Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit, you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 60s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement. I've made over 6 figures since then.
@@ThomasChai05I'm very much aware of the great benefits of working with a pro but I haven't found one for myself. Can you please share more info on the advisor that guides you?
As always, good and practical advice. In 2002 when we bought our first house, we qualified for $450k, but we told our realtor we only wanted to spend $300k. After our first realtor showed us homes in the $380k - 450k range and said that we would receive salary increases to cover the cost, we eventually fired the realtor and got another realtor. We purchased our first home for $300k and never regretted not being house poor. My wife and I both switched to lower paying lower stress jobs and were able to continue to pay the mortgage. Now it is paid off.
I’m closing in on retirement, and I'd love to move from Minnesota to a warmer climate, but home prices are ridiculous now, and mortgage price skyrocketing on a roll... do I wait for a crash, or go ahead and buy house anyways?
Consider hiring financial advisors, estate planners or tax experts. They can provide specialized knowledge and help you navigate complex financial decisions. Right now treasuries and HYSAs pay 4.5-5% risk free, do that.
Agreed, instead of panic or following a hearsay, I simply adopted the service of an advisor early 2020 amid covid-outbreak, and so far, I've attained my most measurable financial milestone of $650k after subsequent investments.
When I curiously typed in her entire name to search online, I saw that her site was highly ranked and really professional. Thank you for sharing this; it has stoked my desire to achieve my objective again.
I bought my first house at 22 years old in April 2008 for $260k, the ARM loans were all over the place but I insisted on a fixed rate 30 year. We did go FHA with 3% down, 5.5% interest. During the crash that immediately followed, it sucked to see my house value fall to $180k. But my payment was always the same and we never had a problem making our payments. We had at least 3 friends lose their houses to foreclosures during the crash. Thankfully we kept ours. In 2019 we bought another house and kept the original as a rental (which turned into a nightmare during covid and we lost thousands and thousands, a whole separate story). But we still can afford all the payments. The house is worth $520k now and we are currently deciding if we should sell or continue to hold as a rental (we refinanced to 3% in 2020 so it's hard to let go of that...) Moral of the story, only sign up for a payment that you can comfortably afford with your current situation.
I'd also sell, and put the proceeds into high dividend low fee index funds. Let it reinvest until retirement, then take the dividend to supplement your cash flow.
Another thing that's weird about the "Your house will appreciate and you can refinance to lower a rate in a year or two" logic is that during the refinance process, your house will be reappraised at the higher value, which will raise your property taxes. My friend fell for exactly this a few years ago, put a ton of sweat equity into his home, and when the reappraisal came in during the refi, his property taxes jumped up so much that the refi to the lower rate barely changed his monthly.
I always ponder if Cali had normal property taxes would their housing costs be 5X what the house should actually sell for? When I lived in Santa Barbara in the 90s a crappy 60s never updated 1500 sq ft ranch could sell for $800K. Would it sell for that much if they had TX property taxes?@@ezekieloruven
Inventory down so much compared to ‘08. And like you said, mortgage requirements are so much more strict. Back then, people’s dogs were literally getting mortgages 😂
Dogs getting mortgage 😂…so true, I put 100 thousand grand downpayment and still lost my home. Wished I would have waited as I was told by my friend, I would have bought a great home for half the price if I had just waited. Oh well…
@@Daniel-xb4ybjust cause theyre ready doesnt mean theyll be able to. Affordability is at an all time low, people are over leveraged and the economy is getting worse. 2008 crash took around five years to fully happen, wouldnt be surprised if the same thing happened this time
Every one of the emails he went over, I was thinking that sounds like a very reasonable purchase price. Today, 2-4x those numbers. Wages have not gone up 2-4x in that time. And that is why the housing market is in serious trouble. 😉
I decided that I could COMFORTABLY afford a monthly mortgage in the $2100-2500 range. When I told my loan officers the properties I was interested in, they punched in the info. (350k home, $6500 taxes, 7.8%, 5% down.) I'm using very rough numbers here, but they gleefully said "Estimated comes out to $3200 a month!" I nearly fainted. That was for a 3-bed, 2-bath, 2-car garage house, good condition, fantastic neighborhood I was gunning for. I was planning on buying it right the first time, and staying in the home for at least 15-20 years. My new solution is this: I'm going to buy a $240-260k home with less than $6000 taxes. What do I do to achieve this? Well basically, I had to dump all my requirements except the bare essentials. I'm doing a 2-bed, 1-bath, 1-car garage, okay condition, slightly worse neighborhood, but still close to highways, family, & shopping areas I like. NOW I'm in a starter home, and that knocks my payment down from $3200 a month to a $2400-2600 a month. This is MUCH more doable, but I'm making it my mission to pay it off aggressively like IT IS a $3k+ monthly mortgage, so that I can pay more towards the principal, less to interest (profit for the bank!!) and gain equity sooner so I can sell the house from a much stronger financial position in the future, and FINALLY get the house I initially wanted to buy. Being financially literate means making great sacrifices now to get ahead. Wish me luck 🤞
Here to say that your sacrifice will be worth it. It's better to have money in the bank than have a bigger house to impress people. Less bills to stress about = more life
Here's why today is so much worse than anything since the 1930s Great Depression. Imagine in 2007 making $50,000 and looking at homes that are $160,000. You pull the trigger, and 18 months later you either lose your job or get your hours scaled back (loss of income or reduction of income). Since 80% of people back then live paycheck to paycheck and don't even have 2 months emergency fund (identical to today) they get foreclosed on as unemployment rapidly more than doubles from 3.9% in 2008 to 10% in 2009. That was the story for millions of Americans from 2007-2009. Today though, we get to look back at 2020 to early 2023 when interest rates were sub 5% and loans were still easy for people making under $70k. So the craziest thing to consider is that by the peak of the 2007 housing bubble, the median US income was $52,000 and the median home price sold was $257k, which is 4.94x the median income. That's THE WORST it EVER got for the housing market bubble. Today, the market has peaked in Q4 of 2022 with the median home price sold at $479,000 and the median US income at $70,000. That is 6.84x! That's SO much worse than 2008 it's not even comparable. Here's where it gets crazier; In 2006-2008, groceries, transportation, insurance, utilities and ALL other costs of living remained unchanged, while today ALL of those listed expenses are up an AVERAGE of 40% from JUST 2020-2022. This WILL be the worst crash since the great depression. There are millions of people from 2020-2023 who bought $300k+ homes making under $70,000 a year. If and when unemployment rockets upwards, the foreclosure crisis we see and 50-60% crash thereafter will make 2008 look like a bump in the road.
I agree with all of that until people who bought in 2020 and 2021 being foreclosed on. With a low rate their loan has already amortized well in three years. And if housing prices dropped 30% they still probably wouldn’t be underwater. Even if they were underwater they can rent out or get a roommate with their low mortgage payment. Everything else you said I thought was spot on and something crazy is about to happen
@@claytonelofgren Fair point, and to be clear some markets will only drop 20-30% and of course 90+% of these people won't lose their homes, but there will be markets where we see 50-60% declines like we saw in 2009-2010. It'll ultimately be the unemployment rate that causes more foreclosures among these people even with 2.9% interest rates because when your $400k home is then worth $190k and you lose your job and nobody's paying to rent even at your mortgage payment, I think that's what's coming for many.
My husband bought his house during the 2008 housing crash. Had a secure job which probably saved him. Bought it for $200k and it is now worth $500k. The payments are $700 while everyone else buying a house has to pay a good $2k for their mortgage. He got lucky it sounds like.
I am 45 now and am perplexed at people my age or a little younger taking out 30 year mortgages AND based on current salaries even though their salaries are peaking. As opposed to 2008 when 30 year olds bought normal priced homes too and grew their salaries. Now seems worse
I’m with you on this. My wife and I are in our early 40’s and we both arrived at this age debt free with good jobs but no house. We are considering buying one but we are looking at a mortgage of $5-$7k a month on a 30 year when we can rent in the same neighborhood at $3-$4k. Last time I bought a house was Feb 2008 and it feels like Groundhog Day because we are looking at the exact same situation. Rates and prices are high, and well above cost of rent and back then I bought anyway and short sold 4 years later because I needed to move and could not rent it for even close to what I was paying. I think it’s clear we need to wait.
I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.
The enduring US stock market bull run evokes a mix of fear and excitement, presenting opportunities with insight, resulting in $780k gains in the past ten months, utilizing a portfolio advisor for a well-defined strategy.
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
It’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
A lot of folks have been going on about the bull rally and said stocks that would be experiencing significant growth, any idea which stocks this may be? I just sold my home in the Boca Grande area and I’m looking to remunerate a lump sum into the stock market before stocks rebound, is this a good time to buy or no?
Such market uncertainties are the reason I don’t base my market judgements and decisions on rumours and here-says, got the best of me 2020 and had me holding worthless position in the market, I had to revamp my entire portfolio through the aid of a planner, before I started seeing any significant results happens in my portfolio, been using the same advisor and I’ve scaled up 750k within 2 years, whether a bullish or down market, both makes for good profit, it all depends on where you’re looking.
True, we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
Having a fduciary is essential for proper portfolio diversification to make gains. My advisor is LOREN LENA WALKER who is easily searchable and has extensive knowledge of the financial markets.
Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
I remember it so clearly when you had less than 5k followers. You have come a long way dude. I also remember you went out of your way to find me a realtor to buy my first house in 2021. Complete badass man. Wish you all the success!
