WEBVTT - Before You Buy A House #065 0:00:00.080 --> 0:00:02.960 Welcome to How the Money. I'm Joel and I'm Matt, 0:00:03.200 --> 0:00:06.280 and today we're discussing what you need to do before 0:00:06.280 --> 0:00:27.240 you buy a house, Matt. Before you buy a house, 0:00:27.320 --> 0:00:28.720 there are a lot of ducks that you need to 0:00:28.720 --> 0:00:31.080 get in a row, and we're gonna put those ducks 0:00:31.120 --> 0:00:33.080 in a row with people, uh in just a few minutes. 0:00:33.120 --> 0:00:35.520 I'm excited to kind of tackle this topic today. That's right, Joel. 0:00:35.560 --> 0:00:37.440 But before we kind of kick things off, we are 0:00:37.440 --> 0:00:39.760 in our new dining room space. Kate and I have 0:00:39.880 --> 0:00:42.680 renovated our house. We we did in a few episodes 0:00:42.760 --> 0:00:46.040 on renovating a few weeks ago. Gosh, we are so 0:00:46.680 --> 0:00:49.080 freaking happy to be back in our kitchen, in our 0:00:49.080 --> 0:00:51.040 dining room now that we have this sort of connected 0:00:51.040 --> 0:00:53.199 space for our family to spend a lot of time in. 0:00:53.840 --> 0:00:55.400 And it's nice as well for you and I to 0:00:55.400 --> 0:00:57.400 be able to record and not have the instat pot 0:00:57.440 --> 0:01:00.160 over my shoulder here, plus all the spices behind you 0:01:00.240 --> 0:01:02.760 over there, that whole thing going on. It was easier 0:01:02.800 --> 0:01:04.720 to get the beers from the fridge because it was 0:01:04.760 --> 0:01:06.640 just an arms length a way when we recorded in 0:01:06.680 --> 0:01:09.520 your old dining room slash kitchen. Because everything was mixed 0:01:09.520 --> 0:01:11.440 together in one. But but no, this is a nice 0:01:11.440 --> 0:01:14.000 new space, and yeah, it looks really nice, and it's 0:01:14.040 --> 0:01:16.480 nice to have kind of an upgraded recording studio here 0:01:16.520 --> 0:01:19.119 at your dining room table. That's definitely more comfortable and honestly, 0:01:19.120 --> 0:01:20.840 and just the utility that Kate and I that we 0:01:20.880 --> 0:01:22.679 have been able to get out of it as a family. 0:01:22.760 --> 0:01:24.240 We're not even done yet. We still have a punch 0:01:24.280 --> 0:01:26.360 list of things that need to be completed before we, 0:01:26.440 --> 0:01:28.240 you know, write that final check like we talked about 0:01:28.319 --> 0:01:31.000 when it comes to renovating your house. But I realized 0:01:31.000 --> 0:01:33.679 how much stress was sort of on us by not 0:01:33.800 --> 0:01:36.560 being back here and sort of having our our usual 0:01:36.560 --> 0:01:38.560 space and feeling like we're kind of camping out. You know, 0:01:38.600 --> 0:01:40.240 we've been camping out for the past three or four 0:01:40.240 --> 0:01:42.360 months now while this has all been going on, and 0:01:42.400 --> 0:01:44.160 it's nice to be able to resume life and to 0:01:44.240 --> 0:01:46.440 pick up what we left off. Yeah, Matt, and there's 0:01:46.480 --> 0:01:49.960 some really interesting income producing aspects of your innovation that 0:01:50.000 --> 0:01:52.080 we are going to talk about in a future episode. 0:01:52.160 --> 0:01:54.320 So we're gonna need some time and some numbers to 0:01:54.320 --> 0:01:56.000 come in on that. And uh yeah, so we'll get 0:01:56.040 --> 0:01:57.880 to that maybe a few months down the road. But 0:01:57.920 --> 0:02:00.280 first I've got a frugal versus cheap for you. I'll 0:02:00.320 --> 0:02:04.520 bring it, and that is school lunches. Your daughter and 0:02:04.560 --> 0:02:06.880 my daughter, they both go to the same elementary school. 0:02:07.160 --> 0:02:10.040 School lunches are four dollars there, and that's for a 0:02:10.160 --> 0:02:13.359 nice lunch, right, like if they have an incredible lunch program. 0:02:13.400 --> 0:02:15.440 And it's like the nutrition and all the thought that 0:02:15.480 --> 0:02:17.840 goes into these meals, Like last time that my wife 0:02:17.880 --> 0:02:20.600 was there, like the kids were eating beat salad, which 0:02:20.639 --> 0:02:23.960 is amazing, Like I love beats. That's impressive. But the 0:02:23.960 --> 0:02:25.880 fact is four dollars is still a lot of money. 