Mortgages, Lending, and Interest Rates – Oh My!

This is episode number 186 of The Homeowner Show. Well, whether you're DIY or looking to hire, we're here to help you find the best information and options for you and your home. My name is Kevin Hackett, and here with me is Craig Williams.

Hello, hello, hello, and welcome to The Homeowner Show. We're so glad that you could join us for another live episode of The Homeowner Show here in The Homeowner Show studios. How you doing, Kev?

I am doing absolutely great, and I just turned off the weird noise that was happening on my phone, and now we are fine again.

Congratulations on failing the intro.

Yeah, well, would it be—

would it be a Homeowner Show intro without some sort of kerfuffle?

Not without me screwing something up, that's for sure. Oh man, I'll tell you, it's just because my life is, uh, a bit weird right now.

A bit weird.

A bit weird. Lots of Happening. Yeah, lots is happening.

Well, you just, you just flew in on a jet plane.

Yeah, I did. My wife and I took a 15-year anniversary up to New York City. It was fantastic. We saw 4 shows in 2 days.

And I gotta tell you, it didn't feel like you were gone that long, but I enjoyed every minute of it.

I'm sure you did.

I'm sure you did.

And while we were gone, we bought a house.

Hey, that's—

it's weird, man. I've seen it.

I like that house.

Yeah. Yeah, I— it's, um, man, it's, it's exciting. It's the first time we've ever owned some acreage. It's not as much as I want, but, um, it's a little over 3 acres. So I mean, it's not bad for—

It takes time to build an empire.

Yeah, I mean, you know, you can't— you, you gotta just let it, let it come. Let it come. Yeah, exactly. But, uh, but we're super excited. Like, if I, if I could have dropped a pin in the location that I wanted a house, this is like Perfect location.

Okay. Like, I hadn't asked you yet where it was at, but I knew that was a big deal.

So, yeah.

I'm glad it was. I'm glad that worked out.

Yeah.

I mean, it— as, as we were kinda going through this whole thing, it was kinda one of those deals where it's like, okay, you're— we're gonna compromise on something. Right? We're gonna compromise on price or size of house or location or number of acres. Something was gonna wind up being compromised on. Right? But, like, there's so many things that you can change But location you can't change. Like, that's not ever something that can— like, even like someone next to you might sell their house and you could even buy more acres, right? Like, but you can't ever change the location. So anyway, we're, um, we're going through that process. Our option period actually will be over by the time this show airs, and, um,

we'll be in the thick of getting our, our you know, the mortgage closed and all those sorts of things, which, um, kind of plays into what we're going to talk about today. But before we get there, how are you doing, man?

I'm doing really good. Yeah, I mean, I got some ailments.

Yeah, I saw. So, but, um, yeah, but I mean, what else are you gonna do to make yourself look worse? No, it is what it is.

We tried lipstick on the pig.

Yep.

We all know how that goes.

Not well.

So I burned my hand.

Burned your hand?

Yeah, why not?

But hey, you burned your hand like cooking, so—

In one of the more masculine ways you could do.

Right, I mean, it's not like you were like, you know, toasting something.

You know, you were— I was charring meat.

Yeah, yeah, it's good on a grill in the true Texas fashion. That's right.

Over a smoker.

As it should be.

As it should be. If you're gonna burn your hand, Welding, drilling.

Yes. Yes. All the things.

One of those.

Just don't do something stupid like fall out of your attic. Nobody wants to do that. That's, that's dumb.

Yeah.

Don't do that. I wouldn't advise it. I'll tell you. I won't. I wouldn't do it again. So anyway.

Just not the thrill seeker that other people are.

Oh my gosh.

But if you're gonna fall through an attic, make sure you fall through an attic for the house that you're about to sell.

Yes. So, yes. Exactly. But did that in the right order. Yes, I sure did. You know, I do what I can. Yeah, I do what I can.

Trying to think if there's anything else going on. We got the— we got the new horse, right? He's fully integrated.

Uh-huh.

He's nuts and I love it. Yeah. Um, what else is going on, dude? This is, um, termite week in Texas.

Oh man. Like, I— so I've, I've been told that like anywhere in this area like, termites are rampant, those sorts of things. But you've been getting some, some calls.

