I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quite mediocre neighborhoods. Then you’ve got Better, average sized homes in nicer neighborhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
I agree, having a brokerage advisor for investing is genius! Amidst the financial crisis in 2008, I was really having investing nightmare prior touching base with a advisor. In a nutshell, i've accrued over $2m with the help of my advisor from an initial $350k investment.
The decision on when to pick an Adviser is a very personal one. I take guidance from “Gertrude Margaret Quinto” to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.
Home prices will come down eventually, but for now; its best to offset some of your real estate investments and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes. If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
My CFA ’’Carol Vivian Constable’’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Carol.
If Ray has $40k he should pay off his car and credit card. He will then have a better credit score in no time and $700 more a month to save in a high yield. Ray is not ready to purchase a home in my opinion. There’s no proof homes are going to keep going up the way they have or that rates will go up or down. Why would someone want to be in debt and struggle to own a home? Not a good idea.
I think Ray financed the car to try and raise his credit score. The issue with that line of thinking is that if the car was financed to raise the credit score it will take time for the payments to have an effect on the credit score. Sort of a catch 22.
If he paid off his car and credit card, he now dont have enough down payment for the 3.5% fha loan, so now he cant buy any house, even a condo. Its better to have that down payment and emergency fund, cash for furniture, moving.
@@wl6020great he has a home he can’t afford and is in debt. If he has one emergency he’s in big trouble. Or he will just add that emergency to his already jacked up credit card. You are right because that’s the American way. Hence the trillions in credit card debt. No! You pay off your debt before you make the biggest purchase of your life. You save for the emergency fund, then you save for your down payment. I seriously don’t think he will wipe out $40k on his current debt and if he picks up a side hustle and saves the $700 in 2 years or less he will be back to where he was but debt free. This is what’s wrong with people today. You want it all but can’t afford none of it.
400K is really a minimum for a 3/2 in a Phoenix area where you don't have to drive an hour and a half to work or shoot your way to your parked car. 200K might get you a trailer in a rented trailer park spot. Cheap houses in the hood are still over 300K.
I'll say that the electric bill in my 2020 built home is around $100 a month th LESS than my 2005 build home. I'd say it's around 25% less and the new house is twice the size of my current house. Everything is more efficient, better insulation in walls and crawl space. Expanded foam insulation in roof, double pane windows, more efficient A/C and heating units, etc. Pretty wild but it's a nice perk.
My rule is that you must be able to pay the entire mortgage including hoa taxes and insurance with 2 weeks of pay if single and only using a single persons pay if married. This rule will keep you in line. 😊
Totally agree. When budgeting for how much rent/bills is reasonable for my spouse and I, I only take my own income into consideration and ignore his. That way, in the event one of us loses their job, we can still comfortably get by on one income. Definitely gives a stronger sense of financial security
We went even a step further. We made sure that our entire budget could be sustained off just one of our incomes other than daycare and the other income is for daycare for now and saving/paying for the kids extra curriculars and vacations.
To my own research In USA, individuals living in cars due to partial homelessness result from a complex interplay of factors. High housing costs relative to income, stagnant wages, and income inequality drive this issue. Job loss, weak social support, medical expenses, evictions, and lack of affordable housing also contribute, while systemic problems and inadequate policies further perpetuate the phenomenon.
Considering the present situation, diversifying by shifting investments from real estate to financial markets or gold is recommended, despite potential future home price drops. Given prevailing mortgage rates and economic uncertainty, this move is prudent, particularly due to stricter mortgage regulations. Seeking advice from a knowledgeable independent financial advisor is advisable for those seeking guidance.
I've remained in touch with a financial analyst since the start of my business. Amid today's dynamic market, the key difficulty is pinpointing the right time to buy or sell when dealing with trending stocks - a seemingly simple task but challenging in reality. My portfolio has grown by more than 5 figures within just a year, and i have entrusted my advisor with the task of determining entry and exit points.
Finding financial advisors like Margaret Johnson Arndt who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for the information. I conducted my own research and your advisor appears to be highly skilled and knowledgeable. I've sent her an email and arranged a phone call.
The biggest issue with these house prices is these fixed percentage costs. I mean 5% to buy a house in fees on a median house is almost 30,000 dollars. That's nuts. That's so much more money than most people have. I mean that's like a car that you're paying just in fees. EDIT: And for Ray he can rent that same house for 1850 instead of paying that 3080 mortgage.
We have a fairly new home (13 years old) and had a flood in our basement, had to replace the AC unit, we knew the back door needed to be replaced when we moved in, and a hail storm broke our fence and damaged our roof. All in the first 2 years after we bought it (only owned it 3 years). Some of it was covered by insurance but no where near the total. The sad truth is if $30k seems like too much to save to even buy the home, you are not in a financial place to even own a home and be able to deal with maintenance if it all hits you at once. Even if the payment would be less than or the same as rent for someone.