0:02:25.919 --> 0:02:27.960 And in our family were able to feed each one 0:02:28.000 --> 0:02:30.000 of us individually for one dollar per meal, so this 0:02:30.040 --> 0:02:33.000 is four times that. And Kate and I we're having 0:02:33.000 --> 0:02:35.240 the discussion the other day and we were asking ourselves, 0:02:35.320 --> 0:02:37.840 are we withholding a sort of special experience from our 0:02:37.919 --> 0:02:41.480 daughter by not allowing her to buy school lunch? Are 0:02:41.480 --> 0:02:44.560 we depriving her of this sort of fun thing that 0:02:44.720 --> 0:02:46.400 the other kids get to do, Because it's something that 0:02:46.440 --> 0:02:48.800 recently she has been sort of mentioning, kind of on 0:02:48.840 --> 0:02:50.440 the side a little bit she did she hasn't like 0:02:50.480 --> 0:02:53.440 demanded anything, but yeah, what are your thoughts on that? Well, 0:02:53.480 --> 0:02:55.960 So we actually let our daughter buy one day a week, 0:02:56.120 --> 0:02:59.360 so she buys either Monday's or Fridays, and we usually 0:02:59.360 --> 0:03:01.280 picked the meal that we think she's gonna enjoy the 0:03:01.320 --> 0:03:04.359 most based on those days. It's one fewer day that 0:03:04.760 --> 0:03:06.440 that we have to pack a lunch for, which just 0:03:06.520 --> 0:03:08.160 kind of makes it easier to get out the door 0:03:08.200 --> 0:03:10.480 in the morning. But for the most part, we're packing 0:03:10.560 --> 0:03:13.000 lunches because it's way cheaper. Yeah, well, that's that's where 0:03:13.040 --> 0:03:14.600 we are with it. We feel like that it's frugal 0:03:15.280 --> 0:03:18.560 because otherwise we're spending four times flasts or twenty bucks 0:03:18.800 --> 0:03:21.320 four weeks a month. You're looking at eighty bucks just 0:03:21.400 --> 0:03:24.919 for lunches, just for one kid. And I don't know, 0:03:25.000 --> 0:03:27.000 part of that is we can't really get around and 0:03:27.040 --> 0:03:30.000 like we know our lunches are just as nutritious, But 0:03:30.120 --> 0:03:32.160 there's just I guess the fun aspect of it that 0:03:32.200 --> 0:03:35.400 we feel we're sort of depriving heavy of a little bit. 0:03:35.480 --> 0:03:37.280 And I mean basically, she just wants to be able 0:03:37.320 --> 0:03:39.560 to like eat pancakes when they have pancake Day, or 0:03:39.640 --> 0:03:42.080 like French toast, right, you know, Yeah, that's definitely the 0:03:42.080 --> 0:03:43.480 one you should let her have. And so I didn't 0:03:43.480 --> 0:03:45.240 know you guys actually did that. I didn't know you 0:03:45.240 --> 0:03:46.760 you did one day a week thing. And I think 0:03:46.760 --> 0:03:49.120 we might start looking ahead to the lunch menu and 0:03:49.160 --> 0:03:52.000 maybe when there's a day in particular that sounds extra delicious, 0:03:52.040 --> 0:03:54.760 maybe we'll start allowing that. You know, it's cool, Matt. 0:03:54.840 --> 0:03:57.600 You can actually ask if you have an Amazon Alexa device, 0:03:57.680 --> 0:04:00.520 you can ask it to read the cool lunch for 0:04:00.520 --> 0:04:02.520 our school. Someone told me that I heard that recently 0:04:02.560 --> 0:04:04.200 as well. You know what else you can ask Alexa 0:04:04.240 --> 0:04:06.600 to do? Play our podcast, can you really? Yeah, you 0:04:06.600 --> 0:04:08.760 can say Alexa, play How to Money and it'll it 0:04:08.760 --> 0:04:11.360 will happen. So, by the way, if anyone's listening to 0:04:11.880 --> 0:04:14.000 us right now and they have an Alexa in the room, 0:04:14.280 --> 0:04:17.960 Alexa probably just played our podcast because I said, alright, Matt, 0:04:18.040 --> 0:04:20.440 so real quick, let's tell everybody. The beer we're drinking 0:04:20.440 --> 0:04:23.360 on the show today another beer from rhein Geist. Our 0:04:23.400 --> 0:04:25.839 friend Natalie, who works at Ryan