The best advice I’ve ever gotten. The price of the home doesn’t matter. Either you can afford it or you can’t. It’s not fancy or sexy. It’s simply get a payment you can afford and don’t worry about it gaining or losing value.
That's the worst advice I've ever heard, unless you're talking about paying cash OR if you have 2-3 YEARS worth of expenses in a cash emergency fund to tide yourself over in case of an extreme market downturn accompanied by 9+% unemployment. Want good advice? Pay attention to the ratio between median home price sold and median US income (or wherever you live). In 2006-2007 at the PEAK of the bubble, the median home price was 4.94x the median income. Today it's 6.84x. This is the single largest bubble in human history and it's not even close.
@@enthused7591If you have the means to make your payments, economic downturns become inconsequential as history has shown steady rebounds. Similar to the stock market, refraining from panic selling is crucial. Living within your means and choosing a home that fits your budget have been my guiding principles. Regardless of whether this advice is considered unconventional, it has allowed me to acquire multiple homes without complications during economic downturns. Staying within budget on mortgages provides the leverage for further growth. The challenge for many lies in their hesitance to take any path. Instead of worrying about heading in the perfect direction, they often end up going nowhere. Numbers are objective, and if they add up, it simply makes sense.
We bought a home in Avondale, AZ in Dec 2007. 30yr mortgage fixed at 5.25%. By Dec 2010, the other builders in the master planned community went belly up. There were dozens of vacant spec homes. There was excess amounts of housing worth almost nothing. It's crazy to hear about housing shortages now. BTW, it took 10 years for the home to be worth what we paid. Now it is worth more than double what we paid. Weird turn of events.
@melinda67 It was a very scary time. People were losing jobs and homes left and right. Lending standards were under scrutiny. The houses couldn't even be rented. There weren't enough people to rent them. Many homes were bank owned, cash only auction houses. I was also 26 with 3 kids at the time. I didn't know.
I live near there too. There were so many vacant homes in 2009. All kids had to do was find someone with a realtor key. Then bring speakers and drinks. Then it was a house party
Even smaller townhouses in my area going for $100,000+ more than 3 years ago. Even if the market prices drops I don’t see it lowering to below previous values.
In 2020 i got pre approved for 350k, but chose to aim for 200k. My realtor kept trying to get me to aim for at least 300k. I cant stand being a broken record so by the third time she didn't start showing what i wanted, i dropped her and found someone better. I bought for 215 and have more than doubled my income since then. Im so glad i did what i did cause im very comfortable now and able to adjust should anything happen with my current job with much kess stress. Stress kills guys.
Phoenix was absolutely destroyed during the Great Recession. I was able to get a house for $40k in 2011 at 20 yrs old. Still live in it and the comps around are mid $300s to low $400s. Sure I can sell but then what? I have to live somewhere.
Closed on a house last monday at 6.875%, which was from a rate lock in mid September 2023. I could afford sooooo much less than i could this time 1-2 years ago (even at a lower salary) because of the rate hikes, but because I waited I was able to put down a generous downpayment. First time homebuyer, credit rating in the high-700s low-800s. 28 years old. Going it alone, single income, which I can.... juuuuust squeak by affording while still saving 10% of my income. Oh well. If things don't work out with my partner moving in next year, I could always rent out the second bedroom! :/ Fingers crossed it works out, because closing costs were so high I barely have an emergency fund anymore. ugh.
"21 was a dumb age!" man i made terrible housing decisions during that time . Thank you for the practical advice javier. 21 year old people should take note of these practical and rational advices.
At 28, I bought my first home in 2009, a 5BR/3BA on a 0.5 acre lot for $140k in a short sale. So glad I listened to my common sense to wait for a crash when everyone was telling me to buy buy buy in 2004-2008. After it crashed, and the $8,000 tax credit was offered in 2009, it was finally was enough to get me to buy my first home as a single bachelor. I qualified for $450k through Wells Fargo, but I only spent $140k at 3% fixed. Got married and my wife and I sold it for $350k and consolidated to her house. We have a lot of equity with a $1,200 payment, and $260,000 yearly income here in the Midwest. We’re not in a hurry to move with two kids, but if the prices crash again, it might be incentive enough that we will move up again.
@@ichoosewombo2124 I wouldn’t say rich, but we are comfortable and secure for the time being. I also keep old paystubs, from 2002 when I was making $8/hr just as a physical reminder how far I’ve come and be smart with every dollar I earned.
I wish I would have watched more of your videos before purchasing this week. But I also like the house, the area/neighborhood, and the amenities. But I will continue to watch because you’re right I need to think of this as my forever home not my starter home.
Bought a home last 2007, hiring a practical realtor like javeir helped us way a lot. We're now debt free and have fully paid our house. I somehow relate to what javier is talking about. gladly i didn't stretched out my budget during that time. we are now planning to have our 2nd home and will surely follow it the Javier Vidana way🤩
We bought in 2005 155k 5.5% and we didn't like it, we were in a crunch. So after hardships and modification, we short sold it in 2013 for 78k. When we were buying in 2021 #1 priority was that we really like it and so it was not fomo this time. We're in great financial situation and love our home at 2.37% $390k in NE Florida.
I genuinely hope your financial situation is excellent because buying a $390k home in 2021 is going to be like buying a $160k home in 2005. It's going to be worth $250k in 2025.
I'm buying right now, in my hometown there's a lot of people buying houses for cash . Interest rates are pretty high right now but I was able to get a 5.25 fixed at the lowest rate and that's through a local bank. Look local don't get a mortgage from a big bank.
That email was wild, the lenders sound just as bad as the lenders from 2005-2008. I never forget when I was 18 (2008) working at Office Depot in high school, .my manager and his wife wasn’t making crazy money - they got a home built and a full year later he was talking about being upside and having to sell it. He was a really nice guy but looking back on there situation now it really affected him mentally.
Insurance cost and taxes have gone crazy due to the wild climb in home valuations. My mortgage is barely anything compared to these rising costs. It is nuts.
I bought a house in 2005 and got wiped out on it. It was one of those 0% down, two mortgages at 80/20 (interest rates were like 8% and 12%) so you didn't have to pay PMI. Which is crazy considering PMI is for the bank. Anyway that house is still inflation adjusted under what I paid for it. My wife and I are trying to buy a new home now, but I'm far more cautious since it appears housing is too expensive versus incomes. I don't really want to be inflation upside down again even if it doesn't matter.
People are going to be wiped out on an entirely different scale than 2008-2010. Homes are 30-40% more expensive across the US on average when adjusting for inflation than 2005-2007. Where I am in Florida, people are paying 110% more than 2 years ago for a home, which is 100%+ more than peak 2005-2007 bubble.
the first thing that stands out to me is he was 21, the time where you save for a deposit and buy a house at 21. now the deposit alone takes like 5 years to save up.
9:55 while he made the right call the appeal is if he had bought $500k and was able to hang on he’d be a millionaire since $150k turned into over $400k. I wish I bought a 400-500k home in 2019 even if it would’ve been tough
I bought in August. Closed on 8/1. My house was originally on the market for $245k, but I got it for $230k. Was able to cover closing, 20% down and moving costs without touching my emergency fund. My rate is 7%, even with a high credit score, but my payment is affordable. Its equal to or less than rent for a two bedroom apartment in this area. And I have a yard for my german shepherd. I know I'm lucky in some ways for that to be possible. I have a good salary and lived with my ex for 8 years, so we were each able to get debt free and save in that time. So when the relationship ended, I was able to jump straight into buying. Plus channels like Javier's, Kristina Smallhorn and Win The House You love made it feel achievable instead of frightening. 😊
@@spicycandyapple 30% where? In Florida where I live, homes are up 110% in 2 years but have dropped 7-8% in the last 8 months and are accelerating wildly now. This is the largest bubble in human history, over 30% worse mathematically than peak 2006-2007.
Hindsight is 20/20, but why would you ever get an ARM if your interest rate is only 2-3%? What was the logic of people pre-2008, interest would at one point disappear?
Honestly with the prices of homes and why would you buy? On top of the rates. CDs are getting almost 6% (5.75 ) for 12 months. Cash out your home and rent. Put that 100-400k in a CD and make 15k plus a year until prices come down. The economy is hanging by a string from car market to house market. And the crash will not be like 08.... that's what they all say. Until people stop moving, stop buying 60k cars, people stop buying crap homes for 200-300k. Taxes, insurance are catching up to these home prices too. Taxes then go up the following year while values are starting to level off and go down. And school loan repayments started again. All less money into an economic running like a runaway train. There is at LEAST a 20% drop coming. And then that usually snowballs. 3 of the top 5 banks already filed for bankruptcy in the last year (in the US). What does that tell you?
your videos are always helpful Javier I appreciate you bringing in different scenarios cus everyone is different. You were a valuable resource when I bought my crib last year man! GGs my boi!
I was a 1st time buyer in 2008 while stationed at Ft Hood. Lost $20k when I took orders and moved/sold 5 years later. Looking to buy another house now, and the PTSD is real.