Dude, I, I posted a video, and I don't, I don't post a whole lot to, like, TikTok or any of that kind of stuff. But, like, since I posted this, like, thousands of people have watched it now because it's— for me, it was the first time I ever saw one. And I've been doing this for more than 20 years. And it was a— it's what they call a carton on the inside of a wall.

Okay.

And it's, it's where termites come inside And then they establish a nest inside your wall by bringing mud inside.

Really?

And so it was about the size of my torso.

What?

Yeah. And so, but it was like just hardened, encrusted mud on the inside of this wall. And then I, I would stick like a knife into it and break it open. And when I did, like just thousands of termites. Oh, and it was on the corner of a building. And so it had already caused structural damage to this place. And it wasn't even like— that's not even what they were opening the wall for. There was like a roof leak and they opened the wall to repair it. And if you go watch the video, you can look, you can see it was— it's a stucco house, which is my least favorite kind of construction because of this reason. It's basically a giant sponge.

And they had stucco they put either on the back of like metal, um, wire.

Okay.

Or on particle board. This one was on particle board. And so where the roof leaked, the roof dripped water all the way down the side inside the particle board, moistened the particle board, and then they ate the particle board all the way up to the ceiling. And then when they got done with that, they just started going into the 2x4s, and that's when they built that, that nest. And I've never seen one like that before.

Wow. So, well, at least they already had the wall open for you.

I mean, yeah, well, if they hadn't found it, those guys would have just 'Cause you can cut 'em off at the ground and they can survive in there.

Mm.

Wow. Yeah, it's bad stuff.

That sounds really, really bad. Yeah, termites are the worst. Ew. No, I don't want 'em.

These are the aggressive ones. They'll like come out and try and bite you.

Really?

Yeah, they don't hurt, but they'll do it.

Well, I don't really— I don't wanna find out. It's not like I'm gonna be like, here, termite, termite. You know, like I'm not trying to bring 'em to me.

Well, let me ask you this.

Okay.

Would you rather burn your hand in a barbecue grill Or get bitten by a termite?

Where is the termite? What do you mean? Besides on my hand, like, yeah, a termite in my house, or is it in your house?

Oh, doesn't matter. I mean, just just termite. You can stick your hand in the ground. I don't care.

Okay, fine. I'll I'll I'll probably take the termite.

I would.

Okay.

Having experienced both.

That's funny. Well, so hey, we have a we have a really great episode. We've got a a former guest. Multiple time former guest, former guest host, former guest host because sometimes people don't show up.

That's right.

To do the podcast, and so we have to have fill-ins.

And and has like by the way when she guest hosted, I think it's like the number four episode of all time.

I don't doubt that at all.

Yeah.

Well, but let's if we're gonna go there, I mean the number one episode of all time you weren't here.

That's right.

And I did edit it though. So you did edit it. You edited it. But man, that was a good episode. Yep. We should replay that sometime.

We have.

Again. Anyway, so we're excited to have Hailey Thayer back.

That's awesome.

Welcome, Hailey.

Welcome.

Hi, guys. It is so good to see you again. And I'm not surprised that Kevin had the top show.

Let's be honest.

Why, thank you very, very much. You're so welcome.

And I'm humble about it too.

She's just, she's just nervous because you keep ducking out of time every time she comes on the show.

I honestly, I was probably the most surprised that I was gonna be here. Whenever you put her on the schedule, I was like—

He's like, do I have to?

Yeah, I didn't, I didn't think it was gonna happen. I mean, I mean, honestly, like, I, I literally left town last week and you said it was gonna be on Monday. That's originally whenever he had it on the schedule was on Monday. And I was like, Craig, I'm not even gonna be here. She's gonna think I hate her.

It's all part of the plan.

Anyway, he was like, no, I put it on the wrong date. And I was like, okay, good. I'm actually gonna be here.

So anyway, so happy it's all 3 of us. This is amazing.

Yes, it's fun.

So what's, what's new in your world? Hopefully you haven't burned your hand or been bitten by termites.

So neither of those, thankfully. So I can rest easy tonight. Well, since I've been on, we were kind of talking about this before. I now have a son and a husband, and I now live in California.

