Speaker 1: Episode one, how to save money when buying a house
Speaker 1: or refinancing. Welcome to the Frugal Friends podcast, where you'll
Speaker 1: learn to save money, embrace simplicity, rights, and liver with
Speaker 1: your life. Here your host Jen and Jill M m m.
Speaker 1: Welcome to the Frugal Friends podcast. My name is Jen,
Speaker 1: my name is Jill, and today we are talking home
Speaker 1: buying refinancing and this is a topic we get asked
Speaker 1: about so much. We did an episode about um home
Speaker 1: buying versus renting that you can look back in our
Speaker 1: archives and find. But today is specifically for potential homeowners
Speaker 1: or homeowners that are looking to refinance because it is
Speaker 1: such a great time to refinance. Yes, and both Jen
Speaker 1: and I have done both of these things and just
Speaker 1: to home and Jen just refinanced, so we can speak
Speaker 1: from our own experience also yep, and we will be
Speaker 1: doing that. So we are gonna talk about our sponsors
Speaker 1: and then hop into the episode there. Our first sponsor
Speaker 1: is the Frugal Friends work Book. Yes, so uh, this
Speaker 1: is a project Jill and I worked so very hard
Speaker 1: on and we've been getting such great feedback from you
Speaker 1: guys that have already started going through it since we've
Speaker 1: launched it a month ago at this point. So whether
Speaker 1: you're new to budgeting or just trying to reach a
Speaker 1: big financial goal like paying off debt, and you need
Speaker 1: something to get you out of your rut, something to
Speaker 1: re motivate you. That's what the Frugal Friends work Book
Speaker 1: is for, so people starting out or people that need
Speaker 1: some like revitalization to their journey. This is a six
Speaker 1: week long dig uitual workbook with six one week challenges
Speaker 1: that are going to help you save money, simplify your life, um,
Speaker 1: improve money conversations, and more. And those can be done
Speaker 1: over six consecutive weeks or one at a time. The
Speaker 1: workbook is over sixty pages of content, so it is
Speaker 1: jam packed and you can do it on your own,
Speaker 1: but it's actually designed to be gone through in pairs
Speaker 1: or small groups. So that's why every single purchase comes
Speaker 1: with two downloads, so you are more than welcome to
Speaker 1: share it for free or split the cost with someone.
Speaker 1: We want you to do that, So had to Frugal
Speaker 1: Friends podcast dot com slash Workbook to learn more and
Speaker 1: use the code taco bell all one word you know
Speaker 1: how to spell it to get ten dollars off the
Speaker 1: regular price nice also brought to you by very high
Speaker 1: price tags on seemingly insignificant low cost I had ms, Well,
Speaker 1: we have a complicated sponsor today, but it's quite fitting
Speaker 1: as we discuss home buying. Take stamps, for example, what
Speaker 1: one would think costs fifty five cents and be used
Speaker 1: to mail a letter. When it comes to home buying.
Speaker 1: This is nowhere near what the word stamps mean. No, no, no,
Speaker 1: stamps are hundreds of dollars. You never actually see them,
Speaker 1: nothing gets mailed anywhere as a result, but they are
Speaker 1: apparently necessary and there's no circumventing them high price tags
Speaker 1: on what should be low cost items. It's all part
Speaker 1: of the home buying magic. Oh my gosh. We asked
Speaker 1: the same question again when we refinance, Like, what the
Speaker 1: heck is the is the stamp fee? And not even
Speaker 1: the woman they're new Uh so she was not the
Speaker 1: title company, she worked for the credit union. But whatever. Yeah,
Speaker 1: these stamps, I don't think they're actual, Like I think
Speaker 1: it's like notary stamp ap type things. Some of it is.
Speaker 1: There's tons of different types of stamps. There's text stamps
Speaker 1: and yeah, the notary stamps, and I'm just like, what
Speaker 1: kind of ink are we using here that? Yeah, can
Speaker 1: I get my mom to do it? It just feels
Speaker 1: like there are some really arbitrary things that it's just
Speaker 1: like and this and this, and this and and and
Speaker 1: you're just demoralized by the end of it. I know
Speaker 1: it is. It's tough. So there are some things you
Speaker 1: just cannot get around when you're buying a home or refinancings.
Speaker 1: So that's why it's so important to know the things
Speaker 1: that you can control, negotiate, and lower so that you
Speaker 1: can do those things and then you don't have to
Speaker 1: feel so guilty or demoralized by paying, you know, five
Speaker 1: dollars for stamps. So that brings us to our first article.
Speaker 1: It's from the Lenders Network and it is seven ways
Speaker 1: to save money when buying a house. Yes, I like
Speaker 1: the first tip We're just going to dive right in,
Speaker 1: and that is to use an experienced local real estate agent.
Speaker 1: I definitely agree with this one, and thank you Jen
Speaker 1: for your recommendation on our real estate agent that we
Speaker 1: were able to use. Kyle. Shout out to Kyle uh
Speaker 1: So as some of you know that I'm We moved
Speaker 1: from Pennsylvania to Florida, so it was really important for
Speaker 1: us to get a local person who knew the area
Speaker 1: and would be able to help guide us in that way.
Speaker 1: But also I like the tips that this article makes
Speaker 1: about using a real estate agent. I think sometimes there's
Speaker 1: this um conception that we would be able to save
Speaker 1: if we could cut out the agent. But particularly when
Speaker 1: purchase saying as buyers, we don't pay the real estate
Speaker 1: agent fees. That is typically the seller who pays that.
Speaker 1: And especially if this is your first hometime home buying experience,
Speaker 1: then there's a lot of unknowns. There's a lot of
Speaker 1: weeds to dig through that I would suggest going through
Speaker 1: a real estate agent, particularly if if it's your first time.