Im not concerned about the interest rate even though it's high. It is what it is. What the most important is the price of the house. You dont buy a 40,000 car if you cant afford it. My budget is 350,000 top so the house has to be under that. The monthly will be what it will be
I got a loan for an $189K home straight out of law school in 2006 with no savings and no income. It was a 7.25% fixed rate. It’s shocking how easily I got that loan. Funnily enough in 2007 I was working for a foreclosure firm because that’s where the jobs were. And you’re right, most of the loans I saw were ARMs given to people with zero fiscal responsibility. In 2010 when I refinanced with an actual income it was much more difficult and I had to jump through a lot of hoops because of my outstanding $180k+ student loans. We’ve ended up staying in this house since we missed selling at the peak of this boom and plus buying was insane, with every decent place being so bid up. But now I’ve got a house with a good amount of equity and unless some great deal comes up this is where I’ll remain for now.
If available young families should speak to builders, sometimes they offer great incentives, buydowns, for instance we got a 5% and closing cost paid and 10k in upgrades.
Randomly came across the video and loved the content! Yes I'm a firm believer of not over leveraging yourself and living under your means (at least in your growth phase). I bought a house 2 years ago in an expensive market; coupled with a Fixed 30 yr conventional loan + few real estate strategies (House hacking + BRRRR) am able to live for free. As for the SAVINGS bit, I agree save when times are good but it's better to optimize those savings by investing strategically to get to your next growth point. All depends on how quickly you want to grow and how much risk you are willing to take!
I’m here in SoCal and during 2010 I was in the market to buy a home since properties hit rock bottom at the time. I was qualified to buy a home, I put in 24 offers for homes under $100k, not offer one was accepted or countered. I believe most where bank owned and probably sold off to big money private equity.
1994 first house put 10% down $127900 was a short sale in 2 yrs I was up side down, but my dad said you have a place to live and might go back up again 1999 I sold for $165k house I bought in 1999 a 3 unit building in 2000 I never could save to buy a first house or buy multi properties ,2004 did look at homes, prices where to high ,bad loans , still have what I have never selling. myloans are under 4%,advise for a first time buyer move to a low cost area if you can
The big difference between then and now was that lenders were pushing ARM and Balloon loans on people that they KNOW could not afford the interest increase, it was the result of predatory lending practices. Now, the interest rates are just high…it is better to buy now and refinance later when the interest rates drop because they will eventually drop, maybe not back down to 3% but it will drop and when it does people are going to be scrambling to buy!
Here in Florida, a house that had crashed down to $50,000 in 2011 is selling for $350,000 today. Same house was $160,000 in 2020. It's the single largest bubble in the history of this country. At the peak of the bubble in 2006-2007 the same exact house was $150,000.
As long as you can afford it and are okay with taking on the risk of a potentially depreciating asset in the short term it’s most likely okay (you will almost certainly make equity long term). It comes down to your situation and risk tolerance. Where it becomes dangerous is when people become over-levered while ignoring the current red flags of the lagging inventory situation with the most inventory under construction ever (substantially more then the 2006 peak). Look up Fred UNDCONTSA. That is the federal reserve chart that shows that there isn’t so much a lack of inventory as there is a lagging inventory issue.
The value in property really doesn't keep up with inflation. House bought in 2005 for $240,000 selling in 2023 for $299,000 With inflation the 240,000 should be worth 379,000. Value did not keep up with inflation
I'm 31 and missed my chance to buy a house. I could easily afford to put 20% down payment on a house in 2019, up until before house prices and interest rates surged. Next best thing for now is CD's or 5% money market for the time being. Fortunately my parents (who have been renters their entire lives) purchased a house in June of 2020 for $100,000. It was a decent house in a rural small town, but they got a great deal. According to 4 different websites the current price of the home right now averages out to around $183,000. No it's not a million dollar house, but the percentage rate increases that are just insane the last few years. Add in the high interest rates and it makes it nearly impossible to buy. In the city where I work there's only 1 house listed under $250,000 for sale. The only way to be able to buy right now is for house prices to decline, interest rates to come down, or income to go up. I feel like it'll be at least 5+ years for this, this sucks.
My friend just bought a new build home for right around $700k. They started the process almost 2 years ago and finally closed and moved in August. Her finance is a mortgage lender and at the time they started the process was making a killing due to the refi boom. Fast forward to this year, they needed a co-signer in order to still qualify for the home. I really think they are over extending themselves and I’m worried for them 😢 so many people are believing that they can just refi later once rates drop but not even thinking about all the other factors that are at play
If you know someone who has been paying on a mortgage for more than 12 years with an adjustable interest rate. Ask them how many of those months were at a high rate, and how many of the months we're at a low rate. The statistics of a mortgage holding at a higher rate are very sad. There is insurance, for when your adjustable rate stays consecutively too high, and you cannot afford your monthly payment. Unfortunately these insurances are so damn expensive, the average person cannot afford them.
Dave Ramsey's advice saved our butts. Don't buy a house unless you have 20% down, and can buy it on a 15 year mortgage with the payment being less than 25% of your take home pay.
I bought my first house in 2018, I was so upset because I thought I overpaid. I was living paycheck to paycheck and was so house-poor that I was eating Ramen. I just sold that house for more than three times what I paid for it. I downgraded to a condo, bought in cash, and now have over $200k left over in a high interest savings account. So happy! 🥳
EXACTLY❤❤❤❤ PEOPLE keep dreaming: real state crash, instead save save save , emergency fund, bigger down payment work more, get more income, get out of debth, instead of waiting for a crash ❤❤❤❤❤❤❤❤
In 2012 I felt they were still pushing more than one could afford. I was in my early twenties then, had 10s of thousands in school loans, and car debt (it was dumb to buy a new car right out of school). I figured out how much i could afford, carefully budgeted all my expenses, calculated the mortgage payments and bam the bank told me i easily qualified for 2x what i was asking. I knew i couldn’t afford that and they argued that i was selling myself short and would be unhappy. I stuck to what i thought was right, and used government programs to lower my down payment. Money was tight for a few years, but I paid off the car, the student loans, then paid the principal enough to drop PMI which made life much easier. Now with all the inflation having a fixed rate mortgage from when the housing market bottomed…I consider myself lucky seeing what rents and houses go for these days.
I make ~270k/yr in Seattle. I have a wife and 2 kids. Current rent is ~4k/mo. Buying a home terrifies me. Right now if anything happens to me or my career, my family will be fine. If we were to buy a house right now and anything bad happens, I have no idea what collapses financially. My family comes first. I’m not willing to wager their financial security on anything that is yet to come. I don’t care what the house is worth. I don’t see it as an investment. It’s either a place to live, or it’s a financial trap. The housing market feels like a giant scam. If you ask any realtor at any point in time, “Now is the perfect time to buy!”. Yuck.
Loans were complete crap back in 2005. I went through Country Wide. Failed company. They qualified me for 784K. I ended up building the house for 368K which still ended up as too much once I went through 3 pay cuts of 10% each, lose of mileage, loss of medical, loss of matching 401K. Ended up selling the place for what I owned plus commission in 2011. But holy heck if I would have actually built a house for their ridiculous number. Only good thing was credit was not effected. Lost what I put in but learned a lesson that now has me in a paid off home and a second paid off home. Don't fall for stupid advice that a lender is providing...
Bought in April 2022 in the Bay Area in CA on a single income. The interest rate was at 4.7%. The house value has pretty much flat-lined at what I bought it for.
I'm closing on a house next week. I follow and trade markets so I wasn't ecstatic about buying right now, but you do what life tells you to do. Even at this interest rate, my total monthly costs is still far below the price of an apartment with comparable square footage. I can't really articulate how lucky I feel, most houses in my area range from 300-500k while the median income is a bit over 50k a year here. Can't see prices going much higher until wages go up, unless larger households with multiple adult cosigners become widespread.
Question for you or anyone here who is fairly knowledgeable. Houses in my area are generally about 450k. I've got enough to put down 200k and I'll have a payment of roughly 1800$. I make about 5k per month. Additionally I have about 90k in taxable investments. Does buying now seem reasonable? Additionally should I sell some of those taxable investments to lower the payment even more?
You buy a house when it’s the right time and you can afford to pay the mortgage comfortably not overstretching. Ideally you want it 30% less than your income. Also if you have any consumer debt like credit or student loan. I’d say try to pay off everything first. You want to be debt free as much as possible. It’s also easier for banks to approve you for loan. Make sure you shop around for rates. I advise get 4-5 lenders and compare. The lowest the better or more savings. Use the small banks they offer lower rates than big banks or use the independent broker they have access to multiple lenders. I used a broker last year. The average rates were 5.5. The broker gave me 4.375 and he beat all the small banks so I went with him. Also it helped me because I had 820 credit score. Also make sure your credit score is high. Good luck to you
I truly feel like any realtor that cons you into a house should face criminal charges. It’s tantamount to defrauding someone for a few thousand dollars of commission. It’s like a pyramid scheme. They work because the people doing the selling is someone you think you can trust.
I make $27k/yr (disability + part time income). Bought a condo last year for $141k with a 5.625% loan using a bunch of downpayment assistance. My monthly payment is less than it was in my old studio apartment that was 1/4 the sq footage. I've been able to make a few extra payments and the value of the condo has already gone up $30k in the year I've owned it. I have a very stable job, an emergency fund, and I'll always have at least some money coming in from disability, so it feels like things will continue working out well!
People need to understand the monthly payments are no joke! There are many points of failure that would cause you to fail to keep up with the payment. Being sick, unexpected spending, lost of a job! Mostly unpredictable things! And even when you are paying...you are stuck in your job that you could be hating on! Due to the high monthly mortgages, you won't have time to recover, you could quickly go into debt that would ruin your credit, your family, your life! It's like a bad marriage where you are the man!