Wow.

So many things have changed. Yes, a lot of things have changed for the better. And I— we moved back down to California because my family's here. This is where I was born and raised. And so it's been nice to be around and have Grandma come take care of the baby and We're just doing everything.

Well, and let's be honest, they don't have rain every day. So, your life is probably happier in general.

Exactly. It is way better. I see the sun every day, which is just wonderful. I couldn't be happier.

And you're bucking the trend over there. I mean, you've got the California exodus and you're like, well, whatever the crowd is doing, I need to do the exact opposite of that.

That's right. I'm gonna move to California, you chumps.

No, she's going there. It looks like opportunity.

Yeah, that's true.

Yes.

That's true.

It's so interesting you say that because as I've been starting to build up more relationships with people in my industry, they're all like, you moved back to California? What are you doing?

Yeah.

And we were considering Austin for a long time, so we could have been neighbors. I'm sorry that we weren't.

We should have been neighbors, but you know what? That one time you came, you didn't even tell us, so it's fine. Yeah, we're not bitter about it at all.

I probably would have had a car though if I lived there.

That's true.

That's true. I will say, like, when I was in New York City, like, I absolutely love riding the subway system. Like, it's so good and everything is so easy to get around and everything.

Like, It's not as grimy as those crime shows make it out to be.

Well, I mean, it's grimy.

Let's be honest.

But here's the thing. Like, it's $33 a week to ride the public transit in New York City, which is really, really good. And so for like $140 a month or something like that, you got all—

That's way cheaper than a car.

Why would anybody buy a car? You know?

Right.

It costs me more than that to— my wife filled up my Excursion today and it cost that much.

Yeah.

Oh yeah, it's ridiculous, dude.

I— okay, so, and I don't know if you've experienced this yet, and Haley, maybe you can say. I don't know how often you fill up over there, but like, I had a gas station cut me off.

Oh yeah, it happens. A lot of them are at $75.

That's what it was. They cut me off at $75.

Some of them are at $100. Walmart didn't cut us off today. It was good.

Good old Wally World.

Yeah, I've been cut off at $90.

At $90?

That's a weird one.

It's like 10 gallons there, right?

Yeah.

Yeah, exactly.

Yeah.

What are you guys paying?

Oh, I don't know if I should say. It's really embarrassing that I live here. We're in the $6, like $6.25, $6.30.

That sounds about right.

Yeah, they're really pushing people to plug their cars in. That's what they're really pushing. So yeah, because we're—

what are you guys at?

We're just under $4.

Well, yeah, we paid $3.59 today.

$3.59?

Yeah.

That's pretty cheap.

It's really cheap. Yeah.

I mean, in— For right now. Yeah. I mean, I've been, I've been paying on average about $3.73.

Yeah.

Yeah.

Yeah. So I don't know.

So maybe I drive to you guys. I can come see you.

Yes.

And then also fill up.

You'll make money.

Just makes sense.

It's, it's cheaper to just fly and buy a car and then sell it and fly home. than it would be to drive out here from California.

Oh, so that's the plan. Okay, great. I can't wait to see you.

Now we got it.

Yeah, we got it. Yeah, we'll have adult beverages waiting, um, which we didn't get to have tonight. We got spoiled last week.

That's true.

Yeah, that's true.

Yeah. Well, so I'm, I'm curious, like, um, So, so we've, we've been through this whole process. I mean, we've gone through the, the selling of a house, getting into a rental, and now we're, um, we're buying a house. And so, um, my lender called me the other day and was like, hey, I'm ready to lock in a rate. I need you to gimme a couple pieces of information, all that kind of stuff. And the rates are like so much different than they were 3 months ago. Uh, way different than they were 6 months ago. They're like double.

Mm-hmm.

Pretty much. where they were.

Yeah.

But I will tell you this, I was very, very thankful. I don't know if I should say this on the air or not. I'm gonna say it anyway. But like, and you can help me understand something about this, but my lender was, she was kind and used one of her chips on me and got a better rate. And I didn't even know this was a thing. So can you speak to what that even means? Do you know what I'm talking about, Haley?

So are you working with a bank or are you working with a mortgage broker?

