Get A 15 Year Mortgage Or Save To Buy A House With Cash?
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- čas přidán 18. 08. 2018
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Rather than relying on penny stocks, I wish to diversify my assets by investing in real estate and mutual funds and stocks of corporations with stable cash flows. I have a high interest mortgage and I’m wondering if to pay to off or purchase more real estate and flip. What should I do?
Remember that investing in the market carries risks, and it’s important to do your own research and consult with a financial consultant before making any investment decisions.
Accurate asset allocation is crucial, and some individuals use hedging strategies or allocate part of their portfOlio to defensive assets for market downturns. Expert guidance is vital for achieving this. This approach has helped me stay finan-cially secure for over five years, yielding nearly $1 million in returns on invest-ments.
I've been looking to get one, but have been kind of relaxed about it. Could you recommend your manager? I'll be happy to use some help.
’Sonya lee Mitchell’ is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
I bought my first house for 250k during the recession it’s worth 550k now. If I waited 10 yrs to saved up 250k I would hv to pay double.
Wade H yes but he said he would be buying in a rural area so to count on any significant appreciation wouldn't be that smart.
Yea but the market it high right now so his situation of different today. He should save now and buy when the market drops again.
If you had waited, you would have made three times the money since you would have been 'free' of the payment pressures and all the other obligations that come along with borrowing ... and you'd probably have 2 houses by now.... Being not in debt gives you the freedom to explore evenues, and increase wealth..... That's what Dave meant...... Sometimes it's beyond maths
Wade H your going to pay double for the house anyway if you have a mortgage. Read your mortgage note. One thing Dave doesn’t talk about.
Depends on the interest. Back in 2011 15 yrs was only 2.5%.
Currently im working +100hrs a week determined to pay my debts and everything off. It feels like itll never happen and really tests my fortitude and belief that ill get there...but step by step im trusting in the Lord.
Anything you put your head to you can accomplish, it’s just a matter a consistency. Keep doing it bro💪🏼
How you doing, man? How much debt left? How much did you have? You’re killing it.
Keep on pressing on.
100hours , I hope you making like 10k per month.
Frenchy Alicea hope your doing well, remember you can do all things through Christ who strengthens you
When I’m in the mood to make dumb financial moves, I listen to Dave first. Helps me to get rid of those thoughts
I am going to do the same.
Right ! He saved me a lot of money and trouble !!!
Same here
That's what he's there for.
Not just Dave. The people that call make me feel better tbh.
If he combines the 2, he can get the house on a 15y mortgage and then pay it off in a few years anyway.
Yes people forget a big down payment helps a lot on monthly mortgage
I agree totally. Buy the house and add the rent to it to pay it off quickly.
True
Yeah I thought the same thing. Why didn't Dave suggest that?
He could even get a 10 year mortgage if he put down enough of a down payment.
My husband and I took your class a few years ago. We were pleased to learn that we were already on your Baby Step 5. I'm happy to report that a week ago we paid off our home. Before we took your class we had a twenty-year mortgage but after your class, it was our goal to pay off our home as quickly we could. We're debt free and it really is the best feeling in the world. Thank you for your program.
Highly doubt he reads these comments
Congratulations 🎉🎉 🎉!
Congratulations!
@@bestofa-z9751 He does
Congratulations! How did u stay focused 😱😱👏🏼🙏🏼
I regret not taking out a loan to buy a house 3 years ago. I could have bought a nice house for $180k-200k.
Instead, I tried saving up to buy a house cash and home prices keep increasing. Those same houses are now $250k-$300k. I finally gave up and got a loan.
If I would have gotten a loan 3 years ago, I could've paid it off already.
You're correct.
Yet in his case Dave is right as always! The bubble will burst soon enough, and they can get an Amazing House with the money they save in the next few years!
@@ArneWidding Your crystal ball says the bubble will pop? Tell me more, which stock do I go all out in?
Please help.
Not every advice is for everyone
you could've just put that money in a stock or index fund. They all went kaboom in the same time period. I don't think Dave Ramsey is wrong here. He's not saying to do nothing with your money, so don't compare it to that lol.