Thank you Javier! I have been planning to buy a house and been researching this stuff for a couple of months. And this is the most informative video I have seen. I had no idea what DTI was or house the loan qualification was even computed. Thanks for showing us the way. Keep up the great work!
Finally found the channel again! All I have to search was “Real Estate Arizona Javier” and you where in the 2nd page lol Subscribed so I don’t lose this channel again
People spend way more than 20-30% of their net income for rent nowadays. That % is not applicable anymore at all for rent nor mortgages in major cities with median income. Buying is for quality of life and security. These have a value that cannot be quantified with rent vs buying scenarios. Also your real cost of buying is the interest and taxes. Your rent will also increase without any limits over time, but your house can be paid much faster than 20 years offering a safe place to stay with no risk of getting kicked out and will offer leverage with the capital paid and value gained over time. Yes this guy should buy his house unless he has a crazy low rent while he stacks more.
Sometimes buying a house is what you have to do. I didn’t have savings when I bought my house. But I also knew that there was no place that would rent to me with 4 cats plus I needed room for my mom. I was living in a home that was owned by my grandparents in a sketchy part of town and I had gunfire right in front of my house and finally had enough. My mortgage is currently 1400(which includes the insurance and taxes of course). FHA loan includes the MIP. Now, I was lucky to have bought the home at the price I did, when I did (2021), with an FHA loan which allowed me to put very little down. At the beginning of my loan term it was only over 1200 a month that I paid but insurance went up. I would be paying about 2 grand for a place for my mom and I and two cats… I would have had to rehome two of my babies. Was never going to happen. The cats have made me a better adult and I now have some savings and some investments and I was able to change jobs because my monthly payment was reasonable enough to make it possible to take a risk. My family is safe too and live in a nice neighborhood. The investment was well worth it to me.
Solid advice. I feel it’s rare to find this kind of knowledge on UA-cam. Can’t trust these finance guru nowadays. Also this math applied to my situation a year ago and I’m so glad I backed out of my contract. I am going to just rent for now.
My mortgage lender approved me for $3200 and that’s what my house payment was going to be! I was stupid and thought I could afford it because I got approved.
I really appreciate this video because like Ray we are in a similar situation. Child car costs are just too much and may prevent us from buying a home. As painful as it is with our strong “Why” it does mean putting on our adult pants like you said and admitting that no purchase is better than a highly leveraged purchase.
We are in the same situation as you. We think renting a 3 bedroom condo is a better financial decision than buying the a bigger house just to be comfortable.
The answer is, HELL NO! There are so many things wrong here. I hope Ray is no longer seriously considering such a expensive house after this video. The answer is NO, NO, NO. You have to consider upkeep costs which cost several thousands a year, it's not just mortgage.
Dope video. And math is deff not boring lol. But if ppl wait until they can afford it, then the working class will just be waiting and blowing money on rent for a sentence of about 10 to life. So it boils down to that "why" at the end of the day.
The working class needs to get past the idea that renting is blowing money. Ownership has its share of expenses (taxes, insurance, opportunity cost, interest, maintenance, fees, etc) that have no residual value. Rent intelligently and most people are better off from a net worth perspective renting and investing the difference into a low cost index fund.
@BTrain-is8ch I agree with you bro but for most ppl working 9-5s they "difference" to invest is probably 2 to 5 hundred a month if they want to live tight. And it's easy to invest passive income. Investing hourly wages is hard as hell. So they don't do it. Better off owning, in my opinion. Now, if you live somewhere popping and you can rent for less and you make good money, then they can look at the option.
@ericg1149 what I'm saying.. and then when we want to buy fast, we are told not to feel rushed lol. Soo we sit back and watch prices or rates go up. Or both 🤣
Right off the bat before Watching the rest. Why have a credit card balance if his income is pretty high? Should definitely pay that off unless is an insane amount or 0% interest but in either case he should pay the card off in full before buying
And I generally do not even recommend relying on spousal income because if your intention is to have children, you never know if your wife has a complicated pregnancy or delivery that has her out of work for a while, and that can mess things up too and then on top of that you now have an added expense of children. Pregnancy and delivery and health of the child you conceive are not guaranteed smooth rides. She could end up on bed rest 7 months into the pregnancy, the child you have could end up disabled or ill and then someone will have to stay home...all things that need to be considered IMO.
He needs to pay off his car loan he has $40,000 once it paid off he can take that extra $610 save it for the next 2 years that would make it his home more affordable to buy , people don’t realize these car payments are making you poor.