I'm working with a mortgage lender. She owns her own company. I assume she's a broker. And since she owns her own company, she has people that work for her, but she likes me and I'm thankful for that. And so she does my loans. It's not the first loan that we've done with her. She does my loans personally. And she the rate was at four seventy-five, and she said I had a chip and I and I decided to use it for you and got you locked in at four fifty. And I was like, thank you, thank you very very much. So I don't even do you do you know what that even means? Because I'm I'm I was sitting here like is this a physical chip? Like you have like a like a like a coin computer. Like do you

like you like insert it?

It's literally a quarter.

It's a Dogecoin in there to get you a quarter off.

Yeah, I don't care what happened. I'm just glad it did.

You know, she's, uh, she's got her own NFTs.

That's the— Exactly. Yes, the first lender to get behind that.

I'm fine with it.

Yeah, that's fine.

Yeah, yeah. So what she means is that she's created this relationship with— if she either is the full-blown lender And has the money there, or if she's lending it out to another source, she has a relationship strong enough to help buy down the rate to help out her clients. So that's what a chip is. It just means buying down the rate without having to spend— have her clients spend more money on the back end.

Well, what a soul she is. I love her. I love her so very much.

I mean, is that something— I mean, like, not to make Kevin feel not special, but is that something that happens with regularity, or is that kind of like a unique relationship that people have?

It's typically more on the unique relationship side. So if you've done a couple loans with her, she's probably like, okay, this is a recurring client. This is a client for life. I want to help him out, especially with rates going up. Um, but if someone is kind of just starting out or building their book of business, they can also do it on that end and just say, hey, this is what I'm doing for you to kind of set that pace for creating clients for life.

And are you seeing, I mean, like, I know you've been talking about this quite a bit on some of your channels, um, which, which by the way, people need to go check out if they haven't yet. I mean, like, I know you're posting stuff on YouTube. I think you post on Facebook as well, don't you?

Yeah. Yeah.

Okay. But like, I know you've been talking about the climbing interest rates. And so where, like, let's give people a little bit of a history because we had it, I think we had pretty good interest rates going into COVID.

Yeah.

And then now that we're kind of at the tail end of, I mean—

Well, and in the middle of COVID they were ridiculously cheap, like down like 2.65%.

Is that right?

Yeah.

Yeah. So we—

Our average was 275.

Okay. So we—

That's an average. An average.

Yeah. So we started off pretty good. We went down a little bit, but now we're kind of, we're jumping up.

Yeah.

Do you, I mean, do you have any insight as to like what's driving this? I mean, what's going on? And is it freaking people out? Is it driving people away from the market or?

Yeah. So a few things on that. So since December of 2021, to the end of March of this year, rates have gone up 1.31%, which is the highest climb since 1994 in a 3-month time span.

Of course it is.

So the fact that interest rates have gone up so much, this is very abnormal, and that obviously doesn't happen as often. And so what people are saying is, with interest rates climbing like this, Most likely they're going to start trending downwards by the end of this year because they just went up too fast.

Mm-hmm.

So what's driving this is inflation. And to be honest with you, our inflation problem in this country is a lot worse than what the mainstream media is talking about. And we're in a big hole. And that's what's really driving the rates up to slow down the economy, to bring inflation to a halt.

And to really start evening out everything that's happened since the start of COVID So do you think that what we're experiencing right now, is this getting compounded by some of the stuff we're seeing with like Russia and Ukraine? Or was the frog sort of already in the pot, so to speak, before any of this happened? And we're just getting tag-teamed now.

Exactly. So I think the latter. Interest rates were starting to go up before the Ukraine and Russia incidents started happening, but that obviously does not help, and it instills a lot of fear. And so when fear is in the market, people pull their money out. They want to be safeguarded. They we all remember what happened in 2008 and how much money was lost during that time. How many how many homes were lost during that time? So people are. becoming fearful. And so one of my favorite quotes is, be greedy when others are fearful. That's by Warren Buffett.

Yeah.

