First and Future
Your paycheck is the fuel; ownership is the destination. Join us on First and Future as we explore the strategies, mindsets, and investments required to bridge the gap between earning a living and owning your future.
First and Future
RENT = $30,000 GONE ep.11
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Your 2.75% mortgage rate might be the most expensive thing you own.
This week we lost a client. He was a builder. He was 100% a man of action — the guy who moved while everyone else was still "thinking about it." That loss turned into the conversation we've needed to have for 11 episodes: waiting is not a neutral decision. Waiting is a decision, and it has a price tag.
In this episode of First & Future, Dibbs and Liam break down the real cost of waiting — waiting on rates, waiting on the housing market to crash, waiting until you "feel ready." We get into why the mortgage market shifted from a rate-and-term market to a cash-out market, why your interest rate matters less than your monthly cash flow, how a 7% mortgage can put $1,400 a month back in your pocket, and what a $30,000-a-year rent payment actually buys if you point it at a down payment instead.
We also get into the part nobody says out loud: most people aren't waiting because of math. They're waiting because they're scared, and the rate is just the excuse they reached for.
What you'll learn:
Why "waiting for rates to drop" is a plan with no plan in it
The difference between a rate-and-term market and a cash-out market — and which one we're in
How a higher interest rate can lower your monthly payment (and why your blended rate is the number that matters)
What a mortgage pricing sheet actually is, in plain English
Why the price of a house going up isn't the same thing as the house being worth more
The real math on renting one more year
How to answer the question "what does ready actually look like for me?"
Why nobody wants to be first — and why being last costs the most
The "lipstick economy" and what it says about where we are right now
Timestamps are below. If you take one thing from this: you can't control rates. You can control your plan.
🎯 Build your financial plan with us → darryldibbs.com 💬 Comment: What's the one financial decision you're putting off — and what does "the right time" actually look like for you? 🔔 Subscribe for new episodes every week.
Darryl "Dibbs" Howard — Licensed MLO, NMLS #2104127, Dynagen Lending.
Licensed real estate salesperson (REAL Broker) since 2013.
Liam "PRSPCTV" Witherspoon NMLS #2755465, Dynagen Lending
This episode is for education and entertainment. It is not financial, legal, or tax advice, and it is not a commitment to lend. Rates and terms discussed are illustrative and subject to change, credit approval, and program eligibility. Equal Housing Opportunity.
#Mortgage #RealEstate #CostOfWaiting #FirstTimeHomeBuyer #CashOutRefinance #DebtConsolidation #InterestRates #HomeEquity #DetroitRealEstate #PersonalFinance #FinancialLiteracy #WealthBuilding #HomeOwnership #MortgageTips #RealEstateInvesting
CHAPTERS
0:00 "I'm Upset Today" — Why We Almost Didn't Record This
1:22 Tomorrow Isn't Promised (And Neither Is Your Rate)
1:59 Waiting Is Not Planning — Stop Confusing the Two
3:27 We're Not in a Rate Market Anymore. We're in a Cash-Out Market.
5:07 The Real Reason People Wait: It's Fear, Not Math
7:32 How Giving Up a 2.75% Rate Puts $1,400 in Your Pocket
8:14 Were 2% Rates Even Real? Our Unpopular Opinion
12:20 The Fed Chair Changed and Nothing Happened. Here's Why.
14:07 Paycheck to Paycheck Is a National Business Model
15:30 The Lipstick Economy — Small Luxuries, Big Problem
17:16 The Renter Math: $30,000 a Year Into Someone Else's Equity
21:22 Did Your House Go Up, or Did the Dollar Go Down?
24:30 The $220,000 House I Was Too Young to Buy
32:47 "I'm Not Ready Yet" — Okay, What Does Ready Look Like?
38:28 Nobody Wants to Be First. You Can't Afford to Be Last.
44:12 Getting Licensed at 23 and the Listing That Taught Me Everything
48:53 Live Roleplay: The $50K HELOC That Should've Been a Cash-Out
55:29 Should You Buy Down Your Rate? Honest Answer.
58:52 What Are You Waiting For? (Comment Below)
This Podcast is not sponsored. Any Products, Tickers, or brands mentioned are for educational purposes only.
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First in Future Finance, episode 11. Something like that. Yeah, something like that. Um, episode 10 of Us Side by Side. Uh, interest only studios sign right there. Um I don't know, man. I'm upset. This has been a it's been a week. It's been a long week. I know we say that every week. It has been a really long week this week. I'm gonna crash out. The economy sucks. Everything sucks. Investments are down. I had a borrower die. Like this week is terrible.
SPEAKER_03It happens. It happens. It's it's it's the thing.
SPEAKER_00Rest in peace, Scott. End of life. I fuck with that guy. Rest in peace, Scott.
SPEAKER_03That was my guy. Yeah, man. You've been working with that dude for since the beginning of this year.
SPEAKER_00Since February, yep. Yeah. That was my he taught me everything about construction loans. I know everything because of him, because he owns his own construction company that built houses. He knew more than me about the loan, but he trusted me and he liked my hustle and he he wanted to work with me.
SPEAKER_03Bro, that dude opened up an entire niche for you.
SPEAKER_00Yeah, I didn't even know that niche existed until I met that guy. So rest in peace, Scott. That's my guy. Um I wish we could have seen everything through for him. He had a really dope vision. He had a really cool plan he was trying to build. But well, nothing stops. Business does not stop.
SPEAKER_03That's a that's a segue, man. Tomorrow's not promise.
SPEAKER_00No, it's not.
SPEAKER_03Tomorrow is not promise, man. Why do so many people believe that waiting is their safest financial decision?
SPEAKER_00Yeah. What are we waiting for?
SPEAKER_03I think that that should be in memory of Scott. I think we should talk about the cost of waiting to do things. Yeah. Not even, not even just in business. We're gonna, this is a you know, mortgage-based, real estate-based podcast, but the cost of waiting to make a financial decision is still a financial decision.
SPEAKER_00It is. So I mean, like I also think people, not to cut you off, really misconstrue waiting for planning. So many people are just waiting for like the right time for everything to fall into place and everything to be perfect. You have to mold that moment. That isn't gonna happen. You have to plan, you have to be like we talked about last week with Drew. We have to do credit repair, we have to pay off debts, find our utilization, figure out other sources of income. You can't just wait around and hope you're gonna get a promotion, hope you're gonna get a raise, hope your house is gonna double in value.
SPEAKER_03Episode, I think episode one or two was about goal setting and like just planning your life around what you want to do and then making it happen. Manifestation is a thing where you have to, you know, you hear people say all the time, you gotta speak it into existence. You know, your thoughts become words, your words become actions.
SPEAKER_00But no one wants to act it into existence. That's the problem. Yep. How many times do you have borrowers say they're just gonna wait? I'm just waiting on the market. Okay, are you paying attention to the market? Are you paying attention to the factors that are leading to the current market conditions?
SPEAKER_03You know they're not.
SPEAKER_00No, hell no. And I know they're not because I do this for a living. I'm not doing that every day. No, I don't have the time. And if I'm not doing it, I know they're not doing it unless they have nothing better to do. And I know these people have something better to do.
SPEAKER_03So, what are I mean, like what are some circumstances where you're now watching the market? What are you thinking about that's gonna be like, you know what, I'm gonna check the 10-year treasury today.