Speaker 1: You know, some people are like, let's I mean Eric
Speaker 1: and I we were like, let's try to cut out
Speaker 1: the middleman and buy directly from a seller, And after
Speaker 1: having walked through it, I'm so glad that we didn't
Speaker 1: for time purposes, energy, the headache of it, I think
Speaker 1: it is very possible that we could have lost more
Speaker 1: money on that kind of transaction just because we didn't
Speaker 1: fully know what we were doing. Yeah, research can get
Speaker 1: you a long way, but just somebody who knows the area,
Speaker 1: knows the market has Uh, negotiating power is able to
Speaker 1: help you in knowing where you can cut costs, like
Speaker 1: he our real estate agent was worth every dime that
Speaker 1: the cellerbated to him. Yes, and it's this is such
Speaker 1: an important thing two have because you are not actually
Speaker 1: as a buyer, you're not spending money on it. Um.
Speaker 1: But it's so important because yeah, he an experienced local
Speaker 1: real estate agent can save you so much money in negotiating.
Speaker 1: And not all local real estate agents are experienced or
Speaker 1: created equally. Like everyone and their mom has a friend
Speaker 1: who's a real estate agent. And so it's really important
Speaker 1: to like go with your gut, go with someone who's
Speaker 1: going to go to bat for you. Like when we
Speaker 1: bought our house, our real estate agent was like, I'll
Speaker 1: cut my I'll cut my like fee, um, you know,
Speaker 1: one percent in order to get this family into this home. Like,
Speaker 1: go with someone who will go too bad for you
Speaker 1: for me. That tends I find it tends to be
Speaker 1: younger people. So maybe people who have not been as
Speaker 1: jaded or complacent. Um, and somebody, Yeah, somebody who's like
Speaker 1: really like Kyle your real estate agent. He has a
Speaker 1: few investment properties too, so he just like loves real estate.
Speaker 1: He loves finding a deal. Um, he's great at negotiating. Yes,
Speaker 1: great listener. I mean yeah, we could almost do an
Speaker 1: episode on like how to Find a good real estate agent.
Speaker 1: There's a couple of things that stood out to me
Speaker 1: that Kyle was like, Thank goodness, Um, but yes, able
Speaker 1: to negotiate, is super tenacious and and a good listener.
Speaker 1: It's funny because during part of that process we did
Speaker 1: work like we we had to interact with another real
Speaker 1: estate agent, and I realized, like comparing the two of them,
Speaker 1: I'm like, this person was not a good center. I
Speaker 1: did not feel heard by them. If they had been
Speaker 1: the one walking me through this home buying process, I
Speaker 1: wouldn't have trusted them. It would have been like, no,
Speaker 1: I just told you that here's the things I'm looking
Speaker 1: for in a house or what I want to do
Speaker 1: to a house, and you totally did not hear me. Yeah,
Speaker 1: so there's a lot of find a good one. I'm
Speaker 1: agreeing with you, Jen and saying finding find a good one.
Speaker 1: And they do have the ability to help you save
Speaker 1: money in the process. Yeah, definitely. And if you are
Speaker 1: with someone and you are deep in the process and
Speaker 1: you find that you are unhappy with them. They're not
Speaker 1: listening to you and you're just not having a good experience.
Speaker 1: You are not obligated to them, you have not signed
Speaker 1: a contract to them. Find somebody who will go to
Speaker 1: bat for you. So yeah, as it's don't be a
Speaker 1: jerk about it, but you should feel comfortable and heard,
Speaker 1: uh and be with someone who is really there for
Speaker 1: you and not just for the commission. Well, so yeah. Um.
Speaker 1: The second one is to get loan quotes from multiple lenders. Um.
Speaker 1: So we we did not do this when we were
Speaker 1: buying our home. Super inexperience. So when we found it,
Speaker 1: we just went with the um with the lender, with
Speaker 1: the guy that our realtor recommended, So we just went
Speaker 1: to him. We didn't seek out other options because we
Speaker 1: didn't know that was a thing, And so we got
Speaker 1: the average of what was you know, being given at
Speaker 1: the time. So it's not like we got a really
Speaker 1: bad deal, but um, it was with Wells Fargo, And honestly,
Speaker 1: I don't like the fact that I gave that much
Speaker 1: money to Wells Fargo as a company in general. Um,
Speaker 1: so look around, um, look at the average. You don't
Speaker 1: have to get pre qualified, but you can look at
Speaker 1: though getting prequalified does not hurt your credit. Um, you
Speaker 1: can just look at what everybody is offering, um, you know,
Speaker 1: around your area. Start with your local credit unions. I mean,
Speaker 1: you can go online to see what online lenders are offering.
Speaker 1: So just google, um, you know, today's mortgage rates or something,
Speaker 1: and you can find a bunch of Nerdwallet, bank rate,
Speaker 1: all kinds of things with the best rates for mortgages. Yeah. Nice. Yeah,
Speaker 1: shopping around I think that was something I didn't realize
Speaker 1: that you could do. We kind of did it by
Speaker 1: default because we got pre approved before we were necessarily
Speaker 1: ready to buy a house or we're seriously looking. We
Speaker 1: were a little bit more curious. And then by the
Speaker 1: time we were ready to buy a house, we ended
Speaker 1: up going with a different lender, and so we were
Speaker 1: able to compare that way. But I didn't realize that
Speaker 1: there could be, um, such a difference between lenders and
Speaker 1: and really it's probably going to be by percentages. But
Speaker 1: it still is worth shopping around. Yeah. One more thing
Speaker 1: that the article says that it's important to note is
Speaker 1: once you have looked at all of these things, get
Speaker 1: actual loan quotes from three to four different mortgage companies, um.
Speaker 1: And then on those loan quotes, you'll be able to
Speaker 1: see the exact fees that each lender charges, and then
Speaker 1: you can use those loan quotes to help you negotiate
Speaker 1: lower fees and rates from the lender that you choose. So, uh,
Speaker 1: definitely get the loan quotes from a few, but check
Speaker 1: out a variety. Yeah. Nice. The next thing that stood
Speaker 1: out on this list to me is number five, which
Speaker 1: is find a house that needs some work. So if
Speaker 1: we're talking about saving money when it comes to home buying,
Speaker 1: this is definitely one of the those areas. And you
Speaker 1: know that we all come from different skill sets, backgrounds, abilities,
Speaker 1: desire to fix up our own house. Um. Of course
Speaker 1: you know, a turnkey, ready home at a price that's
Speaker 1: affordable for us, it would be great, um, But everybody's
Speaker 1: looking for that, as this article points out, and so
Speaker 1: being willing to be flexible a bit on how ready
Speaker 1: the home is for you to live your best life
Speaker 1: now in it can really help to save you some money.