As a loan officer, people need to do there own research. It’s not my fault if you make a shit decision to buy a house that’s not worth the money. That’s why we don’t fund loans for people who can’t afford them
The problem is though is I think they should work towards putting people in houses because apartments and rentals are expensive anymore and we should have the predatory stuff these days because the house prices are three 8480 to 500 K compared to what was in the early 2000
I feel for the first time home buyers today. Some of my close friends and family members are renting and have been turned down/off on purchasing a home. I bought my first home in 2010 right out of college under my parents advice in California. I was 25, single and was making $23 an hour. I was able to get a FHA loan at 5.75, took advantage of the “Obama” credit and down 3.5% on a 180k house. Fast forward to now, I am married with 3 children. I refinanced my mortgage in 2019 to get rid of the PMI at 2.79% and my house is valued around $500k. My wife and I have been looking to get a bigger house in a better local area, but we are staying put with our combined $150k yearly salary. Even though we have home equity, I can’t imagine paying more than 40% of our net income toward a new purchase.
I bought a house with my girlfriend this year and the mortgage is about 30% of our income. And we couldn't be more happy about our decision! We ended up getting a 3 bedroom, 2 bath, with a 1 car garage, and me and my girl are both 22 years old and plan on starting a family with this house so that's why the rates now don't really matter. Because we know we will stay here for at least 20 years. Don't get discouraged guys, just do the math and if it lines up do it, and if the math doesn't work DON'T!
If you can buy a house with her, marry her. If you can't marry her, you made a mistake. Best wishes though. Sounds like you are planning your futures together which is great...so....put a ring on that finger! 😊
I bought a house this year and I was told that I couldn't apply for less than 50k as a mortgage, it would have to be done as a personal loan. As bad as mortgage rates are, I am not getting into the business of personal loans, if I can help it.
It was 2010 i was 20 yrs old. I was working in fracking in North Dakota and during Army reserves after doing 3 yrs of active duty at the time. I was able to save $70k and bought a duplex. Things picked up fast in Afghanistan so i reactivated myself of course for promotions and money. Now medically retired from Army. The duplex generates net 2600 a month. Wife now has a medical career and i have cybersecurity career. We were recently living a rural 3000sqft home but the school district sucks and so we rented out that place and had to move back to city and we bought a 1500sqft nice school district. I was approved for 650k. We bought a 200k house. No way in hell im buying a $600k home in this market.
I bought my house in 2012 for 1.24 mil and i couldn’t be happier i didn’t listen to my realtor to over buy. I stayed within my budget. I’m 38 now and only 4 more years till this one is paid off
But those predatory loans are still being written. How else can you explain a factory or in my case, a warehouse worker on the floor getting a $500K up to a $700K loan while making $75K a year. This is Southern Ca. housing and I work with many co-workers that have purchased these homes in the last few years. I don't know the mechanism for how they are written but then I didn't in '06 either. I just knew the numbers didn't make sense then and don't make sense now. My question is who is buying these loans once the banks and other lenders make them? It was mortgage backed securities being bought by pension funds and investment firms then. Is it REITs now? Is the FED buying them?
Is it bad to buy a house if you're hoping to get picked up for a better position that will make you relocate in 1-2 years? $255k house, 7.35%, $1600 after all bills including mortgage minus food and gas from my salary alone. With my wife, add $2k to that. $3600 before savings and we have a dog. We were thinking of renting it out when we relocate. $3600 sounds great but it still scares me. Any insight please? Thanks! Love your videos. Been watching you a lot lately!
A majority of people say don't buy unless your planning on staying 5+ years. Now maybe even longer then 5+ years with interest rates so high. If you do plan on renting it out in the future have you researched how much the market rent is for similar homes in the area? Will you be able to manage your home from a distance? Will you get less property tax exemptions for using it as a rental (thus increasing the mortgage payment)? Make sure you research as much as possible before you make a decision. Good luck.
5:00 spot on! What you sign up for today is what you get, and what you contract under. No rate change in certain in the future. What is certain is the terms you signed for today. You don't "date the rate" you get married to it through a contract. And later you may decide to divorce the rate and it will take half the house with it.
I was 23 making $12/hr and going to school; I qualified for a $450k loan in 2007. In addition, They used my mom’s income even though her name wasn’t on the loan. She lost her job during the crisis and I couldn’t make the neg-am loan payment of $2k month (nothing even to principal, in fact I was under water more with every month). I agreed to short sale the house. Sold for $275k. I had no clue at that time what type of loan I agreed to; except the fact that the lender kept saying it was fine and they’d make it work. I wish I knew now what I didn’t then. Super stressful time in my life. I felt like a failure because I lost my home
So having bought a home in 2022 with a 45k down payment for a 145k house with a fixed 5.something% for 30 years and no intention to sell it until it's paid and I'm 30 years older...do the changes of the market matter at all to me? Honestly asking I know about as much about home ownership as I do being 31.
Morgage lenders are starting to do wild stuff again.... We just bought our first house in July with a fixed rate in the 6% ... the qulified us on our gross income of 200kish with a limit of 925k.... lol I was like thanks but no thanks and bought a house for 480k with 5% down...and the month payment still sucks at that....I cant imagine what it like for those that take there home budgeting advise from the lender..... lol
It depends on your equity percentage, but yes. The problem is made worse for people with low down payments and at the top of their budget because mortgage payments hardly budge the principal balance during the first 5+ years with almost everything going to interest. It’s a double edged sword though because if property prices increase, the initial investment is leveraged. It’s just that many people haven’t experienced a market this in their adult lifetime.
IMO, it's not the house prices that make getting a house hard, it's all the extra bullshit on top like the interest rates, the closing costs, property taxes, and any random fees they toss into the mix. MAYBE I'm doing the math wrong but let's take a 500k house, divide it by the loan term which is usually 30 years to get how much you would pay yearly: 500,000 / 30 = ~16.6k. So you would pay about 16.6k yearly, now take this number and further divide by 12 to get your monthly payment (here I just rounded up to the nearest hundred): 16,700 / 12 = ~1391. So technically, accounting for JUST the price of the house you would only pay about 1390 per month over 30 years on a 500,000 home. Am I doing something wrong? ANOTHER THING, how can we have affordable homes when everyone expects the price of houses to appreciate in value all the time always? Those two things cannot co-exist in the same market. I just feel we shouldn't treat houses as an investment opportunity
Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit, you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 60s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement. I've made over 6 figures since then.
@@ThomasChai05I'm very much aware of the great benefits of working with a pro but I haven't found one for myself. Can you please share more info on the advisor that guides you?
CAMILLE ALICIA GARCIA maintains an online presence. Just make a simple search for her name online.
Thanks a lot for this recommendation. I just looked her up, and I have sent her an email. I hope she gets back to me soon.
As always, good and practical advice. In 2002 when we bought our first house, we qualified for $450k, but we told our realtor we only wanted to spend $300k. After our first realtor showed us homes in the $380k - 450k range and said that we would receive salary increases to cover the cost, we eventually fired the realtor and got another realtor. We purchased our first home for $300k and never regretted not being house poor. My wife and I both switched to lower paying lower stress jobs and were able to continue to pay the mortgage. Now it is paid off.
Firing the realtor? wow that's a bold decision to make but it eventually became very helpful and practical. Congratulations guys!
AI
And now that house is worth $750k and people starting in your careers would be extremely house poor trying to buy it.
Perfect example on how financially reasonable decisions today can reap lasting benefits for our future selves. Congratulations!
Love that ! 😂
I’m closing in on retirement, and I'd love to move from Minnesota to a warmer climate, but home prices are ridiculous now, and mortgage price skyrocketing on a roll... do I wait for a crash, or go ahead and buy house anyways?
Consider hiring financial advisors, estate planners or tax experts. They can provide specialized knowledge and help you navigate complex financial decisions. Right now treasuries and HYSAs pay 4.5-5% risk free, do that.
Agreed, instead of panic or following a hearsay, I simply adopted the service of an advisor early 2020 amid covid-outbreak, and so far, I've attained my most measurable financial milestone of $650k after subsequent investments.
When I curiously typed in her entire name to search online, I saw that her site was highly ranked and really professional. Thank you for sharing this; it has stoked my desire to achieve my objective again.
why not rent and wait to buy?
I bought my first house at 22 years old in April 2008 for $260k, the ARM loans were all over the place but I insisted on a fixed rate 30 year. We did go FHA with 3% down, 5.5% interest. During the crash that immediately followed, it sucked to see my house value fall to $180k. But my payment was always the same and we never had a problem making our payments. We had at least 3 friends lose their houses to foreclosures during the crash. Thankfully we kept ours. In 2019 we bought another house and kept the original as a rental (which turned into a nightmare during covid and we lost thousands and thousands, a whole separate story). But we still can afford all the payments. The house is worth $520k now and we are currently deciding if we should sell or continue to hold as a rental (we refinanced to 3% in 2020 so it's hard to let go of that...) Moral of the story, only sign up for a payment that you can comfortably afford with your current situation.
If you are not required to pay capital gains on the rental home, sell it now.
@@mph5896 I would 100% sell if I didn't have to pay capital gains. But I will have to, and that's what makes the decision much harder.
I'd also sell, and put the proceeds into high dividend low fee index funds. Let it reinvest until retirement, then take the dividend to supplement your cash flow.
