative change in their income destroys their standards of living. All this can be largely avoided by a little self-awareness of what you know you can handle financially, and not just let the bank tell you "what you're able to get".

On 2/9/2018 at 5:30 AM, Siegfried von Walheim said:

I don't intend on doing much studying on the best way to finance my future house until I both have the money and the location (I don't intend to die in my current city that's for sure) but I definitely thank you in advance for potentially saving me decades of my and my future children's lives. 

I would start studying RIGHT NOW. Remember, just because people set themselves up to be slaves to their mortgage payments doesn't mean you have to. Working your ass off and saving for 30 years isn't the best way to get into a house. Even if you don't plan on living in the city you live in now, what if you bought a house, then threw in a renter when you moved? Then the renter makes the mortgage payment and you have someone else building up your equity. Hell, you could even just buy the house and never move into it to begin with. Let the renter make the mortgage payment from the beginning. Like eschielder mentioned at the beginning, if you're just looking at your cash stream, you don't really care what the interest payment is as long as you're positively cashflowing every month. Just try to get out of the "expensive principal zone" as fast as you can. :)

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YES!  Exactly my approach.

I bought a house (mortgage) 3 years ago. 

$250,000

I've been paying it off at a fast rate.

I'm proud to be able to say my loan is down to $80,000.

Interest payment went from $800 to $300 monthly

Hoping to pay off this thing in the next 2 years.

With a house paid off I could theoretically work part-time, have time to raise my kids, play music, and finally enjoy my life.

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On 2/18/2018 at 12:20 PM, Dylan Lawrence Moore said:

 

NOOOOOOOOOO!!! You need to refinance and work 8 jobs to pay for it!!!

You sure do if you can get a lower rate. Go buy another property with that money or build you a little rental in the backyard and slap it on airbnb. Get out of the rat race as Kiyosaki would say. Passive income streams. I used to hate debt but it's growing on me. It's the only way to play the game as it's currently set up. Borrow your balls off and don't buy toys buy assets!

Great video.

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24 minutes ago, Marshall B said:

You sure do if you can get a lower rate. Go buy another property with that money or build you a little rental in the backyard and slap it on airbnb. Get out of the rat race as Kiyosaki would say. Passive income streams. I used to hate debt but it's growing on me. It's the only way to play the game as it's currently set up. Borrow your balls off and don't buy toys buy assets!

Great video.

Sorry to break it to you (risk associated with being a messenger)...

ROBERT KIYOSAKI IS A SCAMMER...

For your and others' sake, I highly recommend that you read up on his failures and miss-representations.

 

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1 hour ago, barn said:

Sorry to break it to you (risk associated with being a messenger)...

ROBERT KIYOSAKI IS A SCAMMER...

For your and others' sake, I highly recommend that you read up on his failures and miss-representations.

 

I don't know about Kiyosaki's scams, but his book Rich Dad Poor Dad was the first step in helping me change the way I think about money and wealth.

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14 minutes ago, Dylan Lawrence Moore said:

I don't know about Kiyosaki's scams, but his book Rich Dad Poor Dad was the first step in helping me change the way I think about money and wealth.

I'm glad it did, good for you.

The more reason, you could consider expanding your knowledge of the real character, the person behind those ideas. Oh, and his MLM efforts too. If you were interested, of course.

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