This is almost my scenario with some minor differences . Thank you for the video! I make just about $100k and will be making more in the next 3 years while my wife is staying home with the kids. Once all the kids are in school, she will go back to work. We have a home but in need of a bigger home because our family is growing. I also have teenager from a previous marriage that was very toxic which brings the total amount of people to 5 in a small 1k sq.ft home. If I sell the current home, I’ll have almost $100k to put down on a $400k home. It would be tight with the current rates but it would only be for a short period.
Is the takehome pay you're using before taking out 401k contribution and employer provided healthcare deducions also or is it just after tax take home by itself. Ive had this question for quite a while now.
Because they want their commissions. Can't sell houses if realtors go by net. It's the buyers who need to be educated and dictate to their realtor what they can afford.
Yeah, so want to do a response video to this.. fix expenses and credit ASAP, what’s his rent? Buy a home: yes! Upgrade to a $450k home form where he’s renting, no.. do his taxes change with a purchase? Maybe try to be creative on seller credits to keep more of that savings after purchase.. my advice, run the numbers and budget like you own the place and you’ll get comfortable in 6 mos or a year on if you can afford it… otherwise consider buying something like what you are currently renting (condo/townhome)!
Everyone is basically in the same boat but I wonder what’s going to happen when prices and interest rates drop and suddenly everyone can afford a home? Prices raise back to what they once were?
Even if you are making six figures, getting a 400k starter home is wild unless someone is helping you on the outside. If you know you are staying in one location for a while, it is better to get a cheaper house in a developing area. Then, use the equity from that house into your next house. Cause buying a house is half the battle. Maintaining these things suck especially while still trying to save to retire and handle regular life stuff.
I have a 115k home that I have remodeled ie. totally up to date kitchen and bathrooms. I pay $200 pmi monthly Overall, My min monthly payment is $750 with a intrest rate of 3.75; 30 years Should I refinance to drop my pmi? Or just start slapping 2k a month on the mortgage?
Well yeah it makes 100% sense. Well the people writing the loans are looking for an 8% interest rate and all those other people involved are looking for a cut for themselves. So with high base level prices they will need to collect a ton of cash to make the whole process work.
This is a classical case of supply and demand. Where supply has been suppressed and the people with money are taking advantage! The big investors we know will sell their investments as soon as the profit wanes. But can a person who needs a house sell if it is not profitable, No he is stuck with that overwhelming debt. Remember 2007-2011 houses were selling for less than it cost to build them? A Decade of record low interest rates.....and not building enough homes combined with high need is the problem, Build your own home!
A depreciating asset, I hope he has gap insurance, if it gets totaled he's screwed, paying the difference and no car. My friend learned that lesson. paid for a totaled car for over a year to pay it off.
Maybe the specific area thats the onky thing actually move in ready that won't cost him more money in the long run to fix up. Prices are just too damn high everywhere. I get the starter home arguement, but you shouldnt be dumping $2k/month into a start home you have to fix.
I net 4.5k and I bought a house last year in NJ..small 700 sq ft mortgage about 2k..but I couldn’t rent anymore and watch people mooch off the government and party all day while I busted my ass..so now I love my tiny overpriced home and no shared walls and a yard. Life is short
I just want to buy a decent house in a decent neighborhood that isn't over 250,000, I can put down a good amount. Just seems like everything is still so astronomically high for no reason.
It's unaffordable because he is competing with people that already own in this market that are using the sale as their down payment. Why does he feel he has to buy a house? Why not a condo or townhouse?
Well there's no distinction really in this example. It's just a specific amount. In my market, townhouses are in this price range (no yard. Shared walls. One car garage).....its the entry level mark for us where we live in this exact price point.
How you gonna say dude is a red flag because he probably only has 40k saved up. Lol. He’s making 93k a year. He’s in a much better position than probably 85% of potential home buyers 🤦🏽♂️
He might be in a better place then most. But 40k isn’t much now and days. If you’re buying a 450k house you will eat most of that up between down payment and closing cost and won’t be left with much.
All dude gotta do is pivot, his uncle probably knows what builders are offering PAID closing costs so many incentives on new builds right now. Hell, he can also decide to commute, and go for a USDA eligible area. Lastly, I’m sure if dude is making 93k and has 40k saved, if necessary he could slightly tap is 401 if necessary (last resort). Bottom line, he’s definitely NOT a red flag.
i bought my first house in 2011 for 225k making 110k , my secound was 378, and i was making 210k.. both my houses in denver are now over 1 million.. with that said, i know people getting approved for 250k making 40k😂😂😂wtf .. what's wrong with banks
Don't buy in an inflated market! The equity earned today is future equity that you would have made if this market was not inflated. In other words if the market goes up more, and you gained proper equity who can afford to buy you out then...The bloated market stole your future equity.