SPEAKER_00If a borrower asked me what the tenure is at, that's I don't even look at the tenure anymore because when I was when I because when I started in this industry, and oh it's been actually exactly a year now, pretty much. Like next week it'll be a year. Happy anniversary to you. Thank you. Um, when I started, we were really VA Earl focused. We were really a rate and term market, a lot of people in high rates because they refi in 2023 when rates were at their highest, besides now, besides 2007 is the other time they were this high, which what happened in 2008. Um, and it was just a rate and term market. It was just, hey, is your rate higher than this? Can I bring it down? Can I save you money? We're not in a rate and term market anymore. We're in a cash out market. And in my mind, I don't think the treasury matters in a cash out market because it doesn't matter what the rate's gonna be. It matters are you do you have enough money in your home in the equity to achieve your goals of paying off your debt if you're consolidating, fixing up your house, buying another property that earns you cash flow or doing whatever you need to do with that money? Is the transaction going to help you achieve your goals? The rates are secondary. We're gonna be in a rate and term market again eventually, whenever if rates come down. I don't think they will for a pretty substantial amount of time right now. But you'll get there. Right now, it's I think is purely what you're saying. It's goal setting. It's is this transaction gonna achieve your goal? Yeah, that rate's gonna suck. It's gonna be a 7%. That's where we are. But if your goals are being met, who cares?
SPEAKER_03So why are people waiting? What's the what's the holdup in saying, okay, I know rates are at 7%. I've gotten 12 quotes from eight different lenders. What am I waiting on?
SPEAKER_00My biggest guess is everyone's waiting for the rates to drop because they're scared of the high rate. But also, and this goes back to what we talked about like five episodes ago, I think, of like people are scared to make decisions that are gonna genuinely better their life. Like, I feel like a lot of people get so comfortable in their situation, whether it's a good situation or not, they get comfortable and stuck in that situation and they're afraid to take steps to get out of it. And sometimes making a financial transaction, you might find that one thing that you don't like about it to stop yourself and give you an excuse to stop. If that one thing is at high rate, it's like, oh yeah, I'm getting out of debt. Yeah, I'm putting 30k in my pocket, yeah. My bills are cheaper now every month. Oh, but that's 7%. I'm comfortable where I am, you know? They're looking for whatever excuse they can. I think that's just me. I feel like a lot of people are scared of that action.
SPEAKER_03So just being familiar, what do you mean by scared of it? Because if it's better for me, what what am I afraid of?
SPEAKER_00It's unfamiliar. You're so comfortable and you're so used to your spot that yeah, it might be a better decision for you in the long run, but it's new territory. And you are, I feel like a lot of people are scared of that new territory. I was scared to do this job when I started. I was scared to start a podcast. Uh but that's what we talked about is the importance of getting started. You have to do stuff.
SPEAKER_03I've never done this before, so I'm scared that I might make a mistake or I'm doing it wrong. Absolutely. That fear of I might fuck this up again because I've made probably bad choices up until this point. How do I trust myself now?
SPEAKER_00Is it gonna get worse? Is this decision gonna put me in a worse spot?
SPEAKER_03Right.
SPEAKER_00But I don't know.
SPEAKER_03Like I always say, you can't fall off the floor. Yeah. If if if I've been fucking up this long, yeah, what's one more bad decision? Let me try it out. Throw some darts at the wall, man. But like so the waiting is based on fear instead of instead of the facts. So what are you hoping changes that you know gets rid of that?
SPEAKER_00I mean, in the market sense or just in like a life sense?
SPEAKER_03Anything like if I'm if I'm on the phone with you and you tell me, hey, taking a 7% interest rate is gonna make me is gonna better my life. That sounds like an oxymoron to me. How does how does taking 7% when I have a 2.75 better for me? I mean, you're not making sense.
SPEAKER_00Yeah, but I feel like that's because people look at that in a vacuum. You have to look at it in a yeah, I have a 275, yeah, my mortgage is really of a low payment, but I use that low payment to leverage myself to get into a hundred thousand dollars of other debt and personal loans, cars, credit cards. Right. And I'm paying $1,500 a month on all those.
SPEAKER_03Wait, wait, wait, wait, wait, wait. So wait, wait, go back to $100,000.
SPEAKER_00So let's say I got a $250,000 loan at 2.5%. Yeah, on your house. Okay. Two and a half percent.
SPEAKER_03Right. That's what I bought for, that's what I bought it for, or that's what I owe.
SPEAKER_00You owe it $250, it's worth $400. Okay. All right. Um, you refi'd in 2021 because rates were at 2%. You're like, ooh, I'm gonna take advantage of that. Absolutely. Which I want to go down that rabbit hole a little bit today, too. Of I feel like that was an artificially created market to keep the housing market alive.
SPEAKER_03This is our show. We can do what we want.
SPEAKER_00I I think they made 2% rates happen just because the economy and the market was about to crash, and like, oh, what can we do to save that? We can make houses temporarily more affordable for people. And but people use that to get into more debt of other kinds of debt, 100k of credit cards, cars, whatever, because they're like, oh, my DTI is really low now. I don't pay anything on my house payment. I'm gonna go get a hundred thousand dollar F-150. Man, and then a TRX, a raptor, and like I feel like people use that. And I'm in a ranting mood today, I'm a 400 milligrams of caffeine, but um now I feel like people have used that to put themselves in positions to get what they want, and it's not a realistic position, it's an over-leveraged position because they thought they could sustain it. And with that, what you with your question that you pose of how would the 7% fix my life, if you have a 2.7 on your mortgage, yeah, you're gonna lose that. Yeah, that sucks. But if you're spaying paying two grand a month and all this other debt, and I'm raising your payment six hundred dollars to pay all that off, you're not feeling your interest rate every month, you're feeling how much money leaves your pocket. If I'm putting an extra fourteen hundred dollars in your pocket every month, you're gonna feel that. That's gonna be real than any rate on your mortgage ever.
SPEAKER_03So you're telling me that if I take the 7%, I get an extra $1,400 a month. How do how does that work? Well, I'm paying off all your debt. It's all gone. It's just consolidated. So my TRX is is free and clear.
SPEAKER_00And your insurance goes down because you have a free and clear title on the car. I probably saved you more than $1,500 a month on that because I know my car knows $1,200. On a TRX, absolutely. And I know that insurance is crazy too. You got a V8 that people are likely to steal from.
SPEAKER_03Like, people take that shit.
SPEAKER_00Oh my goodness. Man, I'm heated today. I'm really in a mood. I'm in a passion.
SPEAKER_03You seem like you're in a tizzy. Like, like, you know, you shaking and shit.
SPEAKER_00Like, it's that's the that's the caffeine.
SPEAKER_03That's just the caffeine. I'm I'm looking at I'm looking at, you know, you came in fired or you've been on one all day.
SPEAKER_01Yeah.
SPEAKER_03And I feel like this is this is our this is our session, man. You about to get all this stuff out. You had just bad news after bad news after bad news today. And, you know, you you need some wins. Okay?
SPEAKER_00I just wish people would trust the vision, man. I wish people would be like, you know, you're a professional in your industry. You look at money all day, you got a bachelor's in finance. I'm not saying I'm special. I just wish people would hear me the fuck out sometimes and be like, you know what? That is a good idea. I'm uncomfortable with it. Then to be honest with you, I don't want to do it, but that's a good idea. Thank you. That's all I need to hear, you know. Oh, man.
SPEAKER_03So I mean, like, to your point, you know, your borrower wasn't one of those people. He was a man of action.