27 year old literally sounds like a 40 year old. Good lord.
Alex Minor lol
same thing I said.He wish he was still 27 lol
😂😂😂gotta love CZcams comment section... yall dont miss a beat🤣🤣🤣 I was thinking the same thing.
maybe a heavy smoker
kid WAS RAIDED RIGHT?
go to Detroit and buy a whole street for $1000
Lol! I herd about that.
Sadly if the cost of cleanup & repair work on them propertys didn't kill ya, the property tax on that land likely would kill you before you could manage to sell it. There's a reason construction businessed don't try to milk that opportunity.
Also, squatting was made a felony charge in the state of Michigan a few years ago (probably because someone squatted in the wrong state politicans home). So Michigan homeowners actually got it better then most of the country when it comes to squatting.
Anthony Kernich that cost like $250k in repairs
The r/WallStreetsBets way
And still lose money
If the repairs didn’t kill you, the lovely inhabitants would.
his whole point about bankers is right on point. I own my house debt free and I paid rent while saving cash making 60 to 100k per year to pay for my house. I was thinking about getting a bigger house with a mortgage. after talking to a credit union about all the fees they wanted to hit me with I decided to buy what I could afford with my cash I saved.. Thanks to dave
I waited and paid cash for my house because I didn't want to EVER be unemployed with a mortgage.
Im uneployed all the time and my mortgage is 40k a year.
Where did you live in the meantime? Not everyone wants to burn rent money or can live with their parents or some unsafe environment.
I moved in my van fulltime ill ne buying a hoise for cash.
It is such a legit fear
It’s crazy to me how much most of these callers make per year. Good grief.
Wade Williams right! I enjoy them but they need a playlist for the 50k households 😂
You do know these are all fake callers
It's not crazy at all, if you are in Tech and Health care those are average salaries. They hired a new guy with little experience whatsoever 4 months back at my job in Palo Alto, CA, his base salary is 135k a year plus signing bonus of 15k and stock options plus 401k match etc etc.
@@_blah CAD & Physical Design Engineer.
Lt. Aldo Raine is audio / media production industry a good one ?
OK. I'll save up $1,000,000 right now. Bye
Erin Francisco lol right
Are you done yet?
Erin Francisco I am trying to save for my meds
Erin Francisco that’s about the going rate for a mediocre house in a decent neighborhood in any city where the good jobs are. It’s terribly out of balance.
Erin Francisco it's possible
"Next time you see me walking into a bank its because I'm buying it"
Most savage Dave statement ever
Love it
Finally someone who understands not to borrow for anything 🙌
Why continue to pay rent in order to save up to buy a house cash? Wouldn’t it be better to put that rent money towards the house?
I agree. When you rent you are giving away your money to pay for someone else's dream.
absolutely if he can pay for it in cash in 4 years then get a 15 and pay as if it were a 7 year loan if he can buy cash in 4 years he can do that who knows what interest rates will be in 4 years
Jaco Silvis this is not an apples to apples comparison. You’re forgetting that whatever interest you pay, you can write off in your taxes. With renting you don’t have that option
It depends on how much is saved already. Saving for a 20% dow npayment to avoid PMI could save money in the long run. Why pay PMI when it doesn't insure anything for the home buyer?
Sandy Otis I thought he said they have $52,000 saved up for the house already.
I hope married couples hear that: “she likes where you ended up, but she didnt like how we got here.” Its not about today, its about tomorrow.
Most women don't want to run the marathon....they just wait at the finish line for the winner.
A mortgage is an okay debt. That being said, you shouldn't buy too much house, which sometimes people do since they think they can afford the payment. That is trouble.
Yep definitely not a good idea to get a huge load for the biggest place they approve you for. You may always need home repairs, a new car or need some of your income for many other things. I spent about 40k less on a home than I could have. Why I didn't want to be chained to that payment and not able to go on vacation get a nice dinner out once in a while or things like that because I was house rich and cash poor.
@@MrMikey1273 , I used to be a used car dealer. I finance folks maximum 50% and only $2K that have to be paid in 10 months, no interest. You come across folks that had a $200k in mortgage!!! I myself lived in $104k house, fully paid. Financial stupidity is what ruin people's life.