I don't have to finish this to know that the answer is - this guy can't afford the house.. a lot of Dave Ramsey energy here. Also banks use gross as oppose to net for a reason. You can make changes to your deductions that will increase ur net, but you can't do the same for gross.
I bought my house 8 yrs ago for $215k when I was barely making $16hr and my wife just had our first child and wasn’t working my payments where $1450 and I had no savings at all, I put 5% down for a conventional loan which was about $13k and my rate was 4.375%. I took off the PMI then refinanced for 25yrs for 2.875%, we struggled to make it while my wife didn’t work after our second child was born and she took 4 yrs off.
We bought our 2nd house in 2017. We were making 130k and putting 90k down on the next house. We started looking @400k. Couldnt find something the worked. We needed an inlaw apt. Raised it up to 450k. And found a great house. But that was our max price. We did look at 1, 500k house. I just couldn't do it. Although it was beautiful.. we weren't debt free but working on it. We became debt free in 2018 and refinanced to a 15 year in 2020 @2.5. 9 years left. This is on the south shore of Massachusetts. We could have bought a lot more house but im so glad we didn't.
He needs to in the next 3 years increase the credit, pay off the car or sell it, maybe get married and have the wife bring 3 to 5 k. Then at the minimum double the savings at least and look for a cheaper home.
Ok so he cant afford that house, but why cant he buy a cheaper house? Thats something i never hear every time i watch these real estate videos. I never hear these experts tell them to buy a cheaper house.
I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quite mediocre neighborhoods. Then you’ve got Better, average sized homes in nicer neighborhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
I agree, having a brokerage advisor for investing is genius! Amidst the financial crisis in 2008, I was really having investing nightmare prior touching base with a advisor. In a nutshell, i've accrued over $2m with the help of my advisor from an initial $350k investment.
*@sofiakhalidda* That does make a lot of sense, unlike us, you seem to have the Market figured out. Who is this consultant?
The decision on when to pick an Adviser is a very personal one. I take guidance from “Gertrude Margaret Quinto” to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Thank you for this Pointer. It was easy to find her handler, She seems very proficient and flexible. I booked a call session with her.
Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.
Home prices will come down eventually, but for now; its best to offset some of your real estate investments and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes. If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
My CFA ’’Carol Vivian Constable’’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Carol.
If Ray has $40k he should pay off his car and credit card. He will then have a better credit score in no time and $700 more a month to save in a high yield. Ray is not ready to purchase a home in my opinion. There’s no proof homes are going to keep going up the way they have or that rates will go up or down. Why would someone want to be in debt and struggle to own a home? Not a good idea.
Agree 100%. Looks like people are brainwashed into "financing" a house even if they can't afford it.
I think Ray financed the car to try and raise his credit score. The issue with that line of thinking is that if the car was financed to raise the credit score it will take time for the payments to have an effect on the credit score. Sort of a catch 22.
If he paid off his car and credit card, he now dont have enough down payment for the 3.5% fha loan, so now he cant buy any house, even a condo. Its better to have that down payment and emergency fund, cash for furniture, moving.
@@wl6020great he has a home he can’t afford and is in debt. If he has one emergency he’s in big trouble. Or he will just add that emergency to his already jacked up credit card. You are right because that’s the American way. Hence the trillions in credit card debt.
No! You pay off your debt before you make the biggest purchase of your life. You save for the emergency fund, then you save for your down payment. I seriously don’t think he will wipe out $40k on his current debt and if he picks up a side hustle and saves the $700 in 2 years or less he will be back to where he was but debt free. This is what’s wrong with people today. You want it all but can’t afford none of it.
100%
As a mortgage professional I love your "should you buy a home" chart!
Ray better sit down and find a house for $150-200k because once that electric bill hits .ITS OVA!
$200k in phoenix will get you a trailer park
400K is really a minimum for a 3/2 in a Phoenix area where you don't have to drive an hour and a half to work or shoot your way to your parked car. 200K might get you a trailer in a rented trailer park spot. Cheap houses in the hood are still over 300K.
His electric bill will be through the roof. AZ electric is freaking high.
@@autobiografy while 200k in southern illinois could buy a whole park
I'll say that the electric bill in my 2020 built home is around $100 a month th LESS than my 2005 build home. I'd say it's around 25% less and the new house is twice the size of my current house. Everything is more efficient, better insulation in walls and crawl space. Expanded foam insulation in roof, double pane windows, more efficient A/C and heating units, etc. Pretty wild but it's a nice perk.
My rule is that you must be able to pay the entire mortgage including hoa taxes and insurance with 2 weeks of pay if single and only using a single persons pay if married. This rule will keep you in line. 😊
Agree we got the house under one person, knowing we can afford it on one income.
That makes you house poor @@DaniDani-ml8xk
Totally agree. When budgeting for how much rent/bills is reasonable for my spouse and I, I only take my own income into consideration and ignore his.