Guys, sent us a 0:04:25.880 --> 0:04:27.680 couple of bottles, and so today on the show, we're 0:04:27.720 --> 0:04:31.640 drinking a barrel aged Imperial stout called Ink. And I 0:04:31.680 --> 0:04:33.160 was looking at the bottle. Man, I love how they 0:04:33.160 --> 0:04:35.400 got this little skull. They've got like a droplet I 0:04:35.400 --> 0:04:38.159 assume of little beer dripping down from a barrel. A 0:04:38.200 --> 0:04:41.039 little droplet has a little skull designed into it makes 0:04:41.080 --> 0:04:45.280 it look hardcore. It's like a mixture of hardcore and Q. Yeah. Yeah, 0:04:45.279 --> 0:04:48.159 it's it's so small, it's pretty cute. Yeah. I just 0:04:48.160 --> 0:04:49.840 took a sip. This is good and I can't wait 0:04:49.839 --> 0:04:52.280 to delve into our full thoughts at the end of 0:04:52.320 --> 0:04:54.679 the show. But for now, let's get into the topic 0:04:54.720 --> 0:04:57.000 of hand. What to do before you buy a house? 0:04:57.560 --> 0:04:59.839 And Matt back in the episode thirty of the show, 0:04:59.880 --> 0:05:03.520 we discussed by buying a home is typically a terrible investment. 0:05:03.520 --> 0:05:05.640 And so if you're thinking about buying a home, oh man, 0:05:05.680 --> 0:05:07.600 this is gonna be a great investment, and this is 0:05:07.640 --> 0:05:10.520 gonna be good for me financially over the long haul. 0:05:10.600 --> 0:05:12.560 Well that's likely not the case. And if you want 0:05:12.600 --> 0:05:14.080 to know more about that, go back and listen to 0:05:14.120 --> 0:05:16.839 episode thirty. But for so many of us, buying a 0:05:16.920 --> 0:05:21.400 home has large appeal for so many other reasons besides 0:05:21.520 --> 0:05:24.760 just being a quote unquote investment. Right, So, how do 0:05:24.800 --> 0:05:27.680 you buy a home intelligently? In light of the fact 0:05:27.680 --> 0:05:30.120 that buying a home might not necessarily be the smartest 0:05:30.160 --> 0:05:32.680 financial decision, but it is a decision that many of 0:05:32.760 --> 0:05:35.560 us choose to make for so many other reasons. The 0:05:35.560 --> 0:05:37.360 other thing, too, is that it's just such a huge 0:05:37.480 --> 0:05:39.880 deal to buy a house, right, Like it's intimidating and 0:05:39.880 --> 0:05:41.840 it's a big deal, and it's because it costs a 0:05:41.839 --> 0:05:44.120 ton of money. This isn't a purchase that we make 0:05:44.200 --> 0:05:46.080 frequently at all. You know, unless you're getting an fh 0:05:46.160 --> 0:05:49.400 J loan, you've gotta put down like twenty for down payment, 0:05:49.440 --> 0:05:52.320 and that is a huge amount of money. Last year, 0:05:52.360 --> 0:05:54.479 the median home prices in the US were over three 0:05:54.880 --> 0:05:58.280 thousand dollars, So we're talking at least sixty thou dollars 0:05:58.279 --> 0:06:00.160 that you've got to put down, not including as in 0:06:00.240 --> 0:06:03.279 costs or anything else associated with a move. And because 0:06:03.320 --> 0:06:05.119 this isn't a purchase that we make all the time, 0:06:05.279 --> 0:06:08.600 we're just less familiar with the process. Like even if 0:06:08.600 --> 0:06:10.719 this was something that we did annually, like home buyers 0:06:10.800 --> 0:06:13.039 might feel a little bit more comfortable, But the fact 0:06:13.120 --> 0:06:15.440 is that's not the case. And so I'm glad that 0:06:15.560 --> 0:06:17.160 this is something that we're tackling. I think we've got 0:06:17.160 --> 0:06:19.800 a lot of homebuyers out there, especially a lot of 0:06:19.839 --> 0:06:22.920 first time homebuyers, and with us being the Spring, that's 0:06:22.960 --> 0:06:25.160 a hot time to buy a house for sure. Yeah, 0:06:25.200 --> 0:06:27.200 no doubt. So where do you even begin, right finding 0:06:27.200 --> 0:06:30.200 an agent bruising Zillo. Nope, that's definitely not where you 0:06:30.240 --> 0:06:32.000 want to start. The first thing you need to do 0:06:32.120 --> 0:06:36.360 is take stock of your situation, your personal situation. Buying 0:06:36.480 --> 0:06:37.960 is only going to be a decent move if you 0:06:38.000 --> 0:06:41.040 plan on living in that home for seven years or longer. 