SPEAKER_00He was. Right? And he was getting let down by the people around him. He had a broker for 18 months that was facilitating the purchase on this home. I did more, and he told me this. I did more for him in two weeks than that other broker did in eight months. Hey, that guy wasn't doing shit.
SPEAKER_03He he he got an application, he put it into his into his system as a uh as a sub.
SPEAKER_00Yep. And it wasn't an easy loan, and they had to learn a bunch of lingo.
unknownYeah.
SPEAKER_00They didn't care. They called him once a month. I called him once a day. They didn't care.
SPEAKER_03And that guy, you know, like I said, he he wasn't it kind of sparked this conversation. Like you got you got people like this who are very um outcome-based. If you can get it done for them, they'll rock with you, they'll do whatever they need to do to move it forward.
SPEAKER_01Yeah.
SPEAKER_03And then you got people on the opposite end of the spectrum where you're giving them everything they're asking for, and they're still like, but what if this happens? I think I'm gonna wait for this to happen before I do this. And then they end up missing it all together.
SPEAKER_00You know how many people told me back in January, oh, I want to wait. I know that when when Jerome Powell gets out of office, rates are gonna crash. Jerome Powell leaves office in May, the treasury goes up a fucking half point.
SPEAKER_03What are we talking about, bro? So, I mean, like, just even break that down. The change in the in the fed chair, which doesn't happen often.
SPEAKER_00It's a figurehead move. It doesn't change shit.
SPEAKER_03It doesn't change a damn thing. It's it's all theater. It's all theater, and it goes back to, you know, like Warsh is doing the same thing Powell was doing. It's just, hey, you know what? We gotta wait this out. We we're not really taking it serious that inflation is is overrun running our country.
SPEAKER_00Our inflation target is two percent a year. That two percent a year means they're intentionally trying to debase the currency and make it weaker two percent every year. Why is it a target to make the currency weaker? That's not a goal, that's a problem.
SPEAKER_03That's that's it's backwards. It's backwards. It's backwards. Well, we should be. I mean, so this is my opinion. We should be focused on increasing our gross domestic the gross domestic product.
SPEAKER_00We're at 122% uh GDP right now, which means Which is less than which is which is less than what we're bringing in. Yeah, the government could not get a loan right now for a mortgage based off their GDP or their DTI of 122%.
SPEAKER_03Yeah, their income is less than what they owe. They owe more money than they're making. And their solution to that is to make more money. So if and and you know what? Epiphany right here. This is America. This is America. How many people right now are living paycheck to paycheck?
SPEAKER_00Over 60% of people, statistically.
SPEAKER_03And their paycheck doesn't cover their bills. You've got uh, you know, you you've got two weeks to your next paycheck, you just spent the whole thing on your rent. Right? Then you're waiting till your next check to pay your car note. You're waiting for the check after that to pay your your your phone bill, your internet, and it's just a cycle. Now you're now your rent's late the next month.
SPEAKER_00You won't talk about oxymorons too. I feel like it's the American like keeping up with the Joneses mentality. You gotta get a new car, you gotta get a lease on that car, you gotta live in a nice apartment. People are stretching themselves so thin. You can I think that's dated. I think it's dated too, but I think the mentality's still there a little bit where they're like, I need to I need to be in debt and I need to make more than what my debt is. I'm gonna get what I want by using that debt, and I'm gonna, as long as I make enough to cover it, we're good. That's a that's that's a bad mentality, though, I think.
SPEAKER_03That's the update. You used to buy nice things to show off to your friends, right? Now the nice things, you know, is un the nice things are unaffordable. The things that you can get cost what the nice things used to cost.
SPEAKER_00On that shout out Tim Rios with his lipstick economy theory. Has he told you about that?
SPEAKER_03No.
SPEAKER_00Um, you talked about in the huddle the other day. So he pretty much says we're in like a lipstick economy right now, which means, and we're gonna have him on episode 23, so he'll definitely go more into detail on it.
SPEAKER_02That's a long time from now. Did you put that in the show notes?
SPEAKER_00Uh not these, but I've already confirmed with him, it's lined up. Um, but no, his whole lipstick economy theory is that people can't afford the nice things right now. Like you say, everything's expensive, inflation's rampant, everything's bad. Yes. So $40 is still $40, though. So if I can get a nice lipstick for $40, and I'm just going through CVS and I get the nice one, I gave myself a luxury treat that feels nice without spending a lot of money and breaking the bank. And that's kind of the economy we're in right now. You're not gonna get the nice thing because you can't afford it, because nobody can afford it. But you can get those small, nice things, you know.
SPEAKER_03I want you to comment uh what color lipstick you think Liam would buy. Man, uh, but but yeah, that that's that's interesting. That is interesting. I think that's exactly what I was describing. Lipstick economy. We should we should patent that.
SPEAKER_00Well, Tim's gotta be involved in that. I feel like I saw that from him.
SPEAKER_03No, no, we're Ray Crocking this.
SPEAKER_00All right, yeah, I like it. Yeah, sorry, Tim.
SPEAKER_03We're taking that over. It's been trademarked. Use case.
SPEAKER_00Yep, we said it on air.
SPEAKER_03Oh man.
SPEAKER_00Um, I've been dominating this conversation. I'm sorry, I'm on one thing.
SPEAKER_03No, it's fine. It's fine, man, because I want to I want to dive deep into what's like like the cost of waiting, bro. People that are renting right now that told me one year, two years, it doesn't matter how long ago you told me that you were renting. Yeah, you said that renting was better than owning a home. Wow. And you were gonna you were gonna wait for rates to drop, you were gonna wait for the housing market to crash, you were gonna wait until you had a down payment. That's a fair one to wait for. I'm okay with that. I loved it. I love I'm gonna wait until I'm at a down payment because that at least shows intent.
SPEAKER_00And that's a plan. Yeah, but also when you're waiting for that down payment, do you have an active savings account waiting for that down payment? Are you putting money aside every check, like 20 bucks at least to prepare for that? That's something you can control. You can't control the rates, you can't control the market, and that's my biggest pet peeve. When you're waiting for rates to go down, are you looking at your pricing sheet being like, okay, well, a six and a half percent rate at the house I'm trying to buy is about an $1,800 a month payment. If rates come down to in the fives, I can afford a sixteen hundred dollar a month payment. I'm cool with that. Are you doing that or are you just like, damn, six percent's a big number?
SPEAKER_03Do y'all know what the hell he's talking about right now? Does anyone know? That was that was so much jargon.
SPEAKER_00It was, it was.
SPEAKER_03I I understood you. I understood you. But what is a pricing sheet?
SPEAKER_00Um, essentially, every rate from 0% to 50% is gonna have a cost associated with it. That cost is based off of a formula of how good of a borrower you are, essentially. Your LTV, your loan to value, debt to income, and your credit score. The company, whatever lender you're looking at, is gonna put it all in a fancy calculator and it's gonna just spit out some prices, some offers for you, and decide what that rate is gonna cost you. And pretty much with the with your mortgage payment, a $250,000 loan, let's say, is gonna cost you what a $250,000 loan is gonna cost you at whatever rate you get. There's gonna be a payment associated with it, no matter what.
SPEAKER_01Yep.
SPEAKER_00That payment's gonna change depending on what rate you get. So if I have a 7% loan or 7% rate on a $250,000 loan and a 5%, the only thing that changes is how much money am I paying towards interest every month.
SPEAKER_02Yes.
SPEAKER_00But are people actually looking at that or are they just like, damn, seven's a high number? When in reality they they see that $400 a month, let's say, difference from seven to five.
unknownYeah.