Okay because its a necessary evil. You still have to live, most people can't pay rent, save money for a house. A mortgage lets you live in that house and you can save to pay off thar house. Just check protocols becaue I see people paying off mortgage but the mortgage cobtracts we have here are saying you pay a penalty is yoi pay off more then lets say 5000 a year in top of your regular payments. So you see, that's nothing for a house that's 450k. It will still take msny many years.
I don't m ow what to do.
@@zeynand4039 this is all discussed when you sign up for the term. Mine allows me to pay 20% of the principal each calendar year as extra payments. If you get an open mortgage then of course no penalties to pay off or pay down.
It's so easy to think of the monthly payment and sign for that mortgage. But when you get to work and save the entire cost of a home, that's when you truly grasp what it takes. Another way I think of the interest is measuring it in brand new BMW's. How about having a few of those parked out front and the bank comes for them? That's interest!
"Next time you see me in a Bank is Because I'm Buying it...!!!"
Wooow...Savaaaage...😊😊
Wells Embargo will eat his emergency fund u so quick.
Yes sir!
Dave deals with banks. I am willing to bet his money isn't stored in a safe nor a sock drawer.
He said have a paid off house in 4 years at the age of 31. If he got a 15 year fixed mortgage, he’d have the house in faster than 4 years because he’d pay what he’s paying for rent towards the mortgage plus whatever he’s saving to pay the house off with. You can run this up mathematically and I bet it makes sense. For Dave, this is just pure principle and so that’s why he said he couldn’t be mad either way.
Houses come with unexpected expenses that renting doesn't. If you don't factor in extra for something small like a water pump getting destroyed or something as big as having to redo your entire roof, then the whole plan falls through. If you were renting and any of these things happened, you'd just call the landlord... The owner pays
@@rushellrousseau9197 that’s not entirely true. Nowadays if you’re renting a townhome or house YOU are responsible repairs beyond a water pump or broiler. Landlords are placing those responsibilities on tenants in writing... in the lease...
@@rushellrousseau9197 you do know that you should get the home inspected prior to buying it. Also, if you have an event that causes the need for a new roof your property insurance minus your deductible and your new roof is paid for. Also you renters have an unhealthy fear of an an unrealistic assessment of home maintenance costs.
I'm turning my finances around thanks to you Dave! It really does start with baby steps. Thanks for all you do!
Mathematically it does not make sense to save up.
Ur gonna throw 4 years of rent in the the dirt because of a principle. Get the freaking mortgage and pay it of as fast as u can!
if you can paid cash period. Cash is king,
@@hunkydude322 In this situation, no. He said he could save up for a house while paying rent in 4 years. That means he could easily get the mortgage and pay it off in 4 years as well while paying less interest then you would rent.
@@liamwelsh5565 Yupp, if his mortgage is roughly the same as the "rent" then it would stand to reason that he would be able to pay of the mortgage faster than 4 years of saving for it.
But i mean, i get the whole cash is king and being free of debt is true freedom. It's a though choice, but i bet most guys wouldn't end up paying more than bare minimum on their mortgage, though (which is sort of why Ramsey is against borring money in the first place)....
Renting first gives the luxury of a greater income once you move in.
It would be very nice to move in to a new house, debt free, and your income skyrockets with no mortgage and no having to save for the house.
Alternatively, you save money overall by getting the mortgage, but your income is hampered for a few years. Which prolongs any other thing you might want/need (car, etc.).
With their income, rent for them is a drop in a bucket at any reasonable place (outside big cities).
I think few people will actually pay a mortgage off in 4 years. And the interest paid in those first 4 years is close to rent, it's horrible. Depends on what your're doing of course.
You make $200K a year. Save up enough for 25% down payment and 6-12 months of emergency fund then pull the trigger and buy the house. You don't need to save up $300K-$700K all in one go.
Dave, thank you. You have changed the course of my life.