Another thing that's weird about the "Your house will appreciate and you can refinance to lower a rate in a year or two" logic is that during the refinance process, your house will be reappraised at the higher value, which will raise your property taxes. My friend fell for exactly this a few years ago, put a ton of sweat equity into his home, and when the reappraisal came in during the refi, his property taxes jumped up so much that the refi to the lower rate barely changed his monthly.
That's a great point, I never thought of that. Thanks for sharing
I never thought of this, thank you!
This depends on the state. California caps all property tax increases to 2% unless the property is sold.
I always ponder if Cali had normal property taxes would their housing costs be 5X what the house should actually sell for? When I lived in Santa Barbara in the 90s a crappy 60s never updated 1500 sq ft ranch could sell for $800K. Would it sell for that much if they had TX property taxes?@@ezekieloruven
Yep..same story for me..deja vu
Inventory down so much compared to ‘08. And like you said, mortgage requirements are so much more strict. Back then, people’s dogs were literally getting mortgages 😂
Dogs getting mortgage 😂…so true, I put 100 thousand grand downpayment and still lost my home. Wished I would have waited as I was told by my friend, I would have bought a great home for half the price if I had just waited. Oh well…
True and as much as everyone wants a crash theres so many people ready to buy and wanting to buy high demand and low inventory
@@Daniel-xb4ybjust cause theyre ready doesnt mean theyll be able to. Affordability is at an all time low, people are over leveraged and the economy is getting worse. 2008 crash took around five years to fully happen, wouldnt be surprised if the same thing happened this time
Every one of the emails he went over, I was thinking that sounds like a very reasonable purchase price. Today, 2-4x those numbers. Wages have not gone up 2-4x in that time. And that is why the housing market is in serious trouble. 😉
Yeah, it's not like lenders are issuing mortgages at 45% of people's income today. Oh, wait......
I decided that I could COMFORTABLY afford a monthly mortgage in the $2100-2500 range. When I told my loan officers the properties I was interested in, they punched in the info. (350k home, $6500 taxes, 7.8%, 5% down.)
I'm using very rough numbers here, but they gleefully said "Estimated comes out to $3200 a month!"
I nearly fainted.
That was for a 3-bed, 2-bath, 2-car garage house, good condition, fantastic neighborhood I was gunning for. I was planning on buying it right the first time, and staying in the home for at least 15-20 years.
My new solution is this:
I'm going to buy a $240-260k home with less than $6000 taxes.
What do I do to achieve this? Well basically, I had to dump all my requirements except the bare essentials. I'm doing a 2-bed, 1-bath, 1-car garage, okay condition, slightly worse neighborhood, but still close to highways, family, & shopping areas I like. NOW I'm in a starter home, and that knocks my payment down from $3200 a month to a $2400-2600 a month. This is MUCH more doable, but I'm making it my mission to pay it off aggressively like IT IS a $3k+ monthly mortgage, so that I can pay more towards the principal, less to interest (profit for the bank!!) and gain equity sooner so I can sell the house from a much stronger financial position in the future, and FINALLY get the house I initially wanted to buy.
Being financially literate means making great sacrifices now to get ahead.
Wish me luck 🤞
Here to say that your sacrifice will be worth it. It's better to have money in the bank than have a bigger house to impress people. Less bills to stress about = more life
Good luck bro, I’m thinking I’ll prolly pay off my house in the next 5 years or so too
Smart and not gonna make u feel headache for mortage
Bless you brother, best of luck in your endeavor!
Here's why today is so much worse than anything since the 1930s Great Depression. Imagine in 2007 making $50,000 and looking at homes that are $160,000. You pull the trigger, and 18 months later you either lose your job or get your hours scaled back (loss of income or reduction of income). Since 80% of people back then live paycheck to paycheck and don't even have 2 months emergency fund (identical to today) they get foreclosed on as unemployment rapidly more than doubles from 3.9% in 2008 to 10% in 2009. That was the story for millions of Americans from 2007-2009. Today though, we get to look back at 2020 to early 2023 when interest rates were sub 5% and loans were still easy for people making under $70k. So the craziest thing to consider is that by the peak of the 2007 housing bubble, the median US income was $52,000 and the median home price sold was $257k, which is 4.94x the median income. That's THE WORST it EVER got for the housing market bubble. Today, the market has peaked in Q4 of 2022 with the median home price sold at $479,000 and the median US income at $70,000. That is 6.84x! That's SO much worse than 2008 it's not even comparable. Here's where it gets crazier; In 2006-2008, groceries, transportation, insurance, utilities and ALL other costs of living remained unchanged, while today ALL of those listed expenses are up an AVERAGE of 40% from JUST 2020-2022. This WILL be the worst crash since the great depression. There are millions of people from 2020-2023 who bought $300k+ homes making under $70,000 a year. If and when unemployment rockets upwards, the foreclosure crisis we see and 50-60% crash thereafter will make 2008 look like a bump in the road.
That’s a very good comparison
Low unemployment rate is the only glue that is holding it together.
I agree with all of that until people who bought in 2020 and 2021 being foreclosed on. With a low rate their loan has already amortized well in three years. And if housing prices dropped 30% they still probably wouldn’t be underwater. Even if they were underwater they can rent out or get a roommate with their low mortgage payment. Everything else you said I thought was spot on and something crazy is about to happen
@@claytonelofgren Fair point, and to be clear some markets will only drop 20-30% and of course 90+% of these people won't lose their homes, but there will be markets where we see 50-60% declines like we saw in 2009-2010. It'll ultimately be the unemployment rate that causes more foreclosures among these people even with 2.9% interest rates because when your $400k home is then worth $190k and you lose your job and nobody's paying to rent even at your mortgage payment, I think that's what's coming for many.
@@YourRightSide And that glue is as brittle as glue gets.
My husband bought his house during the 2008 housing crash. Had a secure job which probably saved him. Bought it for $200k and it is now worth $500k. The payments are $700 while everyone else buying a house has to pay a good $2k for their mortgage. He got lucky it sounds like.
I should have been working a job and looking to buy real estate in 2008 instead of being 15 years old wtf
I am 45 now and am perplexed at people my age or a little younger taking out 30 year mortgages AND based on current salaries even though their salaries are peaking. As opposed to 2008 when 30 year olds bought normal priced homes too and grew their salaries. Now seems worse
I’m with you on this. My wife and I are in our early 40’s and we both arrived at this age debt free with good jobs but no house. We are considering buying one but we are looking at a mortgage of $5-$7k a month on a 30 year when we can rent in the same neighborhood at $3-$4k. Last time I bought a house was Feb 2008 and it feels like Groundhog Day because we are looking at the exact same situation. Rates and prices are high, and well above cost of rent and back then I bought anyway and short sold 4 years later because I needed to move and could not rent it for even close to what I was paying. I think it’s clear we need to wait.
I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.
The enduring US stock market bull run evokes a mix of fear and excitement, presenting opportunities with insight, resulting in $780k gains in the past ten months, utilizing a portfolio advisor for a well-defined strategy.
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
@@BiancaSherly-qt6sb Please tell me how to connect with an advisor, My funds are being murdered by inflation. therefore I'm looking for a more profitable investing strategy to put my portfolio
It’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
A lot of folks have been going on about the bull rally and said stocks that would be experiencing significant growth, any idea which stocks this may be? I just sold my home in the Boca Grande area and I’m looking to remunerate a lump sum into the stock market before stocks rebound, is this a good time to buy or no?
Such market uncertainties are the reason I don’t base my market judgements and decisions on rumours and here-says, got the best of me 2020 and had me holding worthless position in the market, I had to revamp my entire portfolio through the aid of a planner, before I started seeing any significant results happens in my portfolio, been using the same advisor and I’ve scaled up 750k within 2 years, whether a bullish or down market, both makes for good profit, it all depends on where you’re looking.
True, we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
Having a fduciary is essential for proper portfolio diversification to make gains. My advisor is LOREN LENA WALKER who is easily searchable and has extensive knowledge of the financial markets.
Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
I remember it so clearly when you had less than 5k followers. You have come a long way dude. I also remember you went out of your way to find me a realtor to buy my first house in 2021. Complete badass man. Wish you all the success!
The best advice I’ve ever gotten. The price of the home doesn’t matter. Either you can afford it or you can’t. It’s not fancy or sexy. It’s simply get a payment you can afford and don’t worry about it gaining or losing value.
That's dumb
@@jayc4715 yes being able to afford your lifestyle is dumb.
@@IL_Bgentyl the price does matter..and payments are for suckers
That's the worst advice I've ever heard, unless you're talking about paying cash OR if you have 2-3 YEARS worth of expenses in a cash emergency fund to tide yourself over in case of an extreme market downturn accompanied by 9+% unemployment. Want good advice? Pay attention to the ratio between median home price sold and median US income (or wherever you live). In 2006-2007 at the PEAK of the bubble, the median home price was 4.94x the median income. Today it's 6.84x. This is the single largest bubble in human history and it's not even close.
@@enthused7591If you have the means to make your payments, economic downturns become inconsequential as history has shown steady rebounds. Similar to the stock market, refraining from panic selling is crucial. Living within your means and choosing a home that fits your budget have been my guiding principles.
Regardless of whether this advice is considered unconventional, it has allowed me to acquire multiple homes without complications during economic downturns. Staying within budget on mortgages provides the leverage for further growth.
The challenge for many lies in their hesitance to take any path. Instead of worrying about heading in the perfect direction, they often end up going nowhere. Numbers are objective, and if they add up, it simply makes sense.