SPEAKER_00And they're like, I can't afford that $400, so I am gonna wait until I can get there. Or are they just like, damn, seven's a high number? I don't like that. That's where I feel like a lot of people are.
SPEAKER_03I think it's both. I think I think if you tell me, because this is this is how most people shop. Me as 13 years as a as a real estate agent, a lot of people shop by can I get this house and what's the payment? Yeah, interest rate be damned.
SPEAKER_00Interest interest rate is the is the the X factor, especially the purchase, because you can use that to leverage how much you bring to the table. Like there's actually more of a use case there.
SPEAKER_03So if they're shopping and they're saying, hey, you know, they look at the house, it's a four-bedroom, two-bathroom, maybe it doesn't check all the boxes. I gotta pay. And then my payment's $2,700 for this house. Yeah, something in their mind is like, okay, $2,700 is a lot for me right now.
SPEAKER_00That's a fair.
SPEAKER_03And they're like, you know what? I don't want it. I don't want it without knowing what words they want to use to express hey, that payment's too high for me. Not not even considering, okay, let me lower my loan amount. Let me find a less expensive house. Let exactly. Let me let me change the levers because technically you can still get that house, put more money down, put more money down. Those are the things. So, this is what I'm saying. When you tell me you're gonna save for a down payment, how much is the house that you're you're trying to get? What's the number you're saving for a down payment?
SPEAKER_00Do you have money liquid in your pocket? Are you selling assets? What's the opportunity cost of selling those assets?
SPEAKER_03Yeah, because house the price of housing has has never gone down permanently. No. There's been a couple years. There's been a couple dips. Yeah. There's been a couple dips, but are houses more expensive? Were houses more expensive in 2008 or now?
SPEAKER_00Man, that's a loaded question. Cause then you're I don't think so. Nah, because then you're going back to the um leverage, uh, or not the leverage, you're going back to forms of currency. Houses are more expensive now, but they're not just more expensive because the homes are more expensive. The home itself, for more or less, hasn't changed. The unit of measurement, yes, that You're buying it with has changed. It's lost value. Oh, I'm rubbing off on you.
SPEAKER_03So no, but that brings me into my next point. Did during that time, that same amount of time, it's still a home, but has it appreciated in value or does it just take more dollars to buy the house?
SPEAKER_00It just takes more dollars. Unless someone's fixed up the house, added things to make it more valuable or the neighborhoods gained value. I'd say on average, most of them is just the unit of measurements changed.
SPEAKER_03Okay. So if it takes more, let's say we're we're doing dollar for dollar.
SPEAKER_00Yeah.
SPEAKER_03If we're comparing 2008 to 2026.
SPEAKER_00Oh, it's quadruple. Quadruple in dollars.
SPEAKER_03It costs four times as much to your bottom line, to your pockets to buy the same house that you were going to buy in 2008. And so that's that's where where my point comes in. Those people that were in 2008, not saying that that was a great time to buy, we're just using this as an illustration. Because in hindsight, it was an excellent time to buy.
SPEAKER_00And also, but that's always my argument I go to. The gold price in 2008 was about $800. Okay. Give or take, we've four five X'd it to today. It's $4,100. So again, has the house gained that much value or has the dollar lost a quarter of its value?
SPEAKER_03I think it's both. Yeah. Because like you said, a house is a house. The house was there 20 years ago. Yeah. The same house was there 20 years ago, whether you erected it from the ground or you know, you bought one used. Yeah. That house was there. But if you go to work every day, you get a paycheck. It's gonna cost you four of those paychecks versus one to buy that same house today. Yep. So that so waiting those 20 years because you were saving up for a down payment, you were waiting on interest rates to come down, you were waiting on, you know, whatever the reason was cost you 75% of your value.
SPEAKER_00Yeah, because what if I was born 10 years earlier and I had some more money in my pocket, 17, 18, I could have bought a house in 2007. Would you have looked at it in 2007, 2008, being like, damn, 75k is a lot for a house, but that same house today is worth, let's say, a quarter million.
SPEAKER_03No, I have I have a an example of that. When I was 20 years old, um I went and looked at a house in Macomb Township. It was $81,000. It was a it was a uh a ranch, shotgun house. You walk in, you can see the whole house left and right. Yeah. $81,000 in 2000. It was like it had to be like 2016 or so. Okay. So I'm looking at this house. Real estate agent asked me, hey, do you want to buy it? I didn't know what the next step was. I said yes. Sure, I like the house. I love the house. Um, I wasn't working at the time. Okay. Didn't know you couldn't buy a house with no job. Who would have thought? Damn, that used me doing it. Do I want it? I said yes. But the house was $81,000. Uh, looked the house up uh a couple years ago. It just sold for $289,000. Same house. If only you had a job. If only I had a job. $81,000 to $280,000. My opportunity cost was $220,000.
SPEAKER_00Yep. Minimum, too, because that's not that's not even counting how much could you have potentially saved in rent over that time? How much could you have made if you rented that house out over time? You at minimum was $220,000.
SPEAKER_03I would have kept that house forever. It's probably worth, you know, I know I'm Macomb is trading probably between five and six hundred thousand right now. So that smaller ranch house, um, if I looked it up today, it'd probably be like $350,000 minimum.
SPEAKER_00And we can make the assumption if that's the price it was in 2016. I mean, shit, dude, just from COVID to now, houses have gained another 25%. So also, did they, or in the past seven years, the dollars lost about 33% of its purchasing power? Did the house appreciate again or did the dollar lose value? So that and but I don't know anything about anything.
SPEAKER_03I'll tell you what, I'll tell you what, you don't see that in real time. If I put that money in a savings account, every day that it wasn't invested in the market, I was losing 33%. I was losing 33 cents a day. So it's like I put a dollar in there, that same dollar, you know, uh, or 33 33 since then, right? So I lost 33 cents.
SPEAKER_01Yeah.
SPEAKER_03So that dollar that I put in is now only worth 67 cents. Yep. The money didn't go anywhere, it just buys less.
SPEAKER_00It's still a dollar. The dollar hasn't changed. But what I can buy with it changed. Weimar Republic Germany.
SPEAKER_03So money costs you money. Or I'm sorry, waiting costs you money, whether you're spending the money or not. Absolutely. So you might as well, like I said, put it in a vehicle that is gonna grow in value.
SPEAKER_00Exactly. There's gonna benefit even if it's not gonna grow in value, if it's gonna net benefit your life, then there's no like I'd say you can you can make an argument if there is a cost associated, but if it's gonna benefit your life and put you in a better position, fuck the cost.
SPEAKER_03You're gonna rent for another year.
SPEAKER_00Yeah.
SPEAKER_03Okay. Let's say you had average rent of $2,500 a month.
SPEAKER_01Yeah.
SPEAKER_03Right? A year that's $25,000 plus another five. So $30,000 a year. You're losing to rent.
SPEAKER_00Not even counting depreciation of the dollar, missed out on putting money in assets. This is a minimum of $30K. That's just gone.
SPEAKER_03Yeah, just just in somebody else's pocket. Right? Versus what you can do with that money. What could what does a $30,000 down payment get you on three and a half percent? Do we have that? Can we get that math real quick? Yeah, we can do that. We can do that because I I think this is this is what gets lost. And I see a lot of finance gurus say, hey, you know, the payment's $2,500. That's that's the that's the most you'll pay as a renter. And $2,500 in a mortgage is the least you'll pay. Yep. And I'm like, okay, cool. But annualize that. That's $30,000 a year that either went into my equity or that I'm never gonna see again because I I paid it out to some company who's gonna use it to buy more real estate. And I just want to know what that is. $30,000 divided by three and a half. That's gotta get me.