I built a house during the recession, it turned out to be the best time to build a house as I built a house for $75k that appraised for $130k when it was finished. I then paid the house off in full 4 years later. I didn't have the cash to build a house when I did, now my house appraises for $230k. I am anti-debt too, but sometimes biting the bullet and getting a mortgage is the right thing to do.
TheRosswise
It is true. Prices can go up real fast. Homes I was looking at 5 months ago are $40,000 more now today. They likely will go back down but then again they might not any time soon. Always a gamble. So a decision like this may result in a home price going up 10s of thousands of dollars.
Why people say they built a house? It's not like you built it yourself, just say you purchased a house and someone built it the way you wanted.
@@keyroncampbell Because everyone knows what you mean when you say you built it. I don't tell you I got in my car and on the highway to get to the store, I just tell you I went to the store. Less words is better
@@akg_table 2 guys I work with actually built their own houses with their own 2 hands so no everybody wouldn't know what to talking about.
TheRosswise, Timing is everything in housing or you get bust. 2018 is the height of the housing market!!
“ Next time you see me in a bank it’s cuz I’m buying it “ 😂😂
Lots of interesting comments and good points...but I’d like to think DR is doing something, that in the military we referred as providing a rule set for the LCD (lowest common denominator)...which unfortunately was often time the majority. Many will be in markets where it makes sense to jump in, get a loan and ride the wave up...but bottom line is unless you have a crystal ball these options are gamble...where with DRs advice you will never completely lose, you may have been able to make more by taking risks, but you will never end up homeless by buying a house cash.
He's not a DR. doctor
Exactly. He preaches the peace mind owning property out right with cash. Market can be up or down but it doesn’t effect you cause it’s 100% yours 🙏🏼
I hear that excuse for Dave a lot, but he spent about half of this very video asserting that _avoiding_ risk (e.g., mortgages) is what leads to wealth.
Excellent point as well. Nothing wrong with living a risk-free, somewhat boring life. Safety is a good feeling. Can’t let other people around you dictate how you perceive money
@@dominicdolenti8699 if you don't participate in a money earning market it absolutely does affect you. it's called opportunity cost. And Dave's method ensures that you opportunity cost is as expensive as possible.
Dave is straight up lying to his listeners when he says that mathematically it doesn't make sense to borrow money. Dave failed at leveraging debt so he thinks no one else should do it. The frustrating part is the he shows a fair amount of disrespect for his listeners by not telling them the whole story. Basically he thinks they are too stupid, greedy, undisciplined to leverage debt, spread payments over time, and invest the rest.
Never wait. Take advantage of the low interests rates, buy below your means and pay it OFFFFFFF
I’m 27 right now renting to the point that I can save. Hopefully in 5-7 years I can buy a beautiful home cash instead of stressing out while paying 15-30 years. This video was very informative. Thank you.
Good luck, stay focused and dedicated
Bryant argueta, I used to rent a 5 bedroom house and rent out all the other rooms. I got to buy a house cash.
we need a 2022 update on your house
Were you able to? Or were you priced out?
Great advice Dave! Debt free is the way to go.
Very grateful to have you Dave!
I’ve always wondered why Dave would say renting costs more than owning in the short term and I’ve finally figured it out. He considers 15 year not 30 year morgage
I never Understood whats wrong with 30 year morgages.
@@nikolaig1 hello. I think is less stress having to worry about how much time you have to pay off the debt.
Unless he can live for free with his parents while saving up to that house, I don't see renting as a good strategy here.
Ivar Losna, Renting is a good strategy in 2018,2019,2020,2021. After the housing market tank than you can buy $1million dollar home for $300k. I know somebody that bought $1m for $100k in 2009
Dave is plainly wrong. Assuming 2 scenarios where you take the same amount of “money for your house” and either get a mortgage and pay it off or you rent and save until you can buy outright, you will own the house outright MUCH faster isn the mortgage scenario. The reason is when you get a mortgage, part of your money is paying off principal. When you rent, that part pays the principal of the landlord. Renting while saving to buy a house outright is silly.
@@judymckee5992 Ah, the housing market tank.
That old chestnut.
Judy Mckee
I just dont see it tanking again.