That way, in the event one of us loses their job, we can still comfortably get by on one income.
Definitely gives a stronger sense of financial security
We went even a step further. We made sure that our entire budget could be sustained off just one of our incomes other than daycare and the other income is for daycare for now and saving/paying for the kids extra curriculars and vacations.
this is my philosophy too as a single person, i have to be able to pay my mortgage (prev rent) and utilities with one biweekly paycheck.
To my own research In USA, individuals living in cars due to partial homelessness result from a complex interplay of factors. High housing costs relative to income, stagnant wages, and income inequality drive this issue. Job loss, weak social support, medical expenses, evictions, and lack of affordable housing also contribute, while systemic problems and inadequate policies further perpetuate the phenomenon.
Considering the present situation, diversifying by shifting investments from real estate to financial markets or gold is recommended, despite potential future home price drops. Given prevailing mortgage rates and economic uncertainty, this move is prudent, particularly due to stricter mortgage regulations. Seeking advice from a knowledgeable independent financial advisor is advisable for those seeking guidance.
I've remained in touch with a financial analyst since the start of my business. Amid today's dynamic market, the key difficulty is pinpointing the right time to buy or sell when dealing with trending stocks - a seemingly simple task but challenging in reality. My portfolio has grown by more than 5 figures within just a year, and i have entrusted my advisor with the task of determining entry and exit points.
Mind if I ask you recommend this particular professional you use their service? i have quite a lot of marketing problems
Finding financial advisors like Margaret Johnson Arndt who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for the information. I conducted my own research and your advisor appears to be highly skilled and knowledgeable. I've sent her an email and arranged a phone call.
The biggest issue with these house prices is these fixed percentage costs. I mean 5% to buy a house in fees on a median house is almost 30,000 dollars. That's nuts. That's so much more money than most people have. I mean that's like a car that you're paying just in fees.
EDIT: And for Ray he can rent that same house for 1850 instead of paying that 3080 mortgage.
Most people are terrible with money. Don't be one of these.
We have a fairly new home (13 years old) and had a flood in our basement, had to replace the AC unit, we knew the back door needed to be replaced when we moved in, and a hail storm broke our fence and damaged our roof. All in the first 2 years after we bought it (only owned it 3 years). Some of it was covered by insurance but no where near the total. The sad truth is if $30k seems like too much to save to even buy the home, you are not in a financial place to even own a home and be able to deal with maintenance if it all hits you at once. Even if the payment would be less than or the same as rent for someone.
Thank you Javier! I have been planning to buy a house and been researching this stuff for a couple of months. And this is the most informative video I have seen. I had no idea what DTI was or house the loan qualification was even computed. Thanks for showing us the way. Keep up the great work!
Finally found the channel again! All I have to search was “Real Estate Arizona Javier” and you where in the 2nd page lol
Subscribed so I don’t lose this channel again
Something tells me Ray's Uncle is running low on money, and needs to get his poor nephew to irresponsibly buy a house now to help pay his bills.
People spend way more than 20-30% of their net income for rent nowadays. That % is not applicable anymore at all for rent nor mortgages in major cities with median income. Buying is for quality of life and security. These have a value that cannot be quantified with rent vs buying scenarios. Also your real cost of buying is the interest and taxes. Your rent will also increase without any limits over time, but your house can be paid much faster than 20 years offering a safe place to stay with no risk of getting kicked out and will offer leverage with the capital paid and value gained over time. Yes this guy should buy his house unless he has a crazy low rent while he stacks more.
Sometimes buying a house is what you have to do. I didn’t have savings when I bought my house. But I also knew that there was no place that would rent to me with 4 cats plus I needed room for my mom. I was living in a home that was owned by my grandparents in a sketchy part of town and I had gunfire right in front of my house and finally had enough. My mortgage is currently 1400(which includes the insurance and taxes of course). FHA loan includes the MIP. Now, I was lucky to have bought the home at the price I did, when I did (2021), with an FHA loan which allowed me to put very little down. At the beginning of my loan term it was only over 1200 a month that I paid but insurance went up. I would be paying about 2 grand for a place for my mom and I and two cats… I would have had to rehome two of my babies. Was never going to happen. The cats have made me a better adult and I now have some savings and some investments and I was able to change jobs because my monthly payment was reasonable enough to make it possible to take a risk. My family is safe too and live in a nice neighborhood. The investment was well worth it to me.
Love you! I just hope the afterlife is run by dogs and cats lol
@@GNARLOUSE❤❤❤ me too 🐈⬛ 🐶
Imma say no even before I watch unless he has $150k to put down on it.
As soon as I saw the car payment…uhm no. Agree
Then u would be giving bad advice
Sad times!