Um, and Kevin, I think that it's really great that you are still out there buying homes and you're still interested in selling and, and being a part of the economy and the housing market because it's still a really good time. We just started hearing these 2s and 3s for a year and a half, and people got used to hearing that. And for it, in a historical perspective, um, the 2s that we were hearing, the average of 2.75, that's the lowest that we've ever seen for interest rates on mortgages. Um, I mean, just to give you an example, my uncle, he lives in Newport Beach, and he was just telling me how he refinanced to just pull cash out of his property And he has about a million-dollar mortgage on his property.

He has an interest-only loan at 2.1%, and he lives in a very affluent part of Newport Beach, California, and he's paying $2,700 a month. That's more than— I mean, that's less than rent in that same area.

Right.

So that— and people saw that opportunity and they ran with it, and good for them. But the people who held off, who kept thinking, okay, maybe rates will keep going down, or I'm not ready yet, they're seeing the 4s and 5s today and they're like, well, that's too much money. I can't afford that. And it's unfortunate because those are more of the average rates that we've seen over the history of mortgage rates. And these are actually still on the lower side of things.

Right.

So to answer your previous question, people are getting spooked.

They—

I have conversations with people every day talking about how, okay, well, I'm gonna wait for the economy to settle down before I make any moves. I'm gonna give it a couple months. Well, what I'm seeing is if you give it a couple months, interest rates are only gonna go up.

Mm-hmm.

And, um, and all these problems that we're seeing are gonna continue. And so, um, if you're interested, Do it now. If you have time to wait and you're not in any rush and you're comfortable with your rent, then maybe give it about a year because things could change then. But it's it's tough to have these conversations. I recently was talking to a client who was looking to purchase a home. He was about to get under contract, and one day it was a Tuesday. just 2 weeks ago, and he, he's on a 30-year fixed-rate mortgage. It was a $900,000 loan. Um, this is in Orange County, California. And he— I told him, okay, your interest rate today is

4.75%, what you were looking at, Kevin. Um, and unfortunately, it's not a good time to lock in because rates shot up today because of what was happening in the market. I said, let's give it one more day. The next day, I was able to get him a 4.5%, and I was able to pay some of his closing costs as well. So the swings that we're seeing in this market are ridiculous. It's absolutely crazy, and people just need to be ready to have those tougher conversations with their mortgage professional.

Well, and I want people to understand what you're saying because I think a lot of people look at like the stock market and they'll, you know, You can look at this past week, Twitter, I think jumped up 12% in one day when Elon bought a bunch of it. And so I think a lot of people watch things like that. And when you say, oh, well, this only went up 0.25%, well, interest rates just don't move like that, like the stock market or gas prices, all that kind of stuff. And you can probably explain this better than Kevin and I can because we're idiots. But like, what, what is the mechanism that's actually in place to move those?

There's a couple different things. So inflation is a big driver, and that's why interest rates have gone up so fast. The 10-year yield is something that we use as an indicator for interest rates going up or down. And when the 10-year yield goes up, interest rates go up. When it goes down, it goes down. A big indicator that people think is an indicator is the Federal Reserve raising their Fed funds rate. So when we hear that the Federal Reserve is raising their rates, people often correlate that to interest rates on mortgages as well going up.

Mm-hmm.

That is not a direct correlation. When the Federal Reserve raises their rates, what they're doing is trying to slow down the economy, help with inflation. And in turn, markets react to that. So the 10-year yield's gonna react positively or negatively towards that news. And that's what directly affects mortgage rates. And so when you're hearing that the Federal Reserve is raising their own rates, what you wanna do is take a look at the 10-year yield. You can just type it into Google and it'll pop up. Watch that and just know that there's going to be market fluctuations. So you want to lock in before the Federal Reserve meets or a couple weeks after they meet because there's going to be some volatility for a while after they speak.

No matter what. Yeah.

Yeah.

So it could be good or bad.

Yeah.