Not unless the gov raises rates to 10% like they used to be.
Even then, there are more protections than ever after 2008.
Plus, the gov lets in immigrants by the millions, which drives up housing costs even further.
It just simply wont go down without some major changes by the gov.
What’s the difference, renting is throwing away money also. Just as bad as debt.
Thanks great advise , living debt free is a blessing .
When he started talking about the guy living in the trailer, i knew exactly who he talked about haha. That guy is a real hero.
Dave is the best, longtime listener keep it on!
Why not pay your own mortgage instead of paying someone else's.
my best video @DaveRamsey, great teaching
FINALLY, someone who has it together. Bravo !
Get the house... you are doing just fine.... turn that house into a home and be happy...
Sometimes I think these callers are just calling to brag.
Idk sounds like a legit question
Straight talk! love it.
I’m so glad I watched this! I’ve been so confused because I am praying about acquiring my first property. I did not want to get into heavy debt so I was thinking of saving up for what I can afford to pay for fully right now. Once I have a roof over my head, I can always proceed from there. Thanks so much. God bless 🙏🏾✨
Curious what happned here
@@judymckee5992 and even more inflated now
110% take the mortgage unless it is a really cheap house (which really don’t exists in most places anymore). You will end up having to save up at least double the amount of money to keep up with the appreciation. Take the mortgage, use the money you would have used for rent on a mortgage, profit from appreciation, and if you want get a roommate/renter.
Lol these callers, I swear. Obviously the guy is responsible, he doesn't need Dave's advice, he just wanted everyone to know he has his act together financially.
Ikr😏 this caller gets the side eye... I was wondering when the disparity part was gonna kick in.
Exactly
No one knows who he is. Your green eyed monster is showing. It was a legitimate question and if you ever get yourself in his position (which is doubtful with your attitude) you’ll understand that when you have options like this kid does, it can be paralyzing and you need advice from those you trust to pull the trigger.
Exactly
Still better than the couple making 1.7mil a year asking if they could afford a house. They obviously called to flex.
Good info 🔥🔥
Thanks for the info . Found her website and it really impressive
100% foreclosures happen on property with a mortgage... is that even true? You can get foreclosured cause of property taxes / insurance i thought
The irony is that during the 5 - 7 years on saving, you are paying someone else bond.
I enjoy and take your advice, Dave.
Great call
Dave's assuming they never have kids. That's an income killer
I would never recommend for someone to buy their firs home cash. If you have the money by all means do it. But if you are renting for 1800 a month and you can get a mortgage for around the same, is better to buy in payments and just send more money to the principal.
I bought my first home in 2000 for 100k. The same house in 2005 was 295k now is 359k. If you try to save for a house to pay cash, you might no be able to buy just because the houses appreciate in value specifically in high demand markets such as California
It depends, the housing market is too inflated, but in colorado he would be fine because everyone wants to live there.
The same house you payed for in 2000 for 100k was only 50k in 1996 you will never get ahead.
Rene Silva I agree with you here. I am in the New England area, rent for 2 bedrooms are 1800 and 3 bedrooms for 2500+. By the time you try to save to buy cash the same 400k house may be 600k.
@@oliden4977 for sure
I'd put a morgage payment that's lower because when you buy it's not just the payment it's the taxes and maitnance of the property as well. So if all of those things are less then your current payment then it makes sense
You are awesome Dave
~ Fantastic advice!
If you have to save for 10 years to buy a house, then you're paying rent for 10 years.
10 years of rent is probably going to be more than the interest on the mortgage.
Facts. Unless you have a place to live for free, a low interest rate mortgage is not bad debt. At least you're paying yourself instead of paying someone else. Sure the bank gets a piece, but the piece they get is smaller and smaller the faster you pay it down.
Live with mom and dad to save up. Really only way and that's sad, isn't it?
Not to mention housing costs just seem to go up and up. 10 years later and that 300k house might be 500k
@@seinfan9 not really sad if it works for you all. It is better to give your parents money on the mortgage or their taxes than to pay rent.