SPEAKER_00Oh, that's all you want was $30,000. I was gonna do a whole mortgage calculator.
SPEAKER_03Oh no, we don't need a mortgage calculator. If that's my down payment, if I got $30,000, yeah, and that's my down payment on the FHA house.
SPEAKER_01Mm-hmm.
SPEAKER_03That's $8,500.
SPEAKER_00No, that's not right. You said $30,000 divided by 3.5. Percent. Oh, percent. Yeah, you're so right. You're so right. All right, yeah. We're professionals.
SPEAKER_03We're professionals, man. Gotta gotta put that in the calculator. I didn't know the exact answer, but I knew that wasn't it.
SPEAKER_00$1,050. No, you're doing something wrong. 30,000 times 3.5%.
SPEAKER_03Divided by 500%. Why are we dividing?
SPEAKER_00What are we dividing? What are we dividing?
SPEAKER_03We're dividing because 3.5% is your down payment. Oh, you're so right. So three and a half percent out of the hundred. Oh, I forgot to put the percent sign.
SPEAKER_00Man, I'm losing it today. Um, this is all your frustration coming out. It is. I need to slow down.
SPEAKER_03It could just be the 500 milligrams of caffeine, too.
SPEAKER_00All right, now it's $87,741.
SPEAKER_03What are you doing over here?
SPEAKER_00$30,000 divided by 3.5%. I told you. I told you that couldn't have been right.
SPEAKER_03That is not $85,000.
SPEAKER_00It's $857,000. Oh, yeah, you're right.
SPEAKER_03$857,000 would be your purchase power.
SPEAKER_00Oh, I see what you're going for. Okay, okay. That I was trying to figure out what the numbers were for.
SPEAKER_03So you can buy so in the same amount of money that you've given to your landlord, yeah, in one year, most people have been there for five.
SPEAKER_00You could have bought at minimum a $750,000 house. Really $800,000, but you don't want to max out your house. I'm just saying that's what you qualify for. Yeah, that's what you qualify for.
SPEAKER_03You qualify for an $850,000 house if you stop paying your landlord and put that money in a bank account. At the end of the year, you can buy an $850,000 house.
SPEAKER_00Would you say it's like to your benefit to live in your car for a year just to save money for rent? My car? I've seen people do that on Insta. Like, you know, I'm gonna live in my car until I save up money for a down payment.
SPEAKER_03I need you to post a reel of somebody living in their car.
SPEAKER_00I've seen people do it. What kind of car is it? I've seen people do it in sedans, which is crazy. Like a Honda Civic. In the Forerunner, I I can make it work. That's crazy. I can make it work in the Forerunner.
SPEAKER_03That's insane.
SPEAKER_00Get the little roof tank go overlanding.
SPEAKER_03You know, I don't believe in suffering. Well, yeah. If you can, if you can comfortably live in your car legally, because I feel like you're going to jail if you just want to get it.
SPEAKER_00Walmart lets you camp overnight, I think. Don't quote me. Walmart lets you camp overnight, I think, in the parking lot.
SPEAKER_03That's a crazy, crazy. So crazy. Yeah. It just might work. If you can, I mean, look, the opportunity costs. That's what we're talking about. If you can save $2,500 a month sleeping in your car, I'm not recommending that.
SPEAKER_00I'm not doing it.
SPEAKER_03Yeah. I would never. I made I almost made it. That never even crossed my mind.
SPEAKER_00Oh, when I was like 19, that crossed my mind. I really thought about it. I was really like, I'm like, I will live in my car for six months, save up money for a down payment, get a new investment property.
SPEAKER_03Never crossed my mind to sleep in my car. I'll stay with in-laws, I'll stay with with friends, family.
SPEAKER_00Sleep in your car, shower at the blant fitness. You 20 bucks from the planet. You got it.
SPEAKER_03No. No.
SPEAKER_00So get a little camping stove.
SPEAKER_03Okay. So here's here's here's what people. And I hear I hear the other side of it too, right? Well, what if the market crashes again? You know? What if what if what if home values go down? What if the rate drops next year?
SPEAKER_00What if an asteroid falls out the sky and kills all of us? I don't know.
SPEAKER_03What if somebody just isn't financially ready? Is waiting okay then?
SPEAKER_00What do you define not financially ready yet? Again, it goes back. Do you have a plan? Are you just like, I'm not feeling it? I just need to have a lot of money in my pocket before I can think about doing something like that. What's a lot of money to you? Yeah, that's the question.
SPEAKER_03That's the question that they need to be asking. Like, what does ready look like? Because a lot of people are gonna say that they're not ready. But when you say not ready, are you not ready to have this conversation? Are you not ready because you know your account's in the negative? Is your credit poor? What what is the fix for your situation to for you to say what does a yes look like?
SPEAKER_00Yeah. If you were to buy this house, what what would that look like in your mind?
SPEAKER_03Man, I'm because I've I've heard it all. I've heard I need, hey, I'm trying to get 50,000 in my account before I start looking. I want to invest, I want to fix and flip. I want to like, hold on, man. Like those are all different things. Let's get let's get to one.
SPEAKER_00Let's and also what's that 50,000 gonna do for you? And this is where people are just it's just a number, right? Because what if your market that you're looking for is $100,000 houses, you don't need 50% of the home value to get in.
SPEAKER_03Right. Shout out to California. I know y'all got special stuff. Yeah, you need 50 grand. You need 50 grand. California, Washington, uh, Oregon, Oregon, um, Colorado. Colorado. New York. Yeah, we know you guys. We we see you. Yeah. Okay. $50,000. Um, you know, you you damn near gotta be an engineer in any of those coastal states. Um but you know, the point still remains what will it take? What will it take for you to be ready? I'm looking at uh yeah, like even if the even California and New York are the perfect examples. Those homes have been expensive for a long time.
SPEAKER_00Yeah.
SPEAKER_03People were still living in them.
SPEAKER_00True. Okay. Because people want to be there, because location.
SPEAKER_03Exactly. So the want has to be there. You gotta, you have to have a desire to own in order to own, right? Yeah. Like if the housing market in in New York halved itself today, you go from a million dollar apartment to $500,000 apartment, people would be eating each other's asses to get into those apartments.
SPEAKER_01Yeah, true. True.
SPEAKER_03But you say that in Detroit.
SPEAKER_00No one cares.
SPEAKER_03No, I don't think no one cares. They they still gonna be like, hey, $500,000 for a house in Detroit? For this, like it's it's the market. Yeah, location, the market and the location, real estate is all about it's three things. Yep. Location, location, location.
SPEAKER_00But that's okay. I I gotta ask you a question then. So if let's say housing drops to $500K for a nice apartment in New York, which also what does that mean? What does that look like? Because did that just mean I listed it for $500K? And if I did, if it's still a bidding war because it's all cheaper now, because everyone wants to live in New York because they see a deal on a nice apartment in Brooklyn, is it really gonna be a 500k home or is it gonna get bid up back to a million?
SPEAKER_03So economics 101, supply and demand. If there's one apartment in New York for 500,000, how many people do you think are gonna bid 500,000?
SPEAKER_00And well, okay, on that tip, uh, me and my cousin talked about this a while ago of like New York is one of those cities that in Detroit you're competing with other Detroiters to get a house. In New York, it's you against the world because everyone in the world wants an apartment somewhere in New York to say they have an apartment in New York. So it could be a random dude that grew up in upstate New York that wants to move to the big city, or it could be a Saudi prince that has some money, is like, I want to live there.