We bought a home in Avondale, AZ in Dec 2007. 30yr mortgage fixed at 5.25%. By Dec 2010, the other builders in the master planned community went belly up. There were dozens of vacant spec homes. There was excess amounts of housing worth almost nothing. It's crazy to hear about housing shortages now. BTW, it took 10 years for the home to be worth what we paid. Now it is worth more than double what we paid. Weird turn of events.
Why did you not snatch up more homes while they were worth nothing?
@melinda67 It was a very scary time. People were losing jobs and homes left and right. Lending standards were under scrutiny. The houses couldn't even be rented. There weren't enough people to rent them. Many homes were bank owned, cash only auction houses. I was also 26 with 3 kids at the time. I didn't know.
I live near there too. There were so many vacant homes in 2009. All kids had to do was find someone with a realtor key. Then bring speakers and drinks. Then it was a house party
@claytonlofgren They didn't even need keys. Our home was vacant for a period of time and they cut a hole straight through the wall.
Thanks for the advice Javier. Im happily renting until i can buy a home and have it be a blessing and not a curse. ❤
Amen!
Even smaller townhouses in my area going for $100,000+ more than 3 years ago. Even if the market prices drops I don’t see it lowering to below previous values.
Just wait for 12% unemployment. This is the single largest bubble with the most overleveraged middle class in modern world history.
Because it’s not going under 100,000
This is a great take on people relying on real estate agents and brokers for their purchasing advice.
In 2020 i got pre approved for 350k, but chose to aim for 200k. My realtor kept trying to get me to aim for at least 300k. I cant stand being a broken record so by the third time she didn't start showing what i wanted, i dropped her and found someone better. I bought for 215 and have more than doubled my income since then. Im so glad i did what i did cause im very comfortable now and able to adjust should anything happen with my current job with much kess stress. Stress kills guys.
Phoenix was absolutely destroyed during the Great Recession. I was able to get a house for $40k in 2011 at 20 yrs old. Still live in it and the comps around are mid $300s to low $400s. Sure I can sell but then what? I have to live somewhere.
I can get you a cash out refinance if you want to tap into some of that equity;)
@@claytonelofgren no thank you. Got what I need. 😤
Closed on a house last monday at 6.875%, which was from a rate lock in mid September 2023. I could afford sooooo much less than i could this time 1-2 years ago (even at a lower salary) because of the rate hikes, but because I waited I was able to put down a generous downpayment. First time homebuyer, credit rating in the high-700s low-800s. 28 years old. Going it alone, single income, which I can.... juuuuust squeak by affording while still saving 10% of my income. Oh well. If things don't work out with my partner moving in next year, I could always rent out the second bedroom! :/
Fingers crossed it works out, because closing costs were so high I barely have an emergency fund anymore. ugh.
That's exactly how I thought- if I can lock in under 4% I can afford the payment for the next 30 years.
"21 was a dumb age!" man i made terrible housing decisions during that time . Thank you for the practical advice javier. 21 year old people should take note of these practical and rational advices.
At 28, I bought my first home in 2009, a 5BR/3BA on a 0.5 acre lot for $140k in a short sale. So glad I listened to my common sense to wait for a crash when everyone was telling me to buy buy buy in 2004-2008. After it crashed, and the $8,000 tax credit was offered in 2009, it was finally was enough to get me to buy my first home as a single bachelor. I qualified for $450k through Wells Fargo, but I only spent $140k at 3% fixed. Got married and my wife and I sold it for $350k and consolidated to her house. We have a lot of equity with a $1,200 payment, and $260,000 yearly income here in the Midwest. We’re not in a hurry to move with two kids, but if the prices crash again, it might be incentive enough that we will move up again.
Bro you are fricking rich with $260.
@@ichoosewombo2124 I wouldn’t say rich, but we are comfortable and secure for the time being. I also keep old paystubs, from 2002 when I was making $8/hr just as a physical reminder how far I’ve come and be smart with every dollar I earned.
I wish I would have watched more of your videos before purchasing this week. But I also like the house, the area/neighborhood, and the amenities. But I will continue to watch because you’re right I need to think of this as my forever home not my starter home.
Bought a home last 2007, hiring a practical realtor like javeir helped us way a lot. We're now debt free and have fully paid our house. I somehow relate to what javier is talking about. gladly i didn't stretched out my budget during that time. we are now planning to have our 2nd home and will surely follow it the Javier Vidana way🤩
We bought in 2005 155k 5.5% and we didn't like it, we were in a crunch. So after hardships and modification, we short sold it in 2013 for 78k. When we were buying in 2021 #1 priority was that we really like it and so it was not fomo this time. We're in great financial situation and love our home at 2.37% $390k in NE Florida.
I genuinely hope your financial situation is excellent because buying a $390k home in 2021 is going to be like buying a $160k home in 2005. It's going to be worth $250k in 2025.
I'm buying right now, in my hometown there's a lot of people buying houses for cash . Interest rates are pretty high right now but I was able to get a 5.25 fixed at the lowest rate and that's through a local bank. Look local don't get a mortgage from a big bank.
That email was wild, the lenders sound just as bad as the lenders from 2005-2008.
I never forget when I was 18 (2008) working at Office Depot in high school, .my manager and his wife wasn’t making crazy money - they got a home built and a full year later he was talking about being upside and having to sell it. He was a really nice guy but looking back on there situation now it really affected him mentally.
Insurance cost and taxes have gone crazy due to the wild climb in home valuations. My mortgage is barely anything compared to these rising costs. It is nuts.
please never change your stance on being a truthful realtor even when times are good! It’s so refreshing and God will reward you.
I bought a house in 2005 and got wiped out on it. It was one of those 0% down, two mortgages at 80/20 (interest rates were like 8% and 12%) so you didn't have to pay PMI. Which is crazy considering PMI is for the bank. Anyway that house is still inflation adjusted under what I paid for it. My wife and I are trying to buy a new home now, but I'm far more cautious since it appears housing is too expensive versus incomes. I don't really want to be inflation upside down again even if it doesn't matter.
People are going to be wiped out on an entirely different scale than 2008-2010. Homes are 30-40% more expensive across the US on average when adjusting for inflation than 2005-2007. Where I am in Florida, people are paying 110% more than 2 years ago for a home, which is 100%+ more than peak 2005-2007 bubble.
the first thing that stands out to me is he was 21, the time where you save for a deposit and buy a house at 21. now the deposit alone takes like 5 years to save up.
We bought a queens nyc 1 bdrm apartment in 1982 for 13k. The sale in 1986 has funded all our single family homes in top towns in the west ever since
9:55 while he made the right call the appeal is if he had bought $500k and was able to hang on he’d be a millionaire since $150k turned into over $400k. I wish I bought a 400-500k home in 2019 even if it would’ve been tough
I bought in August. Closed on 8/1. My house was originally on the market for $245k, but I got it for $230k. Was able to cover closing, 20% down and moving costs without touching my emergency fund. My rate is 7%, even with a high credit score, but my payment is affordable. Its equal to or less than rent for a two bedroom apartment in this area. And I have a yard for my german shepherd.
I know I'm lucky in some ways for that to be possible. I have a good salary and lived with my ex for 8 years, so we were each able to get debt free and save in that time. So when the relationship ended, I was able to jump straight into buying.
Plus channels like Javier's, Kristina Smallhorn and Win The House You love made it feel achievable instead of frightening. 😊
How much is mortgage if I can ask plz in similar situation
Home values are declining in every state.
It increased 30% now dropped 5%. It's still a solid increase from just 3 years ago.
@@spicycandyapple 30% where? In Florida where I live, homes are up 110% in 2 years but have dropped 7-8% in the last 8 months and are accelerating wildly now. This is the largest bubble in human history, over 30% worse mathematically than peak 2006-2007.
They are actually going up in every state.
@@josefj1776 yes. People are still paying above asking because there are multiple offers. This is after 3 years of straight price increase. Crazy!!
@@enthused7591 at the mean time, I only got 3% for inflation. This is like a joke, but is already better than many people. So sad.
Hindsight is 20/20, but why would you ever get an ARM if your interest rate is only 2-3%? What was the logic of people pre-2008, interest would at one point disappear?
Zero down is such a smooth brain move. You need at least 10%.
Honestly with the prices of homes and why would you buy? On top of the rates. CDs are getting almost 6% (5.75 ) for 12 months. Cash out your home and rent. Put that 100-400k in a CD and make 15k plus a year until prices come down. The economy is hanging by a string from car market to house market. And the crash will not be like 08.... that's what they all say. Until people stop moving, stop buying 60k cars, people stop buying crap homes for 200-300k. Taxes, insurance are catching up to these home prices too. Taxes then go up the following year while values are starting to level off and go down. And school loan repayments started again. All less money into an economic running like a runaway train. There is at LEAST a 20% drop coming. And then that usually snowballs. 3 of the top 5 banks already filed for bankruptcy in the last year (in the US). What does that tell you?
your videos are always helpful Javier I appreciate you bringing in different scenarios cus everyone is different. You were a valuable resource when I bought my crib last year man! GGs my boi!
I was a 1st time buyer in 2008 while stationed at Ft Hood. Lost $20k when I took orders and moved/sold 5 years later. Looking to buy another house now, and the PTSD is real.
Inventory high on luxury homes low on affordable homes
Im not concerned about the interest rate even though it's high. It is what it is. What the most important is the price of the house.