Just make sure there is no prepayment penalty on the mortgage and you can always pay it off early if you have extra money. I got a 30 year mortgage and hope to pay it off in less than ten
Great advice.
the best question ever !!
Our situation was different: We had to get out of a bad situation with our slumlord. I applied for a mortage and I was approved. We're on a 10 year mortage and only owe 56K. We'll have it paid off way before then.
Just to be clear the *only* two options in your life were rent from a slumlord, or get a mortgage? lol.
Most times, property tax is not mentioned. My mother owns 2 properties and no mortgages on either. But, if she doesn’t continue to pay the property taxes, there would be a tax lien foreclosure on the properties anyway. What she pays in property taxes is about what I pay in rent yearly. So, people are, indeed, foreclosed upon without even having a mortgage and property taxes, even without having to pay a mortgage are much like paying rent on property you already own.
6:01 ".... because I don't call anybody else dumb....... *ON THE AIR*..."
😂😂😂
Dave is a great speaker.
$10 million by 40 ?? 200,000 a year .., he is 27 years old how in the heck is he supposed to be worth 10 million in 13 years???
I was thinking the same thing. Ramsey was being major fake news.
It's that same (imaginary) investment account that averages 12% a year that he loves to talk about, yet never names. I guess it's a plug for his Smartvestor Pros.
I'm 27 started investing 2 yrs ago I've averaged 11.5 % not quite 12 but close
@Ostin I watch DR because I like his Baby Steps in general, and can get inspired by both successes and failures on his show. I also enjoy the challenge of critical thought, and regularly listen to many people I don't 100% agree with. I find it leads to more truth than the opinion echo chamber of only listening to your favorites.
As for me investing, I've only been at it for a couple years, but I've read several books on it. 12% is not an average you can count on. Stocks average 7-8%, and a good investor can squeeze out 10-12% most years, but planning a retirement based on a 12% average return is stupid.
@@pondboy3682 far too many people don't understand "know thy enemy." Echo Chambers breed ignorance.
I love Dave Ramsey’s principles! He is a common sense genius whether you believe it or not.
You are STUPID!
So pay someone else's mortgage and have no equity, or pay your own mortgage and have 94% equity. Make accelerated payments and cut your interest payments down by paying your mortgage in 5-7 yrs vs. 15. Remember, today's money is cheaper than tomorrows (inflation).
"I am so proud of you."
Awww!
You don't get rich from paying rent either, which is often more than a mortgage payment.
true...but peopple also forgot about property taxes ontop of morgage and that ads up
Eh. My best friend just bought a house thinking he’d save. His rent $500 and his mortgage almost $800. Plus, take in account taxes and if anything happens to the home, it’s on you.
I'm sure that's the case for your friend, but with rent, you're building zero equity over time. Most of the broke people I know rent.
@@Libervation yes your not building equity but theres soooooo many expenses when it comes to a home besides just morgae and property tax, plus all the upkeep like cutting grass and snow plowing and garbage disposol. the list goes on. renting means you dont pay for all the extra stuff and usualy the landlord takes care of it. say you buy a 200k home and in 30 years pay it off and then it increases value to 250k when you decide to sell. ok you just made pay your 200k and then some, but you dont get back probably the other 100k you spent in upkeep and bills and property tax. so you maybe made 100-150k. somone who is renting can save that much themselves if they just save an extra $420 a month or so over 30 years. both ways have their pros and cons. just renting or owing a home insnt going to get you rich unless you start renting part of that home out or a room. people use a mortgage as a glorified savings account putting money into it for he next 30 years and then getting some back on their return depending on the market.
I agree. Well, the house I bought was $20,000. It's almost 2,000 sq. feet and on 14 acres of land. I'm paying $400 a month towards it with 0% interest (I owe around $6,000 on it now). Total taxes are around $200 a year and I have a snow blower and take care of everything else as far as utilities...other than electricity (which is around $90 a month). It needs some work, but nothing too major. Rent in this area is normally $800 to $1,200 a month. My situation is pretty unique though.