And he has to still be sure he can stay in that house for at least 10-15 years… unless rents in the same area are outrageous but I doubt it
Solid advice. I feel it’s rare to find this kind of knowledge on UA-cam. Can’t trust these finance guru nowadays. Also this math applied to my situation a year ago and I’m so glad I backed out of my contract. I am going to just rent for now.
My mortgage lender approved me for $3200 and that’s what my house payment was going to be! I was stupid and thought I could afford it because I got approved.
I really appreciate this video because like Ray we are in a similar situation. Child car costs are just too much and may prevent us from buying a home. As painful as it is with our strong “Why” it does mean putting on our adult pants like you said and admitting that no purchase is better than a highly leveraged purchase.
Unless it’s possible to avoid the child care cost. Family member watching your child etc
I have more money saved, higher income, better credit score and I'm not even looking at 450k because it's a shitty deal no matter what. Gl to Ray :S
We are in the same situation as you. We think renting a 3 bedroom condo is a better financial decision than buying the a bigger house just to be comfortable.
I make far more that that guy and wouldnt buy at $450k right now. What you get for 450 is def not worth it.
His uncle is a realtor, and his advice is always "its the best time to buy a house". Thats a major red flag.
That's what I'm saying. Just because he's family don't mean he's looking out for ya
The answer is, HELL NO! There are so many things wrong here. I hope Ray is no longer seriously considering such a expensive house after this video. The answer is NO, NO, NO. You have to consider upkeep costs which cost several thousands a year, it's not just mortgage.
Is it strange that I loved the algebra refresher? 😂😂😅😅❤
He should focus on paying off that Camry
New to this channel and I appreciate you . Thank you
Dope video. And math is deff not boring lol. But if ppl wait until they can afford it, then the working class will just be waiting and blowing money on rent for a sentence of about 10 to life. So it boils down to that "why" at the end of the day.
You end up waiting and waiting, and the prices keep going up 😢
The working class needs to get past the idea that renting is blowing money. Ownership has its share of expenses (taxes, insurance, opportunity cost, interest, maintenance, fees, etc) that have no residual value. Rent intelligently and most people are better off from a net worth perspective renting and investing the difference into a low cost index fund.
@BTrain-is8ch I agree with you bro but for most ppl working 9-5s they "difference" to invest is probably 2 to 5 hundred a month if they want to live tight. And it's easy to invest passive income. Investing hourly wages is hard as hell. So they don't do it. Better off owning, in my opinion. Now, if you live somewhere popping and you can rent for less and you make good money, then they can look at the option.
@ericg1149 what I'm saying.. and then when we want to buy fast, we are told not to feel rushed lol. Soo we sit back and watch prices or rates go up. Or both 🤣
You can bye any home you want. Key word bye!
Love this series. Even if it’s somewhat the same content. The consistent reminder is important.
Right off the bat before Watching the rest. Why have a credit card balance if his income is pretty high? Should definitely pay that off unless is an insane amount or 0% interest but in either case he should pay the card off in full before buying
And I generally do not even recommend relying on spousal income because if your intention is to have children, you never know if your wife has a complicated pregnancy or delivery that has her out of work for a while, and that can mess things up too and then on top of that you now have an added expense of children. Pregnancy and delivery and health of the child you conceive are not guaranteed smooth rides. She could end up on bed rest 7 months into the pregnancy, the child you have could end up disabled or ill and then someone will have to stay home...all things that need to be considered IMO.
I’d be interested to know the interest rate on that car loan. I’ll bet it’s close to 10 percent. It’s a bad time to buy a house or a car.
I bought a home this year, but my car was paid off shortly after doing so...that was a $550+ monthly payment
He needs to pay off his car loan he has $40,000 once it paid off he can take that extra $610 save it for the next 2 years that would make it his home more affordable to buy , people don’t realize these car payments are making you poor.
Best imo: mortgage (incl. escrow) shouldn't exceeed 35% of net. 25% or lower is ideal.
15:40 the people who should be buying should have a longer term outlook or a family.
Hel no pay off car,credit cards n make 120k then its duable
It’s insane that someone making $90K+ can’t even afford a semi decent starter home
It's insane to only put down 3.5 % for a house, and pay that PMI in todays housing market.
8:20 That is easy basic math... Anyone without that knowledge should just buy bonds and turn those in every 10 years to buy more bonds.
This is almost my scenario with some minor differences . Thank you for the video! I make just about $100k and will be making more in the next 3 years while my wife is staying home with the kids. Once all the kids are in school, she will go back to work. We have a home but in need of a bigger home because our family is growing. I also have teenager from a previous marriage that was very toxic which brings the total amount of people to 5 in a small 1k sq.ft home. If I sell the current home, I’ll have almost $100k to put down on a $400k home. It would be tight with the current rates but it would only be for a short period.