Speaker 1: And especially if you can see past um some imperfections
Speaker 1: or some aesthetic things, you could get a house for
Speaker 1: less than maybe even what it's worth because it just
Speaker 1: doesn't look that great and then take your time loving it,
Speaker 1: making it look nice, making it what you want it
Speaker 1: to be. UM. So, And and that would include either
Speaker 1: hiring some of that work out doing some of it yourself,
Speaker 1: you know, painting, doing your own decorating. Obviously that's um
Speaker 1: that's what we want to do as frugal folks, but
Speaker 1: not just looking for something that has the sparkling white
Speaker 1: countertops and the brand new appliances UM can definitely help
Speaker 1: to save your budget in this process. Yeah, and I'd
Speaker 1: also like to point out is that just because you
Speaker 1: find a house that needs some work doesn't mean you
Speaker 1: have to do the work. So looking for that and
Speaker 1: seeing the average prices for UM for contractors or anybody
Speaker 1: that renovates whatever you're looking to renovate in the house
Speaker 1: and seeing if okay, if I get this house and
Speaker 1: I hire somebody to do the countertops, what is and
Speaker 1: then take whatever they quote you and take a few
Speaker 1: grand off of it, because you'll definitely negotiate down UM
Speaker 1: and see is this cheaper than the other houses I've
Speaker 1: looked at that actually have the countertops done. So you
Speaker 1: have to just take into consideration everything going on and
Speaker 1: see if somebody does all the work for me, is
Speaker 1: it's still going to be cheaper than buying it like
Speaker 1: already done for me. Yeah, it always makes a sometimes
Speaker 1: it won't. Yeah, not that this is a great picture
Speaker 1: of reality, but on a lot of these home buying
Speaker 1: TV shows, when people are going through homes and people
Speaker 1: like I just don't like the cabinets. I don't think
Speaker 1: I'm going to go with it, and like, you're not
Speaker 1: going to buy a home for hundreds of thousands of
Speaker 1: dollars because of a five thousand dot, like a potential
Speaker 1: five thousand dollar fix, Like, yeah, I think sometimes we
Speaker 1: need to have this mindset of, well, what is more
Speaker 1: advantageous for me to get a home for forty dollars
Speaker 1: less than what I like, maybe this other home that's
Speaker 1: turned key ready, because the fixes are are not going
Speaker 1: to equate to that extra spending on that other home.
Speaker 1: So yeah, do some calculations. And it doesn't mean that
Speaker 1: you're d I y ng the fixes, Like you said, Jen,
Speaker 1: you could hire somebody for some of it and still
Speaker 1: be spending less. Yeah, And I mean think if you're
Speaker 1: saving up and paying cash for these fixes, that and
Speaker 1: maybe the fixes add up to thirty grand. Well, that's
Speaker 1: thirty grand you didn't have to get in your mortgage.
Speaker 1: So whether you're you're at three, that is you're saving
Speaker 1: that um as long as you don't finance the fixes,
Speaker 1: because sometimes those those financing those can definitely be more
Speaker 1: than four percent. So take all that into consideration. The
Speaker 1: next one that I like is number four, and it's
Speaker 1: increase your credit score. So divisive, such a divisive topics
Speaker 1: into it and so miss under stood. I I very
Speaker 1: rarely find somebody on the street that like understands credit scores. UM.
Speaker 1: So it's just they're so important, and I think they
Speaker 1: a lot of people in the you know, debt free community.
Speaker 1: You should be paying more attention to your credit score,
Speaker 1: but you should understand it because a lot of the
Speaker 1: age old you know, things that people say about credit
Speaker 1: scores are necessarily true anymore. Like you don't have to
Speaker 1: keep balance on a credit card to increase your credit score,
Speaker 1: Like that's a that's a max. That's a max that
Speaker 1: people say. If you can pay off your credit card
Speaker 1: every month, then you absolutely should UM. And you don't
Speaker 1: have to have a credit card to build credit. You
Speaker 1: can ask your uh landlord to sign up for a
Speaker 1: company where they can report your rent payments as to
Speaker 1: the credit bureaus. So that is something you can do
Speaker 1: and you can get credit for your rent payments. UM.
Speaker 1: So it's such an important thing to know. But if
Speaker 1: you are trying to increase your credit score, then there's
Speaker 1: two really important things that you should do, and there's
Speaker 1: a there's a bunch of things, but like, the main
Speaker 1: thing that you should be working on is paying down
Speaker 1: your debt balances. So hopefully that's high interest in credit
Speaker 1: card debt like first, um. And if you don't have that,
Speaker 1: then student loan debt um. And then the next is
Speaker 1: right when you know you're going to buy a house,
Speaker 1: don't apply for any new loans your credit. So give
Speaker 1: yourself four to six months before you start getting pre
Speaker 1: approved for a home before like puts four to six
Speaker 1: months between you and any new credit applications. So hard
Speaker 1: credit inquiries, UM. Those those are kind of the two
Speaker 1: most important things specifically when you're looking to buy a house. Yeah,
Speaker 1: but if you have credit questions, please bring them up
Speaker 1: in the Frugal Friends community on Facebook um and tag
Speaker 1: me in them, because I don't see everything that happens
Speaker 1: in the group, but um, I would love to answer
Speaker 1: your credit questions because I'm passionate that more people need
Speaker 1: to understand credit uh and and more people can improve
Speaker 1: their credit. It's easier to do than people make it
Speaker 1: out to seem. You don't need any you don't need
Speaker 1: to hire anybody to do it for you. You could
Speaker 1: do everything yourself very easily. Nice. Thanks, Jen, that's helpful.