SPEAKER_03So, yeah, so the higher the demand you have, and I think people lose sight of this, the higher demand that you have for any commodity drives the price up. Okay. We're seeing this in Detroit right now. There's more demand for the housing that we have where you know 10 years ago there was none. Nope. Or very little.
SPEAKER_00That's right. I feel like that's even I'm ranting now. But I feel like that's a lot of like the social media, everyone can be an investor thing now. Yeah. Where everyone's like, oh, Detroit's the best place to go to be an investor. Everyone's buying these houses up in Detroit, not knowing what they're doing.
SPEAKER_03And just no, but you can have that in new markets. When, like I said, when the demand is there, it's gonna drive the price up. We had a depressed real estate market for so long here. People got used to, you know, being able to go get a nice house for twelve thousand dollars.
SPEAKER_01Yeah, true.
SPEAKER_03You get a brick, three-bedroom, two-bathroom at auction for 40 grand.
SPEAKER_00That's crazy.
SPEAKER_03That doesn't happen anywhere else. No, and now that the market is catching up with you know what's normal, people are flipping out. Yeah. So that's another example of the cost of waiting. You could have got a uh a nice house and a nice neighborhood for $50,000, but you waited. You waited until everybody else wanted one, and now that house is $250,000.
SPEAKER_00No one wants to be first, and I can respect not wanting to be first, but you can't be last, you know?
SPEAKER_03Oh man.
SPEAKER_00You can't wait too long to see, like, oh yeah, I have 10 10 cases now where that works, and now I can try it. Nah, you gotta if you don't get in early, you're not gonna get in at all. That's the same with everything. That's with I always go back to music because I'm a DJ and all that. Like, if I make a sound that was popping off five years ago, unless that sound has circled back in the trend cycle, no one cares. If I'm making SoundCloud rap right now, no one's paying attention to me. That ship has sailed. If you're buying in a market that's already appreciated, you missed out on that appreciation, you better hope you got some money down to get some cash flow. You're not gonna get more equity out of it. Like if you're buying a stock, if you're buying SpaceX five days after IPO, you just lost a hundred dollars per share.
SPEAKER_03Oh, check the previous episodes. I was right again. Yeah, we're always right.
SPEAKER_00We're always right. Japanese yen got saved and their treasury kept going.
SPEAKER_03We're just gonna be an industry expert.
SPEAKER_00We're always right, except when we're not, but we don't even need to highlight those moments. So we're always right.
SPEAKER_03We're deleting those. Oh, yeah, we're deleting all bad takes.
SPEAKER_00Absolutely. Money calling. No, it's not. Oh.
SPEAKER_03It's spam.
SPEAKER_00I've been getting in the habit of that recently with um my LOs that when I'm training them. If I get a spam call, I'm answering it. I'm I'm seeing how they're ARP me. And I'm just showing them like, yo, this is a good salesman, this is a bad salesman.
SPEAKER_03That's probably bad to say, but I hang up immediately.
SPEAKER_00Oh, I answer everyone now.
SPEAKER_03If I if I answer them, but if it takes too long, like if there's like a pause, oh yeah, click.
SPEAKER_00Oh yeah, my attention span's gone.
SPEAKER_03If you answer the phone and you give me your ID number, click. It is the the the worst ones are the so realtors get these calls from these agencies that are like trying to sell leads, right? Oh, yeah, yeah. And they always pose like they have somebody on the phone. They're like, uh, yeah, we we work with a lot of uh veterans, and uh, you know, for a small fee at the closing, we can uh you know, we can connect you guys, which is a referral fee, which is normal. Then you say, Okay, shoot me their number. Okay, there'll be a small setup cost of 295. And I'm like, wait a minute. No, that's not how this works.
SPEAKER_00No, have you ever been tricked by those? Have you bought those leads?
SPEAKER_03Never. Good, never. The only one that that tricked me when I was brand new to the industry was Zillow. Yeah, and never again will I pay for a Zillow lead.
SPEAKER_00Where they take 30% of your commission on the back end?
SPEAKER_03Oh no, this was before this. Zillow was just a website when I was doing this. They they weren't they weren't a brokerage yet. Okay. Uh Zillow, Zillow's better now. But when I was doing it, what they had you do is they would call you, they say, hey, we've got this many leads in this zip code. Would you like to be our exclusive agent for that zip code? For the for the low, low price of $500 a month. They lock you in for a six-month contract. Of course. And for $500 a month, you're the only agent that these people are gonna call in this zip code.
SPEAKER_00That's pretty cool. But if you don't sell alone, if you don't sell a home, yeah.
SPEAKER_03One home will pay for itself, but if you don't sell at home, I must have bought the shittiest zip code they had because the people that I got, my phone was ringing off the hook, don't get me wrong. Yeah, but the ones that I that I was able to answer and vet were all uh investors, uh people were renting. Um they just they just weren't qualified leads. Yeah, it was it was a crapshoot. It was people visiting the website. Zillow has so much traffic, that's what they did have right. Zillow has traffic, they have traffic, so you're gonna be able to get something out of the lead, but um, you know, it is it was going through the weeds in the dark that that turned me off. They've got a much better system now, so I'm told.
SPEAKER_00I've interacted with one Zillow lead. Um, that one of my realtors, uh, me and him were trying to work it together. She was an investor, and um she talked to him, he referred her to me. We had a great conversation. This is what you're trying to do, this is what you qualify for, this is where your income comes into it. You're gonna afford this much of a home. Here's your pre-approval letter, we're good to go. He already had a list of five houses, she's ready to go. She ghosts me for a couple days. I'm like, all right, that's kind of weird. And then I'm like, hey, what's going on? And then she emailed both of us and was like, Yeah, you're unqualified to do this. And I'm like, out of any of our conversation, you had no problem. What made you think I was unqualified? And she's like, Oh no, not you, the realtor. I'm like, Okay, and why is he unqualified? Oh, he's just young and new to the market. Okay, but he gave you three houses that are good investment turnkeys. Right. I knew what I was doing. I trusted him and I still trust him. We've closed loans together.
SPEAKER_01Yeah.
SPEAKER_00What makes you so special? And she's like, Oh, I only want to work with a realtor, uh LO duo. And then a month later, she finds a different LO. So she doesn't go through the realtor route, she finds the LO route. That LO refers unknowingly him, her back to my realtor. Wow. So he called me, like, yeah, what's up? She's like, no. So yeah. And now she didn't own a home because she was scared to pull trigger because. We aren't experienced enough, even though it makes no sense. It's like, bro, if the deal makes sense, the deal makes sense. Just because your realtor's young or your your LO's young doesn't mean we don't know what we're doing.
SPEAKER_03Yeah, I've I've I had to overcome that. Because I got my real estate license at 23. Yeah. So people ain't take you seriously, I'm just at all. Oh yeah. At all. My first listing was a uh for sale by owner. Um I ended up just listing, you know, just to get something in.
SPEAKER_01Yeah.
SPEAKER_03I ended up listing the house for what the guy said he wanted to sell it for. I knew the value was way lower.
SPEAKER_01Yeah.
SPEAKER_03And I told him the value was way lower. And I'm like, hey man, like I'm new at this. What would it take for me to get your business? Yeah. He's like, you got to list it at this number. All right. Fine.
SPEAKER_00You're not going to sell it, but I'll list it there.