Too much house for 5500 net. Don’t go by gross. Go by net. It will save in the long run.
Loose the car payment. 610 for a Camry. Damn G.
Good luck! 🍀
Dam, how will i ever affordna house . This sucks man
Is the takehome pay you're using before taking out 401k contribution and employer provided healthcare deducions also or is it just after tax take home by itself. Ive had this question for quite a while now.
People are nuts slaving their future for a loan, a big loan at that. Then complain afterwards, in the present, worrying about their future!
My guess before getting into the video, guessing Javi is going to say a $270K house. Single income doesn't help
Great video thanks!
This one of the problems I see with home cost being so high, banks say ya will give the loan and due to this higher house costs,
Dude you advise is so solid! Why are all these instagram realtors not saying mentioning any of this?
Because they want their commissions. Can't sell houses if realtors go by net. It's the buyers who need to be educated and dictate to their realtor what they can afford.
Yeah, so want to do a response video to this.. fix expenses and credit ASAP, what’s his rent? Buy a home: yes! Upgrade to a $450k home form where he’s renting, no.. do his taxes change with a purchase? Maybe try to be creative on seller credits to keep more of that savings after purchase.. my advice, run the numbers and budget like you own the place and you’ll get comfortable in 6 mos or a year on if you can afford it… otherwise consider buying something like what you are currently renting (condo/townhome)!
Everyone is basically in the same boat but I wonder what’s going to happen when prices and interest rates drop and suddenly everyone can afford a home?
Prices raise back to what they once were?
Even if you are making six figures, getting a 400k starter home is wild unless someone is helping you on the outside. If you know you are staying in one location for a while, it is better to get a cheaper house in a developing area. Then, use the equity from that house into your next house. Cause buying a house is half the battle. Maintaining these things suck especially while still trying to save to retire and handle regular life stuff.
I wish I could get a good home in my area for that price, 400k is a bad home in a bad area in my town…
I have a 115k home that I have remodeled ie. totally up to date kitchen and bathrooms.
I pay $200 pmi monthly
Overall,
My min monthly payment is $750 with a intrest rate of 3.75; 30 years
Should I refinance to drop my pmi? Or just start slapping 2k a month on the mortgage?
Slap 2 k on the mortgage easily! You're winning with that interest rate If you refinance you will lose that interest rate. Not work the refi
The house he should be buying is
Around $350,000
Math is a big part of why i watch your videos !!!! Math is fun
Ray's uncle either shamelessly doesn't care about his family or is incompetent.
The debt must go!!!
I'm nesting my money right probably going to wait 2 or 3 years before buying a house
Well yeah it makes 100% sense. Well the people writing the loans are looking for an 8% interest rate and all those other people involved are looking for a cut for themselves. So with high base level prices they will need to collect a ton of cash to make the whole process work.
What if Ray buys a Condo or Townhouse?
People take on some horrible car payments. Hopefully that is a 3 year or less car loan. But I bet it's 6 years...
This is a classical case of supply and demand. Where supply has been suppressed and the people with money are taking advantage! The big investors we know will sell their investments as soon as the profit wanes. But can a person who needs a house sell if it is not profitable, No he is stuck with that overwhelming debt. Remember 2007-2011 houses were selling for less than it cost to build them? A Decade of record low interest rates.....and not building enough homes combined with high need is the problem, Build your own home!
610 for a fucking Camry.
He probably has a higher interest rate. 30k at 8% for 5 years is 608 a month. Interest rates aren’t doing anyone any favors.
A depreciating asset, I hope he has gap insurance, if it gets totaled he's screwed, paying the difference and no car. My friend learned that lesson. paid for a totaled car for over a year to pay it off.
MAYBE...Ray here shouldbe looking at a much lower price point like 350k or 320k? As a lender that would be my advice.
Maybe the specific area thats the onky thing actually move in ready that won't cost him more money in the long run to fix up.
Prices are just too damn high everywhere. I get the starter home arguement, but you shouldnt be dumping $2k/month into a start home you have to fix.
More like 270k
@@mhodge0890 There are no 270k 3/2 homes in Chandler AZ. Mesa would have some 320k though I assume.
If yiu have 40,000 dollars saved why are you paying monthly payments for a car ? Ir credit cards. Pay your debts off
Maybe he has a greater return on investments (that has is including in that savings) than the rate for the car 🤷♂️
I would clear up that consumer debt 1st before doing anything.
We’re all fucked lol
Fr, 5500 a month net and still can’t comfortably afford a house. Insane dude.
@@damnation358 not to brag but dude I make $7200/month net and still cant afford a house. No debt either. We are living some wild times...