You dont buy a 40,000 car if you cant afford it. My budget is 350,000 top so the house has to be under that. The monthly will be what it will be
I got a loan for an $189K home straight out of law school in 2006 with no savings and no income. It was a 7.25% fixed rate. It’s shocking how easily I got that loan. Funnily enough in 2007 I was working for a foreclosure firm because that’s where the jobs were. And you’re right, most of the loans I saw were ARMs given to people with zero fiscal responsibility. In 2010 when I refinanced with an actual income it was much more difficult and I had to jump through a lot of hoops because of my outstanding $180k+ student loans. We’ve ended up staying in this house since we missed selling at the peak of this boom and plus buying was insane, with every decent place being so bid up. But now I’ve got a house with a good amount of equity and unless some great deal comes up this is where I’ll remain for now.
If available young families should speak to builders, sometimes they offer great incentives, buydowns, for instance we got a 5% and closing cost paid and 10k in upgrades.
Randomly came across the video and loved the content! Yes I'm a firm believer of not over leveraging yourself and living under your means (at least in your growth phase). I bought a house 2 years ago in an expensive market; coupled with a Fixed 30 yr conventional loan + few real estate strategies (House hacking + BRRRR) am able to live for free. As for the SAVINGS bit, I agree save when times are good but it's better to optimize those savings by investing strategically to get to your next growth point. All depends on how quickly you want to grow and how much risk you are willing to take!
I am with you, I was pretty dumb at 21 also. Adulthood should not begin until 21 😅
Adulthood should begin at age 12...
More like 25 or 26 when our brains are fully formed lol. I am only 31 bit I look back at my choices at those ages and pace falm
Huh, you just saved me from buying a possibly unaffordable house ❤
I’m here in SoCal and during 2010 I was in the market to buy a home since properties hit rock bottom at the time. I was qualified to buy a home, I put in 24 offers for homes under $100k, not offer one was accepted or countered. I believe most where bank owned and probably sold off to big money private equity.
1994 first house put 10% down $127900 was a short sale in 2 yrs I was up side down, but my dad said you have a place to live and might go back up again 1999 I sold for $165k house I bought in 1999 a 3 unit building in 2000 I never could save to buy a first house or buy multi properties ,2004 did look at homes, prices where to high ,bad loans , still have what I have never selling. myloans are under 4%,advise for a first time buyer move to a low cost area if you can
The big difference between then and now was that lenders were pushing ARM and Balloon loans on people that they KNOW could not afford the interest increase, it was the result of predatory lending practices. Now, the interest rates are just high…it is better to buy now and refinance later when the interest rates drop because they will eventually drop, maybe not back down to 3% but it will drop and when it does people are going to be scrambling to buy!
I bought my repo house in 2002 for $45,000.00 It's worth now 185,000.00. It's crazy how expensive houses have become.
Here in Florida, a house that had crashed down to $50,000 in 2011 is selling for $350,000 today. Same house was $160,000 in 2020. It's the single largest bubble in the history of this country. At the peak of the bubble in 2006-2007 the same exact house was $150,000.
Good thumbnail Javier!
I still don’t understand why refinancing is a bad plan. If the rates don’t go down then you’re in the same exact place you would be anyway.
If you’re taking something you can’t afford with the idea that you’ll refinance later and it doesn’t work out that way you’re screwed
As long as you can afford it and are okay with taking on the risk of a potentially depreciating asset in the short term it’s most likely okay (you will almost certainly make equity long term). It comes down to your situation and risk tolerance. Where it becomes dangerous is when people become over-levered while ignoring the current red flags of the lagging inventory situation with the most inventory under construction ever (substantially more then the 2006 peak). Look up Fred UNDCONTSA. That is the federal reserve chart that shows that there isn’t so much a lack of inventory as there is a lagging inventory issue.
The value in property really doesn't keep up with inflation. House bought in 2005 for $240,000 selling in 2023 for $299,000 With inflation the 240,000 should be worth 379,000. Value did not keep up with inflation
I'm 31 and missed my chance to buy a house. I could easily afford to put 20% down payment on a house in 2019, up until before house prices and interest rates surged. Next best thing for now is CD's or 5% money market for the time being. Fortunately my parents (who have been renters their entire lives) purchased a house in June of 2020 for $100,000. It was a decent house in a rural small town, but they got a great deal. According to 4 different websites the current price of the home right now averages out to around $183,000. No it's not a million dollar house, but the percentage rate increases that are just insane the last few years. Add in the high interest rates and it makes it nearly impossible to buy. In the city where I work there's only 1 house listed under $250,000 for sale. The only way to be able to buy right now is for house prices to decline, interest rates to come down, or income to go up. I feel like it'll be at least 5+ years for this, this sucks.
My friend just bought a new build home for right around $700k. They started the process almost 2 years ago and finally closed and moved in August. Her finance is a mortgage lender and at the time they started the process was making a killing due to the refi boom. Fast forward to this year, they needed a co-signer in order to still qualify for the home. I really think they are over extending themselves and I’m worried for them 😢 so many people are believing that they can just refi later once rates drop but not even thinking about all the other factors that are at play
If they have a household income of $220k or more they should be fine.
@@melinda67 they don’t when they qualified he was making around $150k and that was during the boom of refis :/
@@blmxo8827 yeah that’s insane. They’ll need a second income to be upwards of 200
If you know someone who has been paying on a mortgage for more than 12 years with an adjustable interest rate. Ask them how many of those months were at a high rate, and how many of the months we're at a low rate. The statistics of a mortgage holding at a higher rate are very sad. There is insurance, for when your adjustable rate stays consecutively too high, and you cannot afford your monthly payment. Unfortunately these insurances are so damn expensive, the average person cannot afford them.
Dave Ramsey's advice saved our butts. Don't buy a house unless you have 20% down, and can buy it on a 15 year mortgage with the payment being less than 25% of your take home pay.
I bought my first house in 2018, I was so upset because I thought I overpaid. I was living paycheck to paycheck and was so house-poor that I was eating Ramen. I just sold that house for more than three times what I paid for it. I downgraded to a condo, bought in cash, and now have over $200k left over in a high interest savings account. So happy! 🥳
EXACTLY❤❤❤❤ PEOPLE keep dreaming: real state crash, instead save save save , emergency fund, bigger down payment work more, get more income, get out of debth, instead of waiting for a crash ❤❤❤❤❤❤❤❤
Exactly
In 2012 I felt they were still pushing more than one could afford. I was in my early twenties then, had 10s of thousands in school loans, and car debt (it was dumb to buy a new car right out of school). I figured out how much i could afford, carefully budgeted all my expenses, calculated the mortgage payments and bam the bank told me i easily qualified for 2x what i was asking. I knew i couldn’t afford that and they argued that i was selling myself short and would be unhappy. I stuck to what i thought was right, and used government programs to lower my down payment. Money was tight for a few years, but I paid off the car, the student loans, then paid the principal enough to drop PMI which made life much easier. Now with all the inflation having a fixed rate mortgage from when the housing market bottomed…I consider myself lucky seeing what rents and houses go for these days.
I make ~270k/yr in Seattle. I have a wife and 2 kids. Current rent is ~4k/mo.
Buying a home terrifies me. Right now if anything happens to me or my career, my family will be fine. If we were to buy a house right now and anything bad happens, I have no idea what collapses financially. My family comes first. I’m not willing to wager their financial security on anything that is yet to come.
I don’t care what the house is worth. I don’t see it as an investment. It’s either a place to live, or it’s a financial trap. The housing market feels like a giant scam. If you ask any realtor at any point in time, “Now is the perfect time to buy!”. Yuck.
Loans were complete crap back in 2005. I went through Country Wide. Failed company. They qualified me for 784K. I ended up building the house for 368K which still ended up as too much once I went through 3 pay cuts of 10% each, lose of mileage, loss of medical, loss of matching 401K. Ended up selling the place for what I owned plus commission in 2011. But holy heck if I would have actually built a house for their ridiculous number. Only good thing was credit was not effected. Lost what I put in but learned a lesson that now has me in a paid off home and a second paid off home. Don't fall for stupid advice that a lender is providing...
You're the luckiest person alive because homes in 2011 were at the lowest bottoms in US history, 35-40% lower than 2005.
@@enthused7591 All and all not bad just to get out and still buy a another place in my new state at the time.
Bought in April 2022 in the Bay Area in CA on a single income.
The interest rate was at 4.7%.
The house value has pretty much flat-lined at what I bought it for.
Nice video. This will interesting to revisit in November 2024/2025
I'm closing on a house next week. I follow and trade markets so I wasn't ecstatic about buying right now, but you do what life tells you to do. Even at this interest rate, my total monthly costs is still far below the price of an apartment with comparable square footage. I can't really articulate how lucky I feel, most houses in my area range from 300-500k while the median income is a bit over 50k a year here. Can't see prices going much higher until wages go up, unless larger households with multiple adult cosigners become widespread.
Question for you or anyone here who is fairly knowledgeable. Houses in my area are generally about 450k. I've got enough to put down 200k and I'll have a payment of roughly 1800$. I make about 5k per month.
Additionally I have about 90k in taxable investments.
Does buying now seem reasonable? Additionally should I sell some of those taxable investments to lower the payment even more?