So to speak to what you were saying, we, um, we bought a home in 2009 for the first time, and, uh, our— that was right after the 2008 craziness happened. Our interest rate was, uh, 4.5%, and, uh, we, we felt pretty good about that at that time in 2009. We felt pretty good about that rate. When we moved, uh, here to Houston, uh, 2017, uh, we got a rate at 3.99%. Felt really good about that as well. Um, and so for us to be locked in currently at a 4.5%, um, now we're spending more on a house than we've ever spent. I mean, we're buying acreage. It's just we spent worse. And, and it's— I mean,

look, the market's hot right now, right? So, um, you're, you're paying a premium anyway. So, you know, 4, 4.5%, I still look at that and I'm like, that's, that's not bad. I mean, yeah, would I prefer to have 2.75%? Sure. But, but here's, here's the thing, like, and, and correct me if I'm wrong on this, but, um, I, I've been, I, I've been paying attention, uh, the older I get and the more we do this podcast, I've been kind of paying attention to some things And here's what I'm seeing. So, uh, the interest rates were low and people were refinancing, uh, like crazy. They're refinancing their house because, uh, they pull a lot of cash out. They can pull a lot of cash out

and they can refinance it a 15-year mortgage, which is what a lot of people did. And, uh, Greg is raising his hand highly.

Actually, we— so, I mean, I'll, well, I'll share this. Like, we just got it down to 11.

11. Nice. I mean, that's nice. That's amazing. I mean, because you can. And so, um, right, what, what was happening is, is the market was so hot that the housing market— I mean, the prices were so high. And not just that, the— so people were listing their, their house at top dollar, and then people were offering so much more over because there wasn't enough inventory. And so they're like, this is that— this is the only house. This is the only house that I want. This is the only one available, and it's the only one that I've seen in a year. And so I'm gonna put as much money as I can on it. And so we've got this weird

thing where banks are going, well, I'm not going to appraise it for that much. It's not going to happen. So, right. So people were really reluctant to sell because they're like, how could I possibly buy something I can't sell? So because I can't buy. And so again, we compounded this problem of not enough homes on the market because people were reluctant to sell. So here's what I think start— is going to start happening. And, and Haley, you— I'm really curious to hear your thoughts on this. I think with interest rates going up, fewer and fewer people are gonna qualify for the amount of money that they thought they could qualify for whenever they started thinking about buying a house 6 or 8 months ago, even a year ago. They

can't qualify for it. So there are now fewer homes on the market, but there also are gonna wind up being fewer qualified buyers on the market, which means the only thing that can happen is that housing prices are going to eventually have to come down to meet demand. And so I agree with you. I think people are going to have to wait. If you're at a point where you're like, I can't, I can't do it, just be patient. The market's going to have to come down and meet demand. How do you feel about that, Haley?

Yeah, so we actually bought at the height of this market. So we bought in August Last year. And we— so we've bought and sold homes, so we thought that this would be the easiest part of all of our personal life changes over the last couple years, and we were very wrong.

Oh man.

So we started putting in offers all around, and we live in a community called Ladera Ranch. It's just filled with families. It was our dream place to live. Um, but we were— we started out at, um, our price point that we were really comfortable with, and then that just kept going up. We're like, okay, well, we can swing it if we do this and whatever. And so we were just part of that buying frenzy. And so we bought our house at a purchase price that we were at. It was the highest that we could go and what we were still comfortable with on a monthly payment. So we were like, okay, this is it. And we got it, which was very exciting. We brought

our baby with us, and I really think that that helped.

Yeah.

He's very cute. And so, I'm just looking at my neighborhood right now and there have been 3 homes that have sold in the last 6 months since we moved in, all for $300,000 more than what we paid.

Oh my gosh.

So we thought we were at the top of the market and we thought, okay, we might not see a lot of equity right away. Our home appraised at what we bought it for, thankfully. we were like, okay, we're— this is our forever home, or, you know, a long-term home. So that's okay if we don't see equity right away. Well, we walked into $300,000. And so seeing that, I have just— I, I now understand what this inventory shortage really means. I think what's going to happen is you're right, Kevin, that home prices might not go down, but they are going to start evening out. Every market is cyclical. So what's going to happen with these higher interest rates and less buyers is sellers—

if people have been thinking about selling, they're going to kind of start freaking out. They're going to be like, well, I want my home to sell at that— at a higher price point than I put it on for, so I need to put my home on the market. So what we're going to see is we're going to start seeing more homes on the market. And less qualified buyers, like what you said, but still there's a huge demand. So even let's say that the buyers get cut in half, there's still 10 to 15 offers on every home. So there's still enough people who can qualify, and they're— it's going to keep those home prices steady. So I do not think that we're going to go into a housing recession at all.