Speaker 1: I just picked your brain the other day on a
Speaker 1: credit question and it was fantastic. Yes. Then tip that
Speaker 1: stood out to me on this list was number seven,
Speaker 1: which is purchased a home in the winter. So this
Speaker 1: is this to me, feels like one of those wedding tips,
Speaker 1: like have your wedding on a Sunday or or a
Speaker 1: Monday and instead. Um, so you know that I have
Speaker 1: not done the research myself on this, but they are
Speaker 1: claiming that most people are in the market for a
Speaker 1: home in the spring and summertimes, which would make sense.
Speaker 1: A lot of people want to get into a home
Speaker 1: before the new school year starts to kind of make
Speaker 1: a swift change for kids, so the time of year
Speaker 1: can dictate what the housing market is doing and demanding
Speaker 1: the most the highest prices in those spring and summer months,
Speaker 1: So uh. They claim that you can save as much
Speaker 1: as twenty dollars if you are purchasing a home in
Speaker 1: the winter months. So something to consider, um sacrificing. Maybe
Speaker 1: when you'd want to purchase a home, do it in
Speaker 1: the winter, move in the snow if you live in
Speaker 1: the north, and save yourself a couple grand. Yeah, I
Speaker 1: mean I might agree with this. We had we bought
Speaker 1: our home in February, um in on in the month
Speaker 1: of February a few years ago, and just got an
Speaker 1: fantastic deal on it, like an unreasonably unreasonably great deal. Um.
Speaker 1: And then our friends who bought a similar home maybe
Speaker 1: like a little bit bigger, paid about forty grand more
Speaker 1: than us um. And I mean I don't think their
Speaker 1: home was worth more than twenty grand more so I
Speaker 1: might agree with this, um. And like, think about when
Speaker 1: you would want to sell your home like it's or
Speaker 1: buy a home like it's very inconvenient to buy around
Speaker 1: the holidays. So but that would also mean it's fewer
Speaker 1: people are going to post their home around the holidays too,
Speaker 1: So it's kind of just you know, there's ups and
Speaker 1: downs to purchasing in the winter. Uh So, but definitely
Speaker 1: look for deals. Then I don't know if we'll see
Speaker 1: any deals this winter because the housing market is like
Speaker 1: it's such a buyer's market. UM, but maybe next winter.
Speaker 1: And this is where you can ask your experienced local
Speaker 1: real estate agent of what they've seen, What are the
Speaker 1: areas that are, you know, the least expensive, What are
Speaker 1: they seeing trends being year after year. And that's where
Speaker 1: the experienced part comes in that they've been doing this
Speaker 1: for years to be able to tell you that answer. Yeah,
Speaker 1: like they actually take the time to research because they
Speaker 1: like it. UM. The last one we're going to go
Speaker 1: over on this one is number six and that is
Speaker 1: get the right type of mortgage loan so UM. I
Speaker 1: know Dave Ramsey loves the conventional mortgage loan UM and
Speaker 1: that is that is the cheapest typically cheapest mortgage loan UM.
Speaker 1: But there are other types and that doesn't mean they're
Speaker 1: bad so V A, F s A. Those are totally
Speaker 1: fine when you're when you're first purchasing a home. UM,
Speaker 1: do do what's best for you U S d A loans.
Speaker 1: If you can get something from the Department of Agriculture,
Speaker 1: those are even better, UM because you always have the
Speaker 1: option to refinance in a few years. Whatever loan you
Speaker 1: pick right now, you're not married to it, UH, you
Speaker 1: will hopefully raise the value of your house in two
Speaker 1: years and you can refinance to a much more affordable
Speaker 1: conventional loan. UM. You should no matter what mortgage you
Speaker 1: end up with. UM. I think the real thing that's
Speaker 1: going to save you money on your mortgage UM is
Speaker 1: making sure that you first have the money to do
Speaker 1: any improvements up front UM that you need to do
Speaker 1: to raise the value of your home. So that may
Speaker 1: mean choosing a thirty year mortgage up front. That's that's
Speaker 1: what that looked like for us UM, and then when
Speaker 1: you look to refinance, then looking for that optimal low
Speaker 1: cost um mortgage loan. But that's that's what I think
Speaker 1: about it. I'm not married. I like for your first
Speaker 1: initial mortgage loan, I think you should, you know, do
Speaker 1: whatever you need to do to get it if you're
Speaker 1: financially ready. Obviously caveat to that. Make sure you're financially ready,
Speaker 1: because it does it costs more or than you think
Speaker 1: it will to purchase a home. There are all sorts
Speaker 1: of stamps, so many stamps. Gosh, the list of fees, yeah, yeah,
Speaker 1: it's unfortunately not right now. It's not just enough to
Speaker 1: have your down payment saved, you have to have thousands
Speaker 1: of extra dollars also saved for the closing costs. Yeah. Yeah,
Speaker 1: sometimes your seller pays for that, but I would still
Speaker 1: buffer a couple of thousand dollars beyond your down payment. Yeah,
Speaker 1: and that's so that's another one that we didn't go
Speaker 1: over on this list was having down for your mortgage.
Speaker 1: I don't think you need that for your first if
Speaker 1: it's your first home, I think you're far better putting
Speaker 1: that money towards uh, increasing the value of the home
Speaker 1: and getting the stuff purchased that you need to buy, um,
Speaker 1: you know, because and then getting to that point in
Speaker 1: two years you can refinance and get the p m
Speaker 1: I off. Yeah, which we'll talk about later as well,
Speaker 1: but more reasons for that. But now that we've talked
Speaker 1: about refinancing, let's just start. Let's start in on that one.
Speaker 1: What's so you're the refinancing expert on this one. I
Speaker 1: just bought early, but tell us let's stood out to you, Jen,
Speaker 1: since you just refinanced. Yeah. So this one is six
Speaker 1: ways to save on a mortgage refinance, and it's from
Speaker 1: mortgage loan dot Com And the first one on the
Speaker 1: list is to pay closing costs and points up front
Speaker 1: so you can roll your closing costs into your loan um.