I'd wait for prices to drop. Buy the cheapest house in a nice neighborhood that needs repairs cash and if needed take a loan to pay for the repairs. Worse comes to worse you already own your house and it will most likely appreciate. Seen a lot of people do this and not one is in debt, plus they have a pretty nice savings account and everything paid off. (My uncle, my best friends dad, my best friend, and my co worker). Am in the process of saving and waiting for the market dip.
Commercial private equity says otherwise about debt. Levered cashflow increases returns.
Dave: "I'm not going to call you dumb because i don't call anyone else dumb..... On the air." 😂😂
Hilarious!!!!🤣🤣🤣
If his rent is the same amount as a mortgage w/ interest payment, then he should get the 15-year mortgage and pay it off ASAP.
Someone raised a great point: Why help another person pay their mortgage when you can pay your own?
Exactly. People get too trapped into what Dave sells. He has great principles for getting out of debt but he doesn't tell people that renting is dumb. It is dumb to rent if you can afford to save enough to buy a home for cash in four years. There are plenty of mortgage lenders that allow early payments. Early payments are better than late payments or defaulted loans.
@@rm5282
Renting is half the cost of buying a house
@@JamesSmith-cm7sg maybe if you live in a run down place. A person that lives somewhere clean and a place that is less likely to be burglarized will pay more. I would rather buy. I have rental properties and I can tell you my tenants covered my mortgage, taxes, insurance and HOA dues. I still had income off each property after all of that was covered by their rent payments to me.
"Saving to buy a house" - A house is around $1 million where I live. You'll be renting till you're 60 on a regular wage, meanwhile the guy who saved up $150k to pay the first down payment would be buying that house and rent out most of it.
You need to move. You must live in California or New York.
One of my favourite videos on youtube.
“Because I don’t call anyone dumb......on the air” hahaha
Wish there'd be some elaboration on the "shortest path to wealth is being debt free." What? Lots of very wealthy folks would deeply disagree with this.
conor harrigan exactly. I like Dave Ramsey for his get out of debt advice, but his “wealth building” advice is absolutely horrible. There are far better sources to get an understanding of how to build wealth. You listen to Dave Ramseys advice if you just want to be an average middle class person for life.
There isnt a straight answer to become wealthy, but being debt free is very important. Obviously choosing the best option will always be situational.
@@Kennan_Davis Well how do you get wealthy if your saddled with debt. Dave's advise will help you become a millionaire with no debt. Rather than a millionaire with 500k+ in debt... See the difference.
NPC lol...Dave Ramsey’s advice is for people with little to no financial intelligence. You can utilize debt as leverage to increase your income and net worth dramatically more than you ever will being debt free. It’s call OPM, other peoples money. You should learn a thing or two about it and lose this bad advice given by Dave Ramsey. The fastest way to wealth is OPM, not being 100% debt free. Why do you think just about every corporation has debt on their balance sheet? Surely if debt was this evil boogeyman then they wouldn’t. Like I said, Dave Ramsey gives advice for people with no financial intelligence. The key is using debt to make you money. Not use debt to go on a shopping spree
Real estate debt is not really bad. Your home is providing you shelter as you pay it off. It is growing in value usually too. And owning often cost much less then rent once you have the down payment to get in to owning. Mortgage interest is tax deductible too so that can help save on taxes.
Since real estate goes up most of the time. It's silly to rent and save to buy cash when you could buy with a loan then work to pay it off. Say you want to save for a $150,000 house and it takes you ten years to save up the cash. Then in ten years the house will cost $ 200,000. You still can't buy what you could have with the loan. Real estate debt isn't really all that bad. Credit card debt is the worst. Never get into long term debt on credit cards.
It's not about what you make, it's about what you keep after the government done with you lol.
Depends on rent vs house payment and market projections in housing...how much for down.payment etc...
I'd be curious to know his advice for someone aiming to let. This scenario is for a couple buying a home in a residential area for themselves. What about a person currently renting, looking to buy an apartment in a busy city and renting out spare rooms to cover most if not all of the mortgage payments. In this instance, a person is actually making money from the debt and not paying rent. The risks are interest rate hikes and low occupancy rates (which would likely be a double-whammy as tenants likely dry up because rents elsewhere are cheaper - house prices are declining).