Because there's so much equity built up. And if people are facing a foreclosure or they can't pay their monthly mortgage, they're going to put their home on the market and someone's going to snatch it up. It might not be a first-time home buyer or a family. It might just be an investor who sees the value in real estate. So I think that that's going to happen across the nation. And Housing markets have all gone up, every single one of them. And, um, and that's not going away anytime soon. But I do think that with inflate— the inflation problem, with interest rates going up, things are going to start slowing down. So we're not going to see as many bidding wars, but homes are still going to go and they're going to go at purchase price or

a little bit higher. Yeah, because it's list price.

Yeah, because I think here's, here's the thing. Like, we, we were— the only reason we were able to buy the house that we bought is because we made so much money on the house that we sold. That's just—

Right.

I mean, and you're talking about the equity built up. I mean, we, we would never have been able to, to buy what we bought if we didn't have the equity that we got out of the house. 50%. It was almost 50% equity that I pulled out of my house after all of the closing costs and fees and, you know, all those sorts of things. Almost half of, of what we put into it. And so, um, so now that I think about it, it was more than half. It was more than half, which is nuts.

That's amazing.

It's nuts. And I'd only lived in that house 4 and a half years, okay? So it's, it's absolutely crazy. But here's what's happening. Oh, when we— we had like, I don't know, we had like 6 or 7 offers on our house in, in like 2 or 3 days. And so we cut it off, and all but one of them were not a contingency.

Wow.

And one of them had a contingency, but the rest of them were not. And, and I think that what we're seeing is so many people have sold their house because they were like, I'm gonna get the equity so that I can get what I want. and they're, they're being patient and they're renting like I'm doing right now. So then I'm not in a contingency. I'm in a stronger position to be able to make an offer on a home because I don't have a contingency and I've got all this money sitting in a bank account right now waiting for the house to come up. And now I'm going to be able to make a really, really strong offer because of that. And so I

hear what you're saying and it makes sense. You, you, what Here, here's what you need to be really careful of if you are a, a potential home buyer right now. You need to have a really good realtor.

Mhmm.

You need to have a realtor that understands what's happening and can, can be very blunt and honest with you and say, you know, here's what you can do. Here's what you can't do. If you wanna offer over, that's great, but you're gonna have to sign an appraisal addendum that says you're willing to, to move forward with, with the, with the loan even if You, you know, the bank doesn't appraise it. Um, like, all of these need, need to happen because if you've got a realtor that just doesn't understand what's going on, you're gonna, you're gonna be frustrated and you're gonna lose houses. I, I had a conversation with a guy the other day, um, that was, uh,

about to— he had to— we were at a conference and he was like, hold on, I gotta, I gotta, um, go, I'll be right back. He comes back and he was like, hey, sorry, I had to fire my realtor just now. I was like, what? And he was like, yeah, she's a friend of mine, but, um, I had to fire her because this is the second house that she's lost on us because of, uh, poor, um, poor comps that she gave us. And so we offered the wrong amount. We had the amount to pay higher, but she, she gave us bad comps and, and we had to get rid of her because we can't, we can't deal with that. And so do your vetting. Make sure you get a really good

realtor because people like Haley, like you, you can't do your job if people don't come to the table with the right amount of money and figure out how to buy a house. I mean, it's not as easy as just saying, hey, I want that one. It's not where we're at now.

Right. It's interesting you bring that up because talking about the appraisal, I've, I've been in multiple situations with buyers who I've told them from the very beginning, listen, we're in a hot market, so you're going to offer more for this property. If the appraisal comes in at list price or below, you have to make up that difference for the loan, or you might have to add on mortgage insurance to your loan. And that changes the debt-to-income ratio. That could change the rate if you're not locked in. So just be prepared. But the problem with my position is I can sit behind a desk all day and run numbers for people, but I'm not the one taking them to homes. I'm not the one in front of them all the time. So their trust in someone is going to

be that real estate agent who's sitting with them, talking to them about offers, seeing their emotions face to face. And they're going to take their word over mine in an emotional situation, which I understand. But if you're not with someone who understands that these are the numbers and this is how it plays out, you could be given bad advice and you could either ask or ask and offer too much on a home, or like your friend could lose out or not be prepared in situations where you might have to come in with more money. And so What I always suggest is if you choose your mortgage broker or mortgage lender first, or your real estate agent

first, no matter who starts talking to you in the home buying process, have them get together as professionals and have a 3-way conversation because it really goes so much further when everyone's on the same page. And the real estate agent and mortgage broker might not know each other, but then they start to understand how each other work. Works, and it really makes it so much smoother. And then once the listing agent gets involved, then it becomes a team, and you really feel like you can go to any one of those people with questions that you have, and they'll give you the same answer that the other person will give you.