SPEAKER_03Yeah. To get my name out, to put my sign in front of your house, I will list it at the number you want. With the exception, like, hey, if it doesn't sell at this number, we're going to drop the price in two weeks. Because I guarantee you, we're not going to get a showing.
SPEAKER_01Yeah.
SPEAKER_03Uh two weeks pass, no showings. He fires me, puts it back up on the market for sale by owner.com at the price that I told him. Then tries to call me after he gets a contract to be the transaction coordinator. Oh, yeah, for sure. For $10,000, I got you. No, it was it. I only charged him like $1,200, but I needed the money. Yeah.
SPEAKER_00That's fair. That's fair.
SPEAKER_03So I mean, like, and that was that was that was my first lesson in not compromising.
SPEAKER_01Yep.
SPEAKER_03Like, so I learned all this stuff early. That was my very first listing. I had sold like uh, you know, I was a buyer's agent. Yeah. Um, started out as a leasing agent. My leases turned into buyers, and then eventually I'm like, hey, I gotta start selling some houses. You grew with your clients. Exactly. Exactly. Every time they stepped up, it opened a new niche for me. Yeah. But, you know, had I waited for that seller to come to his senses, he might have sold the house without me. He wouldn't even have my number had I not been willing to say, you know what? Yeah, I'll take it on, but here's what's gonna happen to demonstrate my expertise because I was so young, I had to risk letting him lead the conversation to get the opportunity.
SPEAKER_00That's the biggest mistake I feel like a lot of LOs make, myself included when I started, is you or we let a lot of borrowers tell us what they want and what they think they want. But we know better. And we know we know better, but we don't want to be real with them and tell them, like, yo, that's not gonna happen. You're not gonna sell your house for that much, you're not gonna get a 5% rate. These things just aren't in the realm of possibility. Not that I don't want to give it to you, I'm just telling you it can't happen. But is that gonna shut you down? You're not gonna do anything because that can't happen. I think that's like the biggest pet peeve of mine. But I don't know. Like, I feel like people are afraid to hear the reality of the situation, especially what I think is crazy is people think they're gonna get a great deal in a terrible economy. People think they're gonna be the one person in the millions of people in the economy that are like, oh, well, this economy doesn't apply to me. I'm better than that.
SPEAKER_03No, here's here's the the the mindset. Like, I tell people like not even tell people anymore, but when I used to do my my real estate pitches, I would have to let people know, like, hey, you're trying to sell your house for top dollar. Yep, because everyone is, everyone wants top dollar for their house, and I'm gonna get you top dollar. But then you're gonna go on the buying side, and you're gonna want the lowest price, you're gonna want the bottom price in the same economy, in the same market. Where you just sold it. Where you just sold your house for top dollar. Those two things cannot be true at the same time. So we need to, we need to, you know, we need to manage our expectations here. We got to make sure that we're we're not making offers in La La Land. If I sell your house in top dollar and you go try to buy in the same neighborhood, you're also not gonna pay top dollar, but you know, you're gonna pay higher than what you want.
SPEAKER_00Yeah, 100%. And because you're not gonna get the best of both ends. You're just not, yeah.
SPEAKER_03You're not gonna get everything you want. I I want I want to get your house to as close to free for you as I can, but we both know that's not a realistic scenario. Yeah.
SPEAKER_00And like that's why I feel like it's big on this side of things too, is everyone like everyone's like, oh, well, I want your best rate. It's like, well, bro, you haven't even told me your credit score yet. Do you even qualify for the best rate? And that's what kind of that's why I've been teaching all my LOs recently, is like, I don't give a fuck what the borrower wants, I give a fuck what they qualify for.
SPEAKER_03You know what? I'm gonna push back on that.
SPEAKER_00Not that I don't care what they want, but yeah.
SPEAKER_03Yeah, give them, give them whatever they want. Yeah, 100%. That's the floor. Yes. Then I'm gonna give them advice.
SPEAKER_00Okay, yeah.
SPEAKER_03So if you call me for a $50,000 equity line of credit, cool. I can do that for you. Absolutely. Right now I have no problems. I have no issue with that. I can do a $50,000 home equity line of credit for you, no problem. What are you gonna use the money for?
SPEAKER_00Paying off some debt. Paying off some debt. Consolidating. I also want to put $10K into my bathroom.
SPEAKER_03Yeah, yeah. Well, what so $10K in the bathroom, what are you using the other $40K for? Is that all debt? Is that all credit cards?
SPEAKER_0030 of that, and uh one another $10 just in my pocket.
SPEAKER_03Well, what type of what type of debt do you have for $30,000? That's not all credit cards, is it?
SPEAKER_00Oh, I got one personal loan at 24%.
SPEAKER_03Okay, yeah, yeah. That's yeah, we're definitely rolling this in. 50k in the home equity line of credit sounds great.
SPEAKER_01Yep.
SPEAKER_03Um, hey man, did you know your credit score is a 600?
SPEAKER_00U uh yeah, I did. Yeah, I knew that going into this.
SPEAKER_03Okay, perfect. Yeah, perfect. So, what what options I have for you in front of me right now? Um, equity line of credit's not gonna work, but it looks like you got enough equity to pull that out of your house in cash.
SPEAKER_00But I like my 2% rate, man.
SPEAKER_03Oh, I love your 2% rate. Uh, but that 24% rate in your loan meshed together with that 2% year rate actually has you paying about 10 to 12% right now.
SPEAKER_00All right, but uh I can't tell my neighbors about about how cool I am at my 2% rate. So you want me to get rid of that status I have?
SPEAKER_03No, what I can do is I can give you more cash than you were gonna get in the home equity line of credit. And I'm gonna drop your effective interest rate to about a 5%. Ooh, okay. So you know what? Here's what I'm gonna do for you. I just switched you from a $50,000 equity line of credit to a payment that's gonna save you $500 a month and put another $50,000 in your pocket.
SPEAKER_00All right. That that sounds pretty good. It's okay. It's not what I wanted, but you know, it's it's cool.
SPEAKER_03No, I'm telling you, this is what you want.
SPEAKER_00I gave you more than what you wanted. I guess so, but I want to keep my 2%, man. I'm gonna find that one reason to stick to to tell you no. It's keeping you warm at night. I know it is. It is.
SPEAKER_03But what we're gonna do is what's paying in you more? The $500 boat payment, the 24% loan. That boat's fucking like I'm just start listing it out. Yeah. Start listing it out for them. And then, like, once they see that picture of like, oh shit, this guy's right. I'm paying $3,000 a month, but I'm keeping my $800 mortgage payment.
SPEAKER_00Yep. And that's still where I do want to give them what they want. I want to put every borrower in a better position. But like when I say like I don't care what you want, I mean it more of like if you're so dead set on a home equity line of credit, but you don't like I feel like I have people with 500 credit scores making 800 credit score demands right now. But the people with 800 credit scores don't even qualify for those same demands in this market. Oh, well, yeah, my credit score is a 580, but I want a 5% on an 80% loan to value cash out right now. Man, what world do you live in right now? I had someone yesterday, they're like, Oh, I'm not doing any loan if I'm not gonna get a 4%. That was off the dome. And I'm like, the treasury's at 4.6. What makes you think the government is gonna lose money lending to you?
SPEAKER_03No, I and I'm I'm fine with boundaries. For sure. Yeah, you don't want to you don't want a loan less than four percent, but what if I could get you an effective rate? A blended rate of 2.3. Does that does does that spin the wheel? Like if I take all of your debt and consolidate it, yeah, and you're only paying 2% interest, yes, your mortgage payment goes up with your but your other debts go away.