Speaker 1: And that is very common. But I so I just say,
Speaker 1: look at mortgage calculators online and test, test and find
Speaker 1: out because points and closing costs are going to vary
Speaker 1: all the time. And honestly, we got to the end
Speaker 1: of it and are the closing costs they actually charge
Speaker 1: us for were was cheaper than what they said it
Speaker 1: was going to be. And we were so confused. And
Speaker 1: it's not like they didn't charge us for the first
Speaker 1: month of the mortgage because that's still coming out, you know,
Speaker 1: in two months. But so we paid all of our
Speaker 1: closing costs up front because we did not want to
Speaker 1: pay interest on that over you know, the life of
Speaker 1: our loan. Uh. But we then plugged in the points,
Speaker 1: uh plugged in like one point on our in our
Speaker 1: mortgage calculator. They'll offer you different levels of points, like
Speaker 1: different numbers, and you just have to plug in whatever
Speaker 1: they're offering you. Uh. So we plugged that in and
Speaker 1: found out actually getting the points made it a little
Speaker 1: more expensive. Yeah, So and and maybe we didn't plug
Speaker 1: in all of them. They do a an example in
Speaker 1: this article, they do three different examples where um they're
Speaker 1: doing I think like one point, um two and a
Speaker 1: half points, one and a half points, and the one
Speaker 1: in the middle actually ended up saving the most, so
Speaker 1: it saved more than the one point or the two
Speaker 1: and a half points. And just to clarify because this
Speaker 1: is something I did not know in my home buying experience,
Speaker 1: but points are a fee that you pay to buy
Speaker 1: a lower interest rate. UM. So if for whatever reason,
Speaker 1: you don't qualify for a certain interest rate, or there
Speaker 1: is a better interest rate available to you, but you
Speaker 1: have to purchase it, you know, kind of like bribery,
Speaker 1: but it's points, So one pin point, Purchasing one point
Speaker 1: might get you a certain um interest rate. Two points
Speaker 1: would get you maybe a little bit better of an
Speaker 1: interest rate. You know. There's there's more to the points
Speaker 1: than than my simple explanation, but that's essentially what it is.
Speaker 1: A point buys you a certain interest rate. Yeah, so
Speaker 1: going online to a mortgage calculator and plugging in all
Speaker 1: of your options so without points, um paying closing costs
Speaker 1: up front versus rolling them in and then with every
Speaker 1: single thing with the points, So just taking the time
Speaker 1: to do that and choosing the one that's right for you. Nice.
Speaker 1: The second tip on here is improving your credit score.
Speaker 1: So again similar to what was listed on the first article,
Speaker 1: um that this is important to have a good credit
Speaker 1: score either when buying a home or refinancing a home.
Speaker 1: And so back to Jen with her tips and ask
Speaker 1: her questions. Tag her in our Facebook community group on
Speaker 1: ways to improve your credit score. Yeah, it's yeah, it's
Speaker 1: so important that you're checking your credit report, doing your
Speaker 1: annual credit report dot com once a year and seeing
Speaker 1: what's on there, and then if you see anything, um
Speaker 1: any like negative dings that you're trying to get those off.
Speaker 1: So first you try and get off the ones that
Speaker 1: for accounts that are already paid off, those are really
Speaker 1: easy to get those, you know, those dings off um.
Speaker 1: But then also if it's it's a account that maybe
Speaker 1: you had a missed payment but now you're current and
Speaker 1: you've been current for a while, then you know call
Speaker 1: and try and get those off sending those um those letters.
Speaker 1: So just be diligent about it and start now even
Speaker 1: if you're not trying to refinanceer by a home so
Speaker 1: that you don't have to worry about it all in
Speaker 1: you know, when it comes down to it, because you
Speaker 1: you want to give Once you take those things off
Speaker 1: your credit score or credit report, you want to give
Speaker 1: a few months buffer um to have it all show up.
Speaker 1: So yeah, credit scores are important. Um. Also, when doing
Speaker 1: a refinance, don't take cash out, so cash out refinances
Speaker 1: are super uh popular special when people want to pay
Speaker 1: off debt with a cash out refinance, and sometimes that
Speaker 1: can be it can look enticing, but doing a cash
Speaker 1: out refinance will always be more expensive than a regular refinance,
Speaker 1: so you'll be paying a slight premium on the rate um.
Speaker 1: That's what the article says. Um. But it could also
Speaker 1: cause you to lose equity in your home if home
Speaker 1: value start dropping again. So if you decide to move
Speaker 1: in a few years, that money you cashed out with
Speaker 1: a refi could eliminate all your home equity. Don't assume
Speaker 1: whatever house you're in is going to be like you're
Speaker 1: forever home. Always work in the assumption that you should
Speaker 1: be able to break even in a few years to
Speaker 1: two years is ideal um. And then you want to
Speaker 1: stay in your house, you know, at least five to
Speaker 1: seven years beyond your break even to get the best
Speaker 1: value from your mortgage or your or your refi. That's
Speaker 1: kind of like industry standard. Yeah. The next on the
Speaker 1: list is to shop around. So similar to what we
Speaker 1: talked about when home buying, to shop around look for
Speaker 1: different lenders. The same is true in refinancing. You can
Speaker 1: look for the best price UM. Again, as Jen said,
Speaker 1: you're not married to your lender, so you can you
Speaker 1: can see who's got the best interest rate for you. Yeah.