0:06:41.120 --> 0:06:42.800 And if you can't make that kind of time commitment, 0:06:43.200 --> 0:06:46.239 it's almost always a bad financial move to buy a house. 0:06:46.760 --> 0:06:49.280 In that case, you're better off renting or you're gonna 0:06:49.320 --> 0:06:52.520 lose money typically when you sell, because of the transaction 0:06:52.560 --> 0:06:55.320 costs involved in buying and selling real estate. Sorry, Joe, 0:06:55.360 --> 0:06:58.080 this reminds me of episode fifteen, So even further back, 0:06:58.080 --> 0:07:01.280 we talked about renting versus buying and if you are 0:07:01.320 --> 0:07:03.120 sort of on the fence of whether you should maybe 0:07:03.120 --> 0:07:05.880 continue renting or maybe this is time for you to buy. 0:07:06.320 --> 0:07:08.000 This is sort of back in the old days when 0:07:08.040 --> 0:07:09.520 Joel and I are recording, But go back and listen 0:07:09.520 --> 0:07:11.200 to that episode. We we we talked about a lot of 0:07:11.280 --> 0:07:13.640 important things that you want to consider when it comes 0:07:13.640 --> 0:07:16.320 to renting versus buying a house. And so after the break, 0:07:16.320 --> 0:07:18.720 we're specifically going to talk about how you should be 0:07:18.760 --> 0:07:22.000 thinking about purchasing a home, like what is the mindset 0:07:22.040 --> 0:07:23.960 that you should have, And we're also going to spend 0:07:23.960 --> 0:07:26.640 a good amount of time talking about financing because that 0:07:27.160 --> 0:07:30.240 is a very important part of buying a house. Game changer. 0:07:39.200 --> 0:07:41.200 All right, Joe, let's go ahead and kick this thing off. Man. 0:07:41.240 --> 0:07:43.600 You know, if it turns out that you are ready 0:07:43.600 --> 0:07:45.680 to go ahead and buy a house, we've got a 0:07:45.720 --> 0:07:48.680 solid order of approach that we think that everyone should follow. 0:07:48.920 --> 0:07:51.080 First of all, make sure that you're spending a lot 0:07:51.120 --> 0:07:53.400 of time thinking about where it is that you want 0:07:53.480 --> 0:07:56.480 to live. And especially if you're moving to a new place, 0:07:57.080 --> 0:07:59.960 this specific location that you're possibly moving to could make 0:08:00.160 --> 0:08:01.960 or break things for you. You know, it could mean 0:08:02.080 --> 0:08:04.760 maybe a longer commute for you, or it could mean 0:08:04.880 --> 0:08:07.120 a short, simple bike ride. And you can even mean 0:08:07.200 --> 0:08:09.400 higher taxes versus lower taxes. You know, if you're in 0:08:09.440 --> 0:08:12.160 an area that is maybe more affluence and the home 0:08:12.240 --> 0:08:14.400 values are much higher, you're gonna see a bigger tax 0:08:14.440 --> 0:08:16.880 bill every single year. Yeah, man, I feel like people 0:08:16.920 --> 0:08:19.480 often don't spend enough time on the front end thinking 0:08:19.520 --> 0:08:22.280 about the specific location they want to live in. They 0:08:22.320 --> 0:08:24.840 maybe draw too big of an outline around where they're 0:08:24.840 --> 0:08:27.560 willing to live and they cast in it too wide, 0:08:27.840 --> 0:08:30.880 and because of that, they're not focused enough on a 0:08:30.920 --> 0:08:34.400 specific neighborhood or location. They don't figure out the specific 0:08:34.440 --> 0:08:36.960 place where they do want to live. And especially if 0:08:36.960 --> 0:08:39.360 you're moving to a new place and you're planning on 0:08:39.480 --> 0:08:42.520 buying right away, if you haven't done your research, you 0:08:42.600 --> 0:08:45.000 might end up buying a place where the location just 0:08:45.040 --> 0:08:48.160 doesn't work well for you, your family, your commute right. 