@@anonyghost7422In the same boat…NJ…
I net 4.5k and I bought a house last year in NJ..small 700 sq ft mortgage about 2k..but I couldn’t rent anymore and watch people mooch off the government and party all day while I busted my ass..so now I love my tiny overpriced home and no shared walls and a yard. Life is short
I bought 340k home...6k/month income
I don't think so, I will watch now. T Y !
I just want to buy a decent house in a decent neighborhood that isn't over 250,000, I can put down a good amount. Just seems like everything is still so astronomically high for no reason.
Cool majoras mask
It's unaffordable because he is competing with people that already own in this market that are using the sale as their down payment. Why does he feel he has to buy a house? Why not a condo or townhouse?
It probably is a townhouse
Well there's no distinction really in this example. It's just a specific amount. In my market, townhouses are in this price range (no yard. Shared walls. One car garage).....its the entry level mark for us where we live in this exact price point.
How you gonna say dude is a red flag because he probably only has 40k saved up. Lol. He’s making 93k a year. He’s in a much better position than probably 85% of potential home buyers 🤦🏽♂️
He might be in a better place then most. But 40k isn’t much now and days. If you’re buying a 450k house you will eat most of that up between down payment and closing cost and won’t be left with much.
All dude gotta do is pivot, his uncle probably knows what builders are offering PAID closing costs so many incentives on new builds right now. Hell, he can also decide to commute, and go for a USDA eligible area. Lastly, I’m sure if dude is making 93k and has 40k saved, if necessary he could slightly tap is 401 if necessary (last resort). Bottom line, he’s definitely NOT a red flag.
@@mynameismrjones Sure there’s some options there, and He’s way better off then most.
Heck no. I would feel under water with that scenario.
Unless you’re relocating/have no choice for housing stability, “I have to buy now because of the market” is NEVER a good reason.
i bought my first house in 2011 for 225k making 110k , my secound was 378, and i was making 210k.. both my houses in denver are now over 1 million.. with that said, i know people getting approved for 250k making 40k😂😂😂wtf .. what's wrong with banks
Don't buy in an inflated market! The equity earned today is future equity that you would have made if this market was not inflated. In other words if the market goes up more, and you gained proper equity who can afford to buy you out then...The bloated market stole your future equity.
30 seconds into the video, the answer is no. He can't afford the house.
Do I need to even watch the vid to know that it'll be a "no"? 🤔
This guy can’t even afford a $300k house
W/o going even 1min into the video he cannnot afford it. That monthly car note puts him over 50%
Whatever you do, don’t have a house that you can’t afford to furnish. It’s super embarrassing and you might as well be homeless
im already gonna say no before watching. Should make at least 7k
I don't have to finish this to know that the answer is - this guy can't afford the house.. a lot of Dave Ramsey energy here. Also banks use gross as oppose to net for a reason. You can make changes to your deductions that will increase ur net, but you can't do the same for gross.
He can as long as he doesn't have a a cocaine habit.
610 on a car loan? Thats a hard no, my boy. Stick to renting
He probably got a shorter term and interest rates and car prices are higher these days
Another one bites the dust
I bought my house 8 yrs ago for $215k when I was barely making $16hr and my wife just had our first child and wasn’t working my payments where $1450 and I had no savings at all, I put 5% down for a conventional loan which was about $13k and my rate was 4.375%. I took off the PMI then refinanced for 25yrs for 2.875%, we struggled to make it while my wife didn’t work after our second child was born and she took 4 yrs off.
You are way below market rents, consider your family very blessed, to have made that decision 8 years ago.
Pay the car off , save those 600+ for another year on top of what he was saving already , come back next year
$90/month credit card payment is bait
We bought our 2nd house in 2017. We were making 130k and putting 90k down on the next house. We started looking @400k. Couldnt find something the worked. We needed an inlaw apt. Raised it up to 450k. And found a great house. But that was our max price. We did look at 1, 500k house. I just couldn't do it. Although it was beautiful.. we weren't debt free but working on it. We became debt free in 2018 and refinanced to a 15 year in 2020 @2.5. 9 years left. This is on the south shore of Massachusetts. We could have bought a lot more house but im so glad we didn't.
No
He needs to in the next 3 years increase the credit, pay off the car or sell it, maybe get married and have the wife bring 3 to 5 k. Then at the minimum double the savings at least and look for a cheaper home.
❤❤❤
They don't want us to own.
Ok so he cant afford that house, but why cant he buy a cheaper house? Thats something i never hear every time i watch these real estate videos. I never hear these experts tell them to buy a cheaper house.
Answer is No.
I make $120k and I can even stomach buying a $350k home lol
I say he still can buy a house just not a 450k house
The answer is No.
Ray needs to find a job that pays 120K a year.
Easier said than done
Nope
I can alrdy tell u : no, no he cannot Lol
With out even watching I can tell you he can't afford it.
No no no