Speaker 1: We so we debated between UM just getting p m
Speaker 1: I off and doing our sticking with our same UH
Speaker 1: loan until we shopped around UM and realized how much
Speaker 1: lower the refinance rates were this year, so we last
Speaker 1: year they were a little higher UM. So that's when
Speaker 1: we were looking at doing that. It would just be
Speaker 1: five bucks to get an appraisal and then we would
Speaker 1: get p m I off UM. But at the end
Speaker 1: of last year when rates dropped, UM, we weren't looking
Speaker 1: and we started looking when you know, when the bottom
Speaker 1: fell out of the world this year and found so
Speaker 1: much variation. So it made me feel better. I didn't
Speaker 1: have to go with Wells far ago um. And we're
Speaker 1: actually at our local union, and that was as a
Speaker 1: personal decision I made because I wanted to be at
Speaker 1: a credit union versus a bank. Nothing against banks, um,
Speaker 1: I just really like the work that my local credit
Speaker 1: union does in our community, So I didn't do as
Speaker 1: much shopping around as I might have otherwise. So also
Speaker 1: think about where your money is going, because you're gonna
Speaker 1: be paying a lot in interest on your mortgage, So
Speaker 1: if you want that money to be going back into
Speaker 1: your community, consider the bank or credit union where your
Speaker 1: loan is taken out of. Yeah, right, which is the
Speaker 1: the next tip. You can either shop around. I mean,
Speaker 1: definitely shop around, but it's also okay to just stick
Speaker 1: with your your lender currently if you've you've got history,
Speaker 1: it's at least going to be less paperwork, and it's
Speaker 1: possible that they are the ones who could offer you
Speaker 1: the best refinancing rates. So true, I don't assume that
Speaker 1: like because you shop around, that is going to mean
Speaker 1: you have to make a switch just to stick it
Speaker 1: to them. Like you can say, with the lender you
Speaker 1: have history with and still get a great rate, save money,
Speaker 1: save sometimes save some headache. Yeah, definitely. Um. And then
Speaker 1: The last thing we'll talk about on this is to
Speaker 1: prepare for your appraisal. So um not every mortgage refinance
Speaker 1: requires an appraisal ours did um and it is something
Speaker 1: that you will pay money for and usually have to
Speaker 1: use their appraiser um. But you can also ask if
Speaker 1: you can use your own appraiser um. But yeah, So
Speaker 1: get your house like almost sail ready, just like the
Speaker 1: outside of the house. You don't have to like set
Speaker 1: it up to take pictures or anything, but spruce up
Speaker 1: the front yard. If you have home projects that you
Speaker 1: are working on, finish them before the appraisal. Just get
Speaker 1: the house looking I eat, and then that could help
Speaker 1: bring up the value of your home um and that
Speaker 1: will save you money on your rate. Yeah. I mean
Speaker 1: certainly if you've got an unfinished kitchen or bathroom renovation
Speaker 1: that needs to be done before that appraiser walks through, Yeah, definitely.
Speaker 1: You know what else needs to be done, The best
Speaker 1: time of the week always needs to be done every week,
Speaker 1: the bill of the week. That's right, it's time for
Speaker 1: the best minute of your entire week. Maybe a baby
Speaker 1: was born and his name is William. Maybe you paid
Speaker 1: off your mortgage, maybe your car died, and you're happy
Speaker 1: to not have to pay that bill anymore. Build Buffalo bills,
Speaker 1: Bill Clinton, this is the bill of the week. Hey,
Speaker 1: Jen and Jill. This is Luisa from Boise, Idaho. First off,
Speaker 1: I want to say I love the podcast Keep killing
Speaker 1: It ladies. Second, my bill the week is my transportation bill.
Speaker 1: Living in Boise, you have to own a car to
Speaker 1: get to most places since I'm required to work from
Speaker 1: home during the pandemic, I haven't gotten gas in forty
Speaker 1: four days. Normally I fill my tank every two weeks,
Speaker 1: so this is awesome. I love being able to gamify
Speaker 1: my driving to see how long I can go before
Speaker 1: I have to fill up. Plus I need to look
Speaker 1: at all the bright sides of the pandemic. Thanks for
Speaker 1: loving me share, keep on keeping on my fro good friends. Oh, Luisa, Well,
Speaker 1: four days forty four days, that's more than a month.
Speaker 1: That's nearly a month and a half. Oh my gosh,
Speaker 1: you remember quarantine, Jill. Yes, we got to quarantine together,
Speaker 1: and I feel that we didn't go anywhere. Nope, Oh man,
Speaker 1: flashbacks should have gamified it, though, I'm more so mourned, grieved,
Speaker 1: and lamented, But my goodness did she have a better
Speaker 1: approach and gamifying it lips. Well, yeah, I remember thinking
Speaker 1: this feels a lot like paying off debt. This is
Speaker 1: what my life was like when we paid off debt.
Speaker 1: And I did this for the reason so I'd never
Speaker 1: have to do it again. But here we are. So
Speaker 1: if you're wondering what it's like, just recreate quarantine for
Speaker 1: a while and you should be able to pay off
Speaker 1: your debt. And you've already done it once, so try
Speaker 1: it again and it'll be fine. And see if you
Speaker 1: can go forty four days without paying it without buying gas.
Speaker 1: So great, see what happens? Well, yeah, thanks so much, Louisa.
Speaker 1: If you have a fun bill of the weed that
Speaker 1: you want to send us, please visit Frugal Friends podcast
Speaker 1: dot com slash bill and leave us a voicemail or
Speaker 1: a speak pipe message, depending on the device. Yourn. Yeah,
Speaker 1: now it's time for round. It sounds. I know it
Speaker 1: sounds so lonely. I just wanted to sound hear what
Speaker 1: it sounded lightning just to you. But I feel like
Speaker 1: our voices really create, like a good sound to get
Speaker 1: lightning a chorus? Yeah, now be be the thunder. That's
Speaker 1: all every time, every time we say it, that's what
Speaker 1: I think of. That sound amazing. That's Tampa Bay. So
Speaker 1: for today's lightning round, we're talking about a few other
Speaker 1: ways to save on homeownership. So these are things you
Speaker 1: can do in the meantime when you're not trying to
Speaker 1: buy a house or refinance a house. Yeah, go for it.