You buy a house when it’s the right time and you can afford to pay the mortgage comfortably not overstretching. Ideally you want it 30% less than your income. Also if you have any consumer debt like credit or student loan. I’d say try to pay off everything first. You want to be debt free as much as possible. It’s also easier for banks to approve you for loan. Make sure you shop around for rates. I advise get 4-5 lenders and compare. The lowest the better or more savings. Use the small banks they offer lower rates than big banks or use the independent broker they have access to multiple lenders. I used a broker last year. The average rates were 5.5. The broker gave me 4.375 and he beat all the small banks so I went with him. Also it helped me because I had 820 credit score. Also make sure your credit score is high. Good luck to you
I truly feel like any realtor that cons you into a house should face criminal charges. It’s tantamount to defrauding someone for a few thousand dollars of commission. It’s like a pyramid scheme. They work because the people doing the selling is someone you think you can trust.
It's part of the game. Be careful
@@coolartps no. This shouldn’t be a game. It’s fraud. It should be illegal.
I make $27k/yr (disability + part time income). Bought a condo last year for $141k with a 5.625% loan using a bunch of downpayment assistance. My monthly payment is less than it was in my old studio apartment that was 1/4 the sq footage. I've been able to make a few extra payments and the value of the condo has already gone up $30k in the year I've owned it. I have a very stable job, an emergency fund, and I'll always have at least some money coming in from disability, so it feels like things will continue working out well!
People need to understand the monthly payments are no joke! There are many points of failure that would cause you to fail to keep up with the payment. Being sick, unexpected spending, lost of a job! Mostly unpredictable things! And even when you are paying...you are stuck in your job that you could be hating on! Due to the high monthly mortgages, you won't have time to recover, you could quickly go into debt that would ruin your credit, your family, your life! It's like a bad marriage where you are the man!
I'm 25. Ready to buy a house, until I saw how ridiculous it is. Hard to not feel like I've been robbed of a future...
As a loan officer, people need to do there own research. It’s not my fault if you make a shit decision to buy a house that’s not worth the money. That’s why we don’t fund loans for people who can’t afford them
The problem is though is I think they should work towards putting people in houses because apartments and rentals are expensive anymore and we should have the predatory stuff these days because the house prices are three 8480 to 500 K compared to what was in the early 2000
I feel for the first time home buyers today. Some of my close friends and family members are renting and have been turned down/off on purchasing a home.
I bought my first home in 2010 right out of college under my parents advice in California. I was 25, single and was making $23 an hour. I was able to get a FHA loan at 5.75, took advantage of the “Obama” credit and down 3.5% on a 180k house.
Fast forward to now, I am married with 3 children. I refinanced my mortgage in 2019 to get rid of the PMI at 2.79% and my house is valued around $500k. My wife and I have been looking to get a bigger house in a better local area, but we are staying put with our combined $150k yearly salary.
Even though we have home equity, I can’t imagine paying more than 40% of our net income toward a new purchase.
I bought a house with my girlfriend this year and the mortgage is about 30% of our income. And we couldn't be more happy about our decision! We ended up getting a 3 bedroom, 2 bath, with a 1 car garage, and me and my girl are both 22 years old and plan on starting a family with this house so that's why the rates now don't really matter. Because we know we will stay here for at least 20 years. Don't get discouraged guys, just do the math and if it lines up do it, and if the math doesn't work DON'T!
Never buy a house with a girlfriend
If you can buy a house with her, marry her. If you can't marry her, you made a mistake. Best wishes though. Sounds like you are planning your futures together which is great...so....put a ring on that finger! 😊
@@nmm913 thx man, and it's all in my plan, I got blessings from all her parents and step parents. I didn't wanna piss any family off
@@TopVillain why not??
@@stoneless_skating if you have to ask it’s already to late
I bought a house this year and I was told that I couldn't apply for less than 50k as a mortgage, it would have to be done as a personal loan. As bad as mortgage rates are, I am not getting into the business of personal loans, if I can help it.
It was 2010 i was 20 yrs old. I was working in fracking in North Dakota and during Army reserves after doing 3 yrs of active duty at the time. I was able to save $70k and bought a duplex. Things picked up fast in Afghanistan so i reactivated myself of course for promotions and money. Now medically retired from Army. The duplex generates net 2600 a month. Wife now has a medical career and i have cybersecurity career. We were recently living a rural 3000sqft home but the school district sucks and so we rented out that place and had to move back to city and we bought a 1500sqft nice school district. I was approved for 650k. We bought a 200k house. No way in hell im buying a $600k home in this market.
I bought my house in 2012 for 1.24 mil and i couldn’t be happier i didn’t listen to my realtor to over buy. I stayed within my budget. I’m 38 now and only 4 more years till this one is paid off
Congrats! That is amazing 👏
Technically that was the bottom of the market ever in US history, meaning if you'd spent more, you'd be even better off today as a percentage.
I am still getting reos from those times.
The 2/1 buydowns are like an ARM
But those predatory loans are still being written. How else can you explain a factory or in my case, a warehouse worker on the floor getting a $500K up to a $700K loan while making $75K a year. This is Southern Ca. housing and I work with many co-workers that have purchased these homes in the last few years. I don't know the mechanism for how they are written but then I didn't in '06 either. I just knew the numbers didn't make sense then and don't make sense now. My question is who is buying these loans once the banks and other lenders make them? It was mortgage backed securities being bought by pension funds and investment firms then. Is it REITs now? Is the FED buying them?
Don't buy variable interest mortgages. You never know where interest rates will be from year to year.
I’m about to sell and possibly buy a new home . I’m thinking about putting half of the price of the home down. Any thoughts?
Sell ASAP if you want to sell and wait until later on next year or early 2025 to buy.
@@Ja56780that's what I'm going to do
Hello Javier love the videos have you ever heard of NACA?
Ooo I’m sure he knows of NACA 😂
Is it bad to buy a house if you're hoping to get picked up for a better position that will make you relocate in 1-2 years? $255k house, 7.35%, $1600 after all bills including mortgage minus food and gas from my salary alone. With my wife, add $2k to that. $3600 before savings and we have a dog. We were thinking of renting it out when we relocate. $3600 sounds great but it still scares me. Any insight please? Thanks! Love your videos. Been watching you a lot lately!
A majority of people say don't buy unless your planning on staying 5+ years. Now maybe even longer then 5+ years with interest rates so high. If you do plan on renting it out in the future have you researched how much the market rent is for similar homes in the area? Will you be able to manage your home from a distance? Will you get less property tax exemptions for using it as a rental (thus increasing the mortgage payment)? Make sure you research as much as possible before you make a decision. Good luck.
5:00 spot on! What you sign up for today is what you get, and what you contract under. No rate change in certain in the future. What is certain is the terms you signed for today. You don't "date the rate" you get married to it through a contract. And later you may decide to divorce the rate and it will take half the house with it.
I was 23 making $12/hr and going to school; I qualified for a $450k loan in 2007. In addition, They used my mom’s income even though her name wasn’t on the loan. She lost her job during the crisis and I couldn’t make the neg-am loan payment of $2k month (nothing even to principal, in fact I was under water more with every month). I agreed to short sale the house. Sold for $275k. I had no clue at that time what type of loan I agreed to; except the fact that the lender kept saying it was fine and they’d make it work. I wish I knew now what I didn’t then. Super stressful time in my life. I felt like a failure because I lost my home
Bottom line: always ask yourself, "What is this person trying to sell me." Remember, everyone is selling something.
Great advice/thoughts...
Except the taco thing...
You should never think you ate too many tacos... They are tacos!!!!
Houses will never be lower then 200k
How do you shop for. Mortage lender?
I actually bought my first house in 2008
So having bought a home in 2022 with a 45k down payment for a 145k house with a fixed 5.something% for 30 years and no intention to sell it until it's paid and I'm 30 years older...do the changes of the market matter at all to me? Honestly asking I know about as much about home ownership as I do being 31.
If you can afford the house, jusr buy it. If the markets drop, 10 years from now it will be worth more.
It could just be me but I feel like everyone thinks of a house as an investment to sell in the future rather than an actual shelter?
Morgage lenders are starting to do wild stuff again.... We just bought our first house in July with a fixed rate in the 6% ... the qulified us on our gross income of 200kish with a limit of 925k.... lol I was like thanks but no thanks and bought a house for 480k with 5% down...and the month payment still sucks at that....I cant imagine what it like for those that take there home budgeting advise from the lender..... lol
So if rate is 8%, but prices don’t appreciate as much yearly - you’re losing money on the investment?
It depends on your equity percentage, but yes. The problem is made worse for people with low down payments and at the top of their budget because mortgage payments hardly budge the principal balance during the first 5+ years with almost everything going to interest. It’s a double edged sword though because if property prices increase, the initial investment is leveraged. It’s just that many people haven’t experienced a market this in their adult lifetime.
IMO, it's not the house prices that make getting a house hard, it's all the extra bullshit on top like the interest rates, the closing costs, property taxes, and any random fees they toss into the mix. MAYBE I'm doing the math wrong but let's take a 500k house, divide it by the loan term which is usually 30 years to get how much you would pay yearly: 500,000 / 30 = ~16.6k. So you would pay about 16.6k yearly, now take this number and further divide by 12 to get your monthly payment (here I just rounded up to the nearest hundred): 16,700 / 12 = ~1391. So technically, accounting for JUST the price of the house you would only pay about 1390 per month over 30 years on a 500,000 home. Am I doing something wrong? ANOTHER THING, how can we have affordable homes when everyone expects the price of houses to appreciate in value all the time always? Those two things cannot co-exist in the same market. I just feel we shouldn't treat houses as an investment opportunity