0:08:48.559 --> 0:08:51.280 And renting, well, that's not that big of a deal. 0:08:51.559 --> 0:08:53.120 You live there for a year, you move on to 0:08:53.160 --> 0:08:54.800 the next place. If you just move on, yeah, But 0:08:54.840 --> 0:08:57.520 if you buy something, man, that's a huge pain. The 0:08:57.559 --> 0:09:00.400 transaction costs are huge that and that's why we mentioned 0:09:00.400 --> 0:09:02.880 before the break living in a place for seven years 0:09:02.920 --> 0:09:05.440 potentially that sounds like a long time, and it is 0:09:05.480 --> 0:09:08.480 a long time. But the transaction costs are killer in 0:09:08.600 --> 0:09:10.840 real estate. It can make or break the home purchase. 0:09:10.920 --> 0:09:13.440 Even if your home appreciates over time, you could still 0:09:13.520 --> 0:09:15.560 end up having to bring money to the closing table 0:09:15.840 --> 0:09:18.360 if you're only in there for three or four or 0:09:18.400 --> 0:09:20.679 even five years, which is kind of I guess been 0:09:20.880 --> 0:09:23.520 what financial experts traditionally say how long you should be 0:09:23.520 --> 0:09:26.880 in a house. So considering that location, spending more time 0:09:27.240 --> 0:09:30.079 on the front end, making sure that that location is 0:09:30.120 --> 0:09:32.480 exactly where you want to be. It's worth that due 0:09:32.480 --> 0:09:34.440 diligence because it could save you a lot of money 0:09:34.440 --> 0:09:36.079 in the long run. And the next thing you want 0:09:36.080 --> 0:09:38.000 to make sure that you're considering is the size of 0:09:38.000 --> 0:09:40.480 the house and the different amenities that you're wanting. You know, 0:09:40.480 --> 0:09:43.559 there's a balance between having enough house now and then 0:09:43.640 --> 0:09:46.400 looking ahead to your likely needs in the future, like 0:09:46.440 --> 0:09:48.040 three hot tubs. I need three hot tubs in the 0:09:48.040 --> 0:09:51.080 future need them all. As we recently covered, renovating is 0:09:51.120 --> 0:09:54.560 really expensive, So you want to have enough house now. However, 0:09:54.600 --> 0:09:57.240 you also don't want to pay tons of money just 0:09:57.320 --> 0:10:01.040 to have some extre amenities that you rarely use. Right 0:10:01.080 --> 0:10:03.199 If you consider often you use that guest bedroom, where 0:10:03.200 --> 0:10:05.520 that guest bath. After doing the math, that could be 0:10:05.600 --> 0:10:09.119 the equivalent of paying five hundred to a thousand dollars 0:10:09.160 --> 0:10:11.880 a night if you're only using those amenities just a 0:10:11.880 --> 0:10:14.160 few times a year. Yeah, so it might be better 0:10:14.200 --> 0:10:16.000 for you to be a little more generous and put 0:10:16.080 --> 0:10:19.640 up your friend or your family in uh nearby hotel 0:10:19.920 --> 0:10:21.600 as opposed to putting them up in your own house, 0:10:21.880 --> 0:10:25.400 having a smaller house, which means right lower monthly out 0:10:25.400 --> 0:10:28.199 of pocket expenses. It all just really depends on your 0:10:28.200 --> 0:10:31.760 situation and what you prioritize. And also now is the 0:10:31.760 --> 0:10:34.360 time to start thinking about your credit. You know, if 0:10:34.400 --> 0:10:36.440 you kind of have had some things in your credit, 0:10:36.640 --> 0:10:38.440 now is when you're gonna want to start having that 0:10:38.520 --> 0:10:40.840 cleaned up and making sure that you qualify for the 0:10:40.840 --> 0:10:44.319 best rates, because having a credit score a hundred points 0:10:44.320 --> 0:10:46.920 lower than what it actually could be could and up 0:10:46.960 --> 0:10:49.120 constion you tons of money down the road, and I'm 0:10:49.160 --> 0:10:51.559 talking thousands and thousands of dollars if you don't have 0:10:51.679 --> 0:10:55.400 to qualify for the best product. Yeah, Matt. On episode ten, 0:10:55.480 --> 0:10:57.800 we talked about how to improve your credit score, gave 0:10:57.840 --> 0:10:59.959 you kind of some tips and tricks. One thing you're 0:11:00.000 --> 0:11:02.040 gonna want to stay away from is anyone who says 0:11:02.080 --> 0:11:03.640 pay me money and I'll help you clean up your 0:11:03.640 --> 0:11:06.480 