16. Do Banks lie?

Not necessarily, they just don’t tell us the full truth.

Example: mortgages from banks are at an all time low hovering around 3%

$100,000 dollar loan at 3% interest is $3,000 total profit for the bank… 

The banks would NEVER do that – too much risk not enough reward.

What the banks do is that $100,000 loan at 3% interest (say over the course of 30 years which is one of their options for loan length)…

By the time the loan is due, we would have paid a total of $151,777… that’s a lot more then 3% of $100,000. (More like a 65% return on their money.)

How does this work? Because the first example was simple interest (which the banks don’t do) and the second example is amortizing interest (which the banks do do) 

They’re both interest, with radically different results

Basically, when we make our mortgage payments with the banks the first few years of the payment we make goes mainly to the interest with very little going to the principal. 

How can we get around that? 

By making extra mortgage payments each month (BUT we have to make contact with the bank to make sure extra payments go to all principal too for this to work, or clear this up before the loan is issued)

See, the banks aren’t lying – they’re just not telling the full truth. 

That’s why it is SO IMPORTANT for us to educate ourselves on these types of things

Especially in the finance world…

I mean where else are we – the people – only being told some of the truth? 

Fund managers with excessive fees who make money from their clients no matter what? 

Broker dealers?

Insurance packages?

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