Speaker 1: The first one is home insurance. So we personally have
Speaker 1: a government UM subsidized plan that is cheapest for us UM,
Speaker 1: but that's not the case for everyone. So sometimes you
Speaker 1: can get cheaper rates by seeing like buying private home
Speaker 1: insurance or bundling it with something else, they'll like match
Speaker 1: it or beat it. So even if you have one
Speaker 1: of those government subsidized plans available to you, you should
Speaker 1: still be checking around shopping around for rates UM and
Speaker 1: then also check for UM like discounts you can get.
Speaker 1: So are there things qualities about the home that if
Speaker 1: it has this thing, you will get a discount on
Speaker 1: your rate. So there were several things that our home
Speaker 1: you know, had, but also didn't have, So as we
Speaker 1: were doing updates to the house, we were able to
Speaker 1: intentionally include those changes UM in order to qualify for
Speaker 1: those discounts. So one of those was hurricane straps for
Speaker 1: a roof. We um there's like a four point roof
Speaker 1: thing that you need to get the discount, and we
Speaker 1: had three. We didn't have the hurricane straps, but after
Speaker 1: several trees fell on our roof, we ended up needing
Speaker 1: a roof from placement. So when we got that, we
Speaker 1: made sure that we asked, intentionally asked, hey, put these
Speaker 1: straps on, and that gave us a significant discount of
Speaker 1: our home insurance um every year. So just be on
Speaker 1: the lookout for those discounts um when you're shopping for
Speaker 1: a home. Ask does the home have these things so
Speaker 1: that I can get a home insurance discount? Or you know,
Speaker 1: is the roof old enough where I'll need to replace
Speaker 1: it and I can get that discount pretty quickly. Stuff
Speaker 1: like that. Yeah, it's it's good to know that these
Speaker 1: things exist, that there's improvements that can be made to
Speaker 1: your home that can save you money in the long run.
Speaker 1: So I would also add to this, and we already
Speaker 1: mentioned it a bit, but calculating if you might save
Speaker 1: more by not putting down on a home when you
Speaker 1: are purchasing. So a lot of the reason that a
Speaker 1: lot of people say don't buy a home until you
Speaker 1: have down is because of p m I that that
Speaker 1: mortgage insurance. But p m I usually cost point five
Speaker 1: to one percent of the loan, it may not actually
Speaker 1: be that large of a sum of money. And and
Speaker 1: if that is the one thing keeping you from purchasing
Speaker 1: a home, it's worth calculating your costs of how much
Speaker 1: is it costing you right now to rent, what is
Speaker 1: the percentage increase of how the housing market year over
Speaker 1: year in your area? What will it cost you in
Speaker 1: the long run to wait until you have twenty down
Speaker 1: versus buying now at ten to fifteen percent down. I
Speaker 1: know for Eric and I, we you know, we had
Speaker 1: the aim of down, but once we actually looked at
Speaker 1: our p m I is something like forty bucks a month,
Speaker 1: which to me is not a large sum of money
Speaker 1: for us to have been able to get into a home.
Speaker 1: And we kept the other money aside so that we
Speaker 1: can start cash flowing renovations quickly get rid of that
Speaker 1: p m I increase the value of our home. Like
Speaker 1: there there are situations where it could be worth going
Speaker 1: with less than twenty down because of what it can
Speaker 1: afford you in the immediacy. MM hmm. Yeah, calculate And
Speaker 1: that's something else you should get when you're getting like
Speaker 1: loan um when you're shopping around for mortgage rates, see
Speaker 1: what p M I will be um and if it's
Speaker 1: you know, if it's forty a month, ask yourself, is
Speaker 1: paying forty a month worth it to like be in
Speaker 1: a house and to be able to immediately start working
Speaker 1: on renovations that could start to bring us in more
Speaker 1: money if we are able to um bring in some
Speaker 1: income off of our property. So yeah, tons of things
Speaker 1: to consider with that. It's ultimately not always a one
Speaker 1: size fits all. There is great advice out there, but
Speaker 1: it's also worth looking into doing some calculations, considering your
Speaker 1: individual circumstances for what makes the most sense for you. Yeah,
Speaker 1: we put three percent down, but we were in the
Speaker 1: middle of paying off debt and that was that was
Speaker 1: a whirlwind. I don't know how that worked out, but
Speaker 1: you're at a beautiful home, yes, And and so we
Speaker 1: put three percent down, got a thirty year mortgage, and
Speaker 1: then three years later we have refinanced. We are now
Speaker 1: in a teen year um our rate is half of
Speaker 1: what it was, so I mean almost half of what
Speaker 1: it was. And I'm happy it's right because also when
Speaker 1: we got into the house, um, we were able to
Speaker 1: start renting out our guest room on Airbnb. That's that's
Speaker 1: my next way to save Um it's actually like monetize
Speaker 1: your home. But we it was just Travis and I,
Speaker 1: so we put our front guest room up on Airbnb
Speaker 1: and we chargedly thirty five bucks a night for it.
Speaker 1: So nothing crazy because we're sharing space and it takes
Speaker 1: a certain type of person to be willing to share
Speaker 1: somebody else's home. Um, and that person is usually pretty cool.
Speaker 1: So it's a little different now like in our current climate,
Speaker 1: but uh, definitely still worth doing. Again. The type of
Speaker 1: person that will share somebody's home after a pandemic is
Speaker 1: just a certain type of person and they are typically
Speaker 1: pretty cool. So I think we had we could. We
Speaker 1: had like almost a hundred guests, and I can name
Speaker 1: on one hand how many I didn't like, So that's great.
Speaker 1: Those are typically I really liked that great ratio. My
Speaker 1: final tip is for saving money in the home buying
Speaker 1: process is to consider purchasing a home in a lower
Speaker 1: cost of living area. So this could include looking a
Speaker 1: bit outside of the radius that you were hoping to
Speaker 1: purchase in it could also mean a massive move altogether.
Speaker 1: This is coming from personal experience. It's a big reason
Speaker 1: why Eric and I moved to Florida. I mean, first
Speaker 1: of all, we both work remotely, so we were able
Speaker 1: to move and our jobs were not a factor in that.