credit score. That is a no no, because those people 0:11:06.520 --> 0:11:08.560 often are gonna take your money and not help you 0:11:08.640 --> 0:11:11.640 very much. But it's definitely of utmost importance to make 0:11:11.640 --> 0:11:13.680 sure that your credit score is in tip top shape 0:11:14.040 --> 0:11:16.920 because the ultimate terms that you're gonna get from a lender, well, 0:11:16.960 --> 0:11:19.120 your credit score is going to be a huge factor 0:11:19.240 --> 0:11:22.240 in how good those terms are. And so thinking about 0:11:22.320 --> 0:11:25.480 your credit score now and how much you can boost 0:11:25.480 --> 0:11:27.320 it by doing some of the things we've talked about 0:11:27.360 --> 0:11:29.200 in that episode, that is going to make a huge 0:11:29.240 --> 0:11:31.920 difference in the rate that you end up getting and 0:11:32.080 --> 0:11:34.800 ultimately what you're out of pocket is every month on 0:11:34.840 --> 0:11:37.360 that new home purchase. That's right. Once you've done all 0:11:37.400 --> 0:11:39.720 those things, now is the time to start looking around 0:11:39.960 --> 0:11:42.360 and seeing if the different things that you value in 0:11:42.400 --> 0:11:44.640 a home, if those things fit within your budget, and 0:11:44.720 --> 0:11:48.360 if they're realistic. These days, almost all home searches begin 0:11:48.480 --> 0:11:51.120 on the internet, right, whether it be through Zillo, which 0:11:51.160 --> 0:11:53.960 is my favorite, or Redfin. I like red Finn, do 0:11:54.000 --> 0:11:56.280 you really, Yeah, that's my favorite. But even just with 0:11:56.400 --> 0:11:59.360 Google stree view, you can see so much of a 0:11:59.400 --> 0:12:01.880 house in this rounding area. You know, with satellite view 0:12:02.040 --> 0:12:04.240 you can see what green spaces and parks there are 0:12:04.280 --> 0:12:06.080 close by by, kind of zooming out a little bit. 0:12:06.360 --> 0:12:08.520 There's a lot you can do remotely before even leaving 0:12:08.559 --> 0:12:10.920 your house. The only downside, though, is that if you 0:12:10.960 --> 0:12:13.120 get your heart set on a certain size home or 0:12:13.200 --> 0:12:15.880 part of town that you can't actually afford in right, Like, 0:12:15.920 --> 0:12:18.439 so you started looking and you realize that, like, oh wow, 0:12:18.480 --> 0:12:21.880 in reality, I can't afford where I want to actually live, 0:12:22.320 --> 0:12:24.800 you might be tempted to increase your budget. And so 0:12:24.880 --> 0:12:27.400 if you know that that's sort of how you operate, 0:12:27.440 --> 0:12:30.079 and if that's you, we would recommend to start with 0:12:30.160 --> 0:12:33.160 your budget and then limits your options based on what 0:12:33.200 --> 0:12:34.880 you can afford. And we're gonna get to that in 0:12:34.960 --> 0:12:37.720 just one second. But I did want to say that everybody, 0:12:37.760 --> 0:12:41.000 no matter what your price point is, everybody has kind 0:12:41.000 --> 0:12:43.720 of a dream home. Everybody has a thought of the 0:12:43.760 --> 0:12:46.680 place that they want to live, and the reality of 0:12:46.760 --> 0:12:50.280 the budget never matches up to exactly what we want. 0:12:50.360 --> 0:12:52.520 Right those three hot tubs I mentioned, Matt, I didn't 0:12:52.520 --> 0:12:54.320 get them. I don't even have one hot tub, and 0:12:54.360 --> 0:12:56.240 it's a huge bummer. I'm not gonna lie at one 0:12:56.280 --> 0:12:58.440 of these days hot tub. It's in the car day. 0:12:59.160 --> 0:13:02.000 But everybody has to make trade offs, and so just 0:13:02.080 --> 0:13:04.839 make sure before you start looking super hard and getting 0:13:04.840 --> 0:13:08.120 your heart set on things that are budget breakers, that 0:13:08.160 --> 0:13:10.800 you've kind of dialed in a dose of realism of 0:13:10.840 --> 0:13:13.040 what you can actually afford. And one of the ways 0:13:13.040 --> 0:13:15.040 that you can do that is by actually touring some 0:13:15.160 --> 0:13:18.120 homes before you're actually in