SPEAKER_00That's true. I feel do you think people get stuck on going backwards on their mortgage though? Like in their mind, like, oh, I'm adding money to my mortgage.
SPEAKER_03I don't think I've had an issue with that. Okay. I've heard people say it, but when we sit down and we go through the numbers, they realize it doesn't matter. Yeah, there are certain scenarios where that makes sense. You got two years left on your mortgage. Okay. Then you can tell me, hey, I don't wanna, I don't wanna start over.
SPEAKER_01Yeah.
SPEAKER_03But anything more than than a 15 year, yeah, what are you talking about?
SPEAKER_01Yeah.
SPEAKER_03It makes it makes zero sense for you to continue to suffer paying more than you have to.
SPEAKER_00And that's where I feel like people have to understand. Like, I had a guy the other day, I might have talked about this like a week or two ago, but I had a guy uh that was texting about getting a cash out. He was like, hey, like off the gate, he's like, I want to borrow $70,000 and keep my payment exactly where it is right now. Cool. What world do you live in? Like, let's just talk about reality. Where do you think you're gonna borrow more money and pay the same amount you're paying for the amount of money you're borrowing right now?
SPEAKER_03That that goes back to where are you in your mortgage? Yeah, because if I buy a $450,000 house and I've paid it down to $100,000, then I absolutely can borrow $70,000 and still pay. I might even be able to borrow more.
SPEAKER_00If you haven't refired in X amount of time, you're stretching out enough, right?
SPEAKER_03So I bought a I bought a $400,000 house 20 years ago. I've got 10 years left on my mortgage. Yeah, I'm still making the payment on $400,000. Right, yeah, that's true. If I refinance at $200,000 over a 30-year period. Over a 30-year period, now my payments cut in half, and I got a hundred grand in my pocket.
SPEAKER_00That's why I don't understand too, is like why even be afraid about resetting because you can still pay that mortgage off tomorrow if you win the lottery. Just don't get it.
SPEAKER_03Because nobody, yeah, nobody points that out to them. Yeah, a lot of a lot of LOs will say, Oh, okay, you don't want to do anything, and then they give up on the call instead of pointing out the obvious.
SPEAKER_00Yeah.
SPEAKER_03I I mean, I broke this lady's brain one time. She she's like, How how does the payment get lower if I borrow more money? I'm like, Well, ma'am, you you paid $500,000 for this house, you put 20% down, and you've been paying on it for you know 12 years now. You haven't changed your deal at all. Exactly. You you've still you're still paying for the houses if you owe $500,000. What we're gonna do is we're gonna cut that in half. You're only gonna pay on $300,000 now.
SPEAKER_00Even at a higher rate.
SPEAKER_03Exactly.
SPEAKER_00Higher rate, I'm still lowering your payment. And again, that's what we talked about earlier. I don't think the rate matters. It's what it does out of pocket every month. That's what's important.
SPEAKER_03The rate only matters to the bank because that's how much money they make off of you. Yep. So that's why you see on your pricing sheet that they're willing to give credits and pay people to borrow money at higher rates because they make more money off of those rates. And what happens when you try to get a low interest rate? You got to pay more up front.
SPEAKER_00Yeah, you do. Yeah, you do. Those loans cost more money. Ooh, I've been wanting to ask you about this, and it's probably a stupid question to ask with five minutes left to go about, but do you think there's a benefit to buying the rate down substantially? Not temporary buy downs, because I see benefits to those. But if I'm if the market's at where it is currently, at the six and a half-ish percent range, even with good credit, do you see a benefit in putting 20k down on the rate to buy it to five and a percent to make your payment more manageable? Because I always think if I got 20k to put down, I'm gonna just go put that into the mortgage and pay down the property and get more equity.
SPEAKER_03There's a lot of factors that go into that. Um, but high loan amounts, it would definitely be worth buying the rate down because what's high do you over 700,000?
SPEAKER_00Okay.
SPEAKER_03You're looking at yeah, 600, 650. Yeah. Anything over 650, because the interest compounds so quickly on that dollar amount per diem, like you don't you really don't have a choice.
unknownYeah.
SPEAKER_03You're gonna be paying two, three thousand dollars in interest every month. Yeah, true. Even if you have a low rate, yeah, it's true. So if I can put an extra 20 down up front to get, you know, get my five percent down to four and a half, that's saving you a lot. That makes more sense because it's saving me more in the long run. That you're talking about 300 bucks a month.
SPEAKER_00But the average person saving, let's say, an extra 60, 70 in a $300,000 house. No, it's juice isn't worth the squeeze. Yeah, it's not affecting you enough.
SPEAKER_03Yeah, and it's not even that it's not affecting me, it's just that, like you said, as a borrower, I mean re-amortizing that loan, if I got extra 20K, I save more paying less on the principal than I do in the interest rate. When you get to those higher loan amounts, it doesn't have the same effect on your interest rate because you're not affecting your principal balance.
SPEAKER_00That's true. We should do uh, you just put the idea in my head, we should do an episode or like at least half an episode where you just go through amortization, go through calculators, show different amounts. Because I feel like people don't realize until they see it in front of I didn't realize this until I was here, just how much you're paying in interest sometimes over the life of your loan. If you stretch it to 30 years, you're paying triple the value of the house sometime.
SPEAKER_03I I love it though.
SPEAKER_00I do too.
SPEAKER_03So here's I mean, just just real quick, we we can do a whole episode on it, but yeah, like real quick, because you posed the question the longer it takes you to pay off anything, the more interest you're going to pay. Absolutely. That's what interest is. It's the it's the cost to borrow money to borrow the money. So if it takes you 30 years, if it takes you 360 months to pay me back, you're damn right you're gonna pay more than it costs.
SPEAKER_00Yeah, absolutely. Let me hold $100 for a week and a month. That's a different cost.
SPEAKER_03That's what I'm saying. If I come to you and say, hey Liam, give me a thousand bucks, man. You know, and I'm I'm gonna pay you back uh in 2056. You know how much you're gonna be able to do it.
SPEAKER_00So you mean 2056?
SPEAKER_03I'm gonna pay you back in 2056, man. I'm good for it. I'm gonna pay you a dollar a month. A dollar a month until 2056, bro.
SPEAKER_00And they'll do a balloon payment of whatever's left.
SPEAKER_03So, like, I think when you do it with smaller numbers, it hits it hits a little harder for people. Like, oh shit, yeah. Okay, now that makes sense. Um, but yeah, man, that's that's the opportunity cost episode.
SPEAKER_00Yeah, don't wait. Plan. Put a plan together, put a financial plan together. Come to daryldibs.com, we'll put a financial plan together for you for whatever. Everything.
SPEAKER_03No, but like a ghost kitchen, like a DoorDash kind of so man, what's uh hey, if you enjoyed this episode, I want to know what's one financial decision you're putting off because you're waiting for the perfect time.
SPEAKER_00And what does that perfect time look like for you?
SPEAKER_03Yep. So, you know, like, subscribe, share this episode with your friends. This is first in future finance. I'm Dibbs.
SPEAKER_00You can't even get our name right, man.
SPEAKER_03You know what? I'm gonna do it again. I'm gonna do it again. Thank you. Thank you. Yeah, like, share, and subscribe. All right, leave a comment. I like that too. This is first in future finance. I'm Dibbs. That's Liam. Yes, sir. We out of here.