Speaker 1: We were able to maintain our employment and pretty much
Speaker 1: go wherever we wanted. So that was huge for our
Speaker 1: ability to do this. But when we were ready to
Speaker 1: purchase a home, we started to realize, Wow, we can
Speaker 1: barely afford to live in the area that we've been
Speaker 1: living in, and if we want to buy a home,
Speaker 1: we may need to look elsewhere. Um. And it turns
Speaker 1: out for us, Florida was an elsewhere that provided quite
Speaker 1: the house for our price range. We could not be
Speaker 1: more thrilled that we can afford the house that we
Speaker 1: ended up buying. We would not be able to get
Speaker 1: anything like what we're living in now up north, So
Speaker 1: for us that was a consideration um, and a move
Speaker 1: worth doing. Mm hmm. Yeah. And this is such this
Speaker 1: is a controversial topic, I guess too, because when you're
Speaker 1: trying to pay off debt or reach like a really
Speaker 1: big financial goal, usually I mean people look at their
Speaker 1: budget and they just assume the costs that they're paying
Speaker 1: for housing is what they have to pay, and they're
Speaker 1: looking to scrimp and save on groceries and utilities. Um,
Speaker 1: but if you were in a high cost of living
Speaker 1: area and you have the physical ability to move somewhere
Speaker 1: else for a little while, then that could be the
Speaker 1: answer to your budgeting questions. I mean, so it won't
Speaker 1: be that way for everyone, um, but maybe like ten
Speaker 1: people and so maybe there's like a few people listening
Speaker 1: to where like that's the answer to their budgeting problem. Yea,
Speaker 1: So there are other reasons I understand why people would
Speaker 1: not want to just up and move. And I'm not
Speaker 1: saying that it was a super simple process and decision
Speaker 1: for us, But at the end of the day, we
Speaker 1: recognized ultimately this is a great area to invest in.
Speaker 1: So even if we want to move back up north,
Speaker 1: we could sell it at a profit, we could rent
Speaker 1: it out. This is just a killer area that still
Speaker 1: happens to be less expensive than from where we came.
Speaker 1: So it, yes, it is a consideration. Just like when
Speaker 1: I lived in a motor home and I knew this
Speaker 1: is not for everybody, but there could be somebody out
Speaker 1: there who's listening, and this is a solution. So whether
Speaker 1: it's tiny living or moving to a lower cost of
Speaker 1: living area, there there are some hacks if you're willing
Speaker 1: to think outside the box, if you're willing to sacrifice
Speaker 1: in some areas for a couple of years, there are
Speaker 1: some solutions if we're willing to go a bit bigger
Speaker 1: than maybe where we typically might be thinking. Yea, so
Speaker 1: I hope that you got at least one nugget from
Speaker 1: the last fifty minutes and you will take that and
Speaker 1: save a lot of money because homeownership is expensive and
Speaker 1: it is not always an investment, but there are ways
Speaker 1: to save and we hope this episode could save you
Speaker 1: some money over your lifetime. And uh, thanks so much
Speaker 1: for listening. We want to thank you also for your
Speaker 1: kind reviews on iTunes and Stitcher like this one just
Speaker 1: happens to be five stars. It's from Cal Patton says, smart,
Speaker 1: fun and genuine a personal finance podcast that feels like
Speaker 1: you're talking to really smart friends. Jen and Jill do
Speaker 1: their research and you'll definitely learn, but with a smile.
Speaker 1: Topics are well thought out and not the same over
Speaker 1: general topics routinely covered in other personal finance podcasts. The
Speaker 1: show is super fun, quirky, and most importantly genuine. Flaws claimed.
Speaker 1: Air is admitted, lessons learned, and all shared in the
Speaker 1: most upbeat way. It feels like wine with the girls
Speaker 1: while the boys are away. So true. Cal Petton, thank
Speaker 1: you so much for your kind words and calling us smart. Wow,
Speaker 1: my mom appreciates that. We also want to thank our
Speaker 1: friends who share these episodes on social media. So when
Speaker 1: you share the latest episode, the most recent episode and
Speaker 1: tag us on Facebook or Instagram, we are adding you
Speaker 1: to our monthly drawing. So for every five tags and
Speaker 1: reviews we get each month, we will give away one
Speaker 1: copy of the Frugal Friends workbook. Yeah, so keep leaving
Speaker 1: us those reviews on iTunes and Stitcher and sending the
Speaker 1: screenshot to Frugal Friends Podcast at gmail dot com. And
Speaker 1: don't forget to tag us on social We will see
Speaker 1: those if they're tagged at Frugal Friends Podcast. See you
Speaker 1: next week. Bye. Frugal Friends is produced, edited and fixed
Speaker 1: by Eric Syria. We're sitting in this weird place where
Speaker 1: are finance actually hasn't gone through, so we have two
Speaker 1: mortgages for one house. Yeah, it's pretty Have you had
Speaker 1: to pay two mortgages? No? No, no no. Even if
Speaker 1: for some reason it doesn't go through, we don't actually
Speaker 1: have to pay. We don't have to pay the first
Speaker 1: um month mortgage because that was in the closing costs.
Speaker 1: So for some something goes wrong, then we're still okay, Okay.
Speaker 1: When do you expect to hear back? Uh? I don't know.
Speaker 1: We won't really hear about it until it goes through
Speaker 1: from Wells Fargo, and then in about three weeks after
Speaker 1: we'll get a check for the overage because there's a
Speaker 1: little overage. Um, we will accidentally get about a grand
Speaker 1: back because it took so long to process the refinance
Speaker 1: because it's um so everything takes longer everything. Yeah. So well,
Speaker 1: I hope that comes through for you soon. Me too.
Speaker 1: I really don't want to pay Wells Fargo again. I'm
Speaker 1: going to see if it's not gone through by the
Speaker 1: end of the week, I will call them Friday. Good plan.
Speaker 1: Thanks glad everybody knows that. Now that's my plan for
Speaker 1: the week. I stay accountable.