the market to buy, to 0:13:18.200 --> 0:13:21.400 do some walkthroughs and see, Okay, if I really want 0:13:21.640 --> 0:13:23.960 this kind of house, I might have to move to 0:13:24.000 --> 0:13:26.400 a neighborhood that isn't exactly where I wanted to be, 0:13:26.840 --> 0:13:30.240 or man, if the neighborhood location is the most important 0:13:30.240 --> 0:13:32.040 factor for me, you know what, I might have to 0:13:32.080 --> 0:13:34.640 live in a smaller house. And those are the kind 0:13:34.640 --> 0:13:37.280 of trade offs that in all likelihood you are going 0:13:37.320 --> 0:13:39.840 to have to make. None of us get that exact 0:13:39.920 --> 0:13:42.920 perfect dream home that we want, And so touring homes 0:13:42.920 --> 0:13:44.640 that are on the market during this phase can be 0:13:44.679 --> 0:13:47.840 just kind of really helpful to setting some realistic expectations 0:13:47.880 --> 0:13:51.040 before you're even in the market. Rajeel, And again, the 0:13:51.040 --> 0:13:53.120 goal here is to initially figure out what your ballpark 0:13:53.200 --> 0:13:55.920 figures are of what you can afford. Like you said, 0:13:55.960 --> 0:13:58.080 maybe after seeing the costs, you might realize that you 0:13:58.120 --> 0:14:00.720 can't actually afford in that area that you want, or 0:14:00.760 --> 0:14:04.440 maybe after realizing that you actually need down, you realize 0:14:04.440 --> 0:14:06.080 you need to say for another year, Like, that's a 0:14:06.120 --> 0:14:08.600 lot of money, and that that's sort of like the 0:14:08.640 --> 0:14:13.120 information gathering stage of house purchasing, thinking a lot about it, 0:14:13.160 --> 0:14:15.040 seeing what's out there, getting a field for the different 0:14:15.040 --> 0:14:17.200 neighborhoods you want to do, all of this before you 0:14:17.240 --> 0:14:20.640 actually start taking what we'd call real steps towards purchasing 0:14:20.640 --> 0:14:24.040 a home. Okay, real steps though, getting financing right. That's 0:14:24.040 --> 0:14:27.280 a huge important step, and I gotta be honest, it's 0:14:27.320 --> 0:14:30.640 the step that people usually skip. They usually call on 0:14:30.640 --> 0:14:33.800 one lender, maybe two, but often the due diligence and 0:14:33.800 --> 0:14:37.840 the research uh that people give to getting financing is 0:14:37.880 --> 0:14:39.520 way less than they need to and it ends up 0:14:39.520 --> 0:14:41.960 costing them a lot of money. So let's go over that. 0:14:42.240 --> 0:14:44.840 A general rule that you should think about when getting 0:14:44.880 --> 0:14:47.880 financing for a home is that you should strongly consider 0:14:48.200 --> 0:14:50.960 not taking out a loan that is more than three 0:14:51.000 --> 0:14:54.440 times your income. And you know what a lender might say, No, 0:14:54.600 --> 0:14:57.640 it's totally okay. You qualify for a loan that is 0:14:58.040 --> 0:15:01.120 five times your income or sick times your income, Like, no, 0:15:01.240 --> 0:15:03.840 you bother you got this, you can make it happen. 0:15:03.960 --> 0:15:07.120 It's okay. You know what, don't listen to them. Listening 0:15:07.160 --> 0:15:10.880 to your lender as opposed to reason in this case 0:15:11.400 --> 0:15:14.520 is a recipe for being house poor, for buying something 0:15:14.560 --> 0:15:17.560 that you truly can't afford, and if something unexpected happens, 0:15:17.800 --> 0:15:19.920 you might not be able to afford that mortgage payment. 