A big plus when buying cash is you can invest your savings as you reach the amount needed. It can take years to save for a house, as it did for me, but even if there's a housing bubble growing, there will be a stock bubble to invest into at the same time.
The interesting thing is the guy is "renting" a house...Lets say hes paying $24,000 a year: that seems like he'd be paying more to rent than in interest...
true but you have to factor in mortgage insurance home repairs property tax renting is alot better short term
@@willlyons6174 renting is better if you're only on a lease for one 12 month period. Anything longer you may as well buy.
In Central PA sometimes buying a house is cheaper than renting on a monthly basis. I bought a $65,000 two story house and the payments are $575/month. That leaves me plenty of income left over to max out my IRA.
"100% of 'em say you're stupid" 😂😂😂
Put the price of the house in investments, and mortgage it out, now you have the investments growing and equity on the house growing at the same time, that's what I'd do
I'm amazed Dave was able to build a successful business without borrowing.
He just kept reinvesting the money he was making from the book sales and financial peace sales.
Imagine your rent 700 a month but your dating $600 for your house a month but your house payment is $1200 a month... so why waste money on rent if you can just pay a house
Some people lose their homes for unpaid property taxes.
If you save up for 5 years, the property prices don't remain the same. It makes sense to get that bond, lock the property price, accelerate bond payments and use rent payments towards selling the bond. Where will you be staying in those 5 years?
Thanks Dave. I would like to see an analysis showing paying rent and savings vs buying a house and paying same amount on mortgage plus additional principle.
But think it's more than the numbers. I am worth almost $2M more in real estate from borrowing, but maybe I would've made more in investments. I would've made more since 2008.
I think it’s all about the peace of mind and flexibility. With a 15 year mortgage you are locked in on your debt. You have no control over. For rent and saving you are taking control of your debt to have no debt.
this made me cry
I'd say it depends how expensive the rentals are in the area
“100% of properties are foreclosed on Home with a mortgage.” He is forgetting about tax foreclosures.
There are almost none, I have a 200k house paid off, I pay 2k a year in taxes, now really think how few people really lose there house because of not paying tax, I mean it take 7 years, you could wait 6 take a loan out, and it would be only 10 percent of what your house is worth, and then if have to sell it, and walk away with money. in short very few people lose house by taxes.
In Michigan it takes only being behind on property taxes 2 years before it is seized and sold
Regardless it's still theft though if I never agreed to pay it
@@classicrocklover5615 woah thats harsh!
Depends on the area. Foreclosure laws are local. Sure, if you got a 1% rate and low appreciation you'll be fine. But if you have a 3% rate and high appreciation it's very easy to get into tax trouble. When you see that your tax bill is over $10K a year now when it was $5K 7 years ago it's clear to see that the state is the landlord. When I'm ready to retire I'm moving to a state with cheap real estate and low property taxes.
Go 15 years and pay it off in 2 to 3 years
you can do that? a 15 year contract being paid off within 2 to 3 years ? can you explain
Jhoge Luceno in the US you can by making extra payments to the principle. You don’t “prepay” it, you pay your principle down. That way you pay less interest overall.
As long there's no pre payment penalty. You can pay off as soon as you can.
waf4545 if you could pay it off in 2-3 years why bother to borrow lol
@@jinjielin4741 You're right... But depending on the market sometimes the longer you wait the more you pay. When I purchased my house I paid 40k more than my neighbors who had theirs built a year before mine. But 3 years later my house was appraised for 70k more than what I paid for it. Pretty much I'd have to save an extra 70k in order to avoid a mortgage...
Hi Dave - Do these same rules apply in the UK?
Can you do more videos for first time home buyers
🤷🏾♀️ We got a 30 year mortgage. We pay extra on the principal every month. My goal is to pay it off in less than 10 years. It’s doable if you’re disciplined!
In San Diego houses are 450k+, idk how I’m going to save that much or do a 15yr mortgage when I’m only making 75k a year.
Move! To Tijuana or Phoenix :-)
I agree 💯
If the interest is close to the cost of rent then buy it, you’re also locking in the purchase price of the house