0:15:20.040 --> 0:15:23.000 So sticking to that rule of three times your income 0:15:23.360 --> 0:15:26.240 as the maximum purchase price for a house makes sense 0:15:26.240 --> 0:15:29.320 in our opinion. And another rule of thumb that we've 0:15:29.320 --> 0:15:32.080 practiced is that your mortgage payment should not be more 0:15:32.080 --> 0:15:35.520 than of your take home pay. I think that might 0:15:35.520 --> 0:15:38.920 be a somewhat more lenient view towards towards your home, 0:15:38.960 --> 0:15:40.720 and I think that's okay as well, right, Like, it's 0:15:40.760 --> 0:15:43.040 okay to have these different rules of thumb. Ask you 0:15:43.080 --> 0:15:45.840 how much your your housing costs are, because it kind 0:15:45.840 --> 0:15:48.040 of comes down to what you value and what you 0:15:48.040 --> 0:15:50.200 want to prioritize. I know, for Kate, and this is 0:15:50.440 --> 0:15:53.920 literally a discussion that we've had before. We've said, do 0:15:53.960 --> 0:15:56.280 we want to spend more than maybe we should on 0:15:56.320 --> 0:15:58.400 our housing? And we've identified the fact that with a 0:15:58.400 --> 0:16:00.240 bunch of young kids like we spend a lot of 0:16:00.240 --> 0:16:02.480 time at home. We value our time at home, Like 0:16:02.560 --> 0:16:04.920 both Kate and I are both homebodies, and so that's 0:16:04.920 --> 0:16:07.280 something that we've intentionally pursued and we know that we're 0:16:07.320 --> 0:16:09.280 more comfortable spending maybe a little bit more on our 0:16:09.360 --> 0:16:12.680 house And that's okay as long as you have proactively 0:16:12.720 --> 0:16:15.640 identify that as something that you do want to pursue. 0:16:15.680 --> 0:16:17.520 And so whatever your guidelines, you just want to make 0:16:17.560 --> 0:16:19.880 sure that you're not spending too much on housing then 0:16:19.920 --> 0:16:22.240 you can afford. And for you, in particular, Matt, housing 0:16:22.360 --> 0:16:24.480 is also actually you know where you do your work 0:16:24.560 --> 0:16:27.440 and so you home office as well. Yeah, so it's 0:16:27.440 --> 0:16:29.520 got a dual purpose. I will say though, there was 0:16:29.560 --> 0:16:32.960 a stat I saw recently almost fifteen percent of Americans 0:16:33.280 --> 0:16:36.680 spend over fifty percent of their income on housing. Jeez, 0:16:36.880 --> 0:16:39.120 that's a lot. Yeah, that's an awful place to be. 0:16:39.320 --> 0:16:41.120 And so yeah, we just don't want you to be 0:16:41.200 --> 0:16:43.760 in a place of weakness when it comes to buying 0:16:43.760 --> 0:16:46.800 a home. And if you're in a situation obviously a 0:16:46.800 --> 0:16:49.480 mortgage lender typically isn't going to allow you to get 0:16:49.520 --> 0:16:51.800 into that kind of space. But you know what, if 0:16:51.840 --> 0:16:54.240 you follow what a lender tells you can afford. There's 0:16:54.280 --> 0:16:56.520 a good chance that you're going to get into a 0:16:56.560 --> 0:16:59.240 position where you can't afford your mortgage with a comfortable 0:16:59.320 --> 0:17:01.600 level of say means and investing at the same time. 0:17:01.880 --> 0:17:03.440 And that's not the place that we want you to be. 0:17:03.520 --> 0:17:05.440 We want you to be in a place of strength 0:17:05.760 --> 0:17:07.840 in housing. And if that means you need to look 0:17:07.880 --> 0:17:10.160 at buying in a different neighborhood or look at buying 0:17:10.240 --> 0:17:12.639 a smaller home, we think that's a trade off you 0:17:12.680 --> 0:17:15.560 need to be willing to consider, because being house port 0:17:15.680 --> 0:17:18.880 is no fun. Oh, Joel. Also, financing, like, we didn't 0:17:18.880 --> 0:17:21.280 really define it, and I think most people know what 0:17:21.320 --> 0:17:23.480 financing is, but that's just sort of a fancy term 0:17:23.600 --> 0:17:26.119 for how you're going to pay for your house unless 0:17:26.119 --> 0:17:28.520 you have cash to buy your home. And if you 0:17:28.520 --> 0:17:30.760 do have cash to purchase your home, you probably know 0:17:30.800 --> 0:17:35.680 what financing is and you reach spollars. But but yeah, basically, 0:17:35.720 --> 0:17:37.880 pretty much everyone is going to be financing their home 0:17:37.880 --> 0:17:39.600 and that just means getting alone for the purchase of 0:17:39.600 --> 0:17:42.240 that home. And when it comes to getting that financing 0:17:42.320 --> 0:17:44.879 or getting that loan for your house, well, credit unions 0:17:44.880 --> 0:17:47.199 are a great place to start. So if you're not 0:17:47.320 --> 0:17:49.520