So do you have, do you have personal relationships with, um, multiple different realtors that, that are kind of like, I'm only going to use Haley, I'm going to point every one of my clients to Haley? And I'm sure that that's mutually beneficial financially for you, but it's more than that, right? It's way more than I'm going to make money on closing this loan or whatever, because at the end of the day, you know how that realtor works. And you know whenever that realtor says this is the right house for this family, then you know that that's going to be what it is. And for them, They know that whenever Haley says this person qualifies, this

person qualifies. Like, I, I can confidently make sure that my, uh, my buyer is going to be able to buy this house, those sorts of things. So could you, could you kind of speak to that relationship a little bit? And because I think a lot of times people want to shop for, for mortgage lenders, which is fine, I don't think there's anything wrong with that, but there is something to be said about the relationship, right?

Mm-hmm. I completely agree. So yes, that is a big portion of my business and my relationships with my referral partners is real estate agents. The issue that I run into with that is there are a million real estate agents and there are a million mortgage brokers. So it's— so what I do as in my own business is I just, I think quality over quantity. So I'm not reaching out to a million different real estate agents just to say, hey, I'm Haley, I'm, I'm in Orange County, like, if you know any buyers, send them my way. I'm taking that one real estate agent that I met at networking, and we've had lunch and we've gotten coffee, and I've invited her to different things. And it's, and, you know, it's a relationship now.

It's also a friendship. And so we've done— I'm talking about one real estate agent in particular, Because it takes time to form that relationship and really understand each other. And I think it's really, really important. And a lot of real estate agents will— they're the first line that people go to because they're like, well, I want to buy a house. I want to talk to the person who knows where all the homes are. So they go to the real estate agent first, and the real estate agent will say, okay, now it's time for you to talk to a lender. Here are 3 people to talk to. So if that happens in your situation, I suggest saying to those mortgage brokers or lenders and saying,

are you close with this real estate agent? Like, how many deals have you done with them? Are you, are you in a position to speak on how she likes to work or he likes to work and how he treats his clients and what that looks like? Because you're not only just hiring a real estate agent to get a home, you're hiring a whole team to help you actually complete this purchase. Because in a market like this, you need really strong individuals behind you who are going to help you make the best offer, who are going to help you understand the money behind all of that. And you might be comfortable going up to a purchase price,

but we're really only talking about principal interest, taxes, and insurance on the mortgage side. We're not talking about all of your other bills. So what you need to understand is that whole picture. And if you're comfortable with that, then let's move forward. If you're not, then let's, let's figure out the best path for you. So yes, to answer your question, having a strong relationship with a real estate agent is vital in my business. But it's also about that quality of a person. Who I'm not expecting her to send every deal to me. I'm expecting her to take care of the clients that I send to her and vice versa.

Yeah, that makes a lot of sense.

Haley, let me, let me ask you this, because this is, this is something I've been concerned about as I've been watching the market over the last, you know, however long we've been doing the show and, and through COVID and all this kind of stuff. I'm concerned that I know one of the big driving factors in the housing market is first-time homebuyers. Like, we want to see more first-time homebuyers. And it really seems like, and I, I don't know this, I don't have anything to substantiate this. I was, I was just reading an article earlier today that said like, that mortgage requests have gone down by more than 40% since last year.

Mm-hmm.

And, and so I'm, I'm, I'm concerned that like we've priced out a certain segment of, of people in our economy that can't get in now as first-time buyers, not because they don't have good credit, or they don't have a good relationship with a real estate agent or a broker or a lender or any of these kinds of things, but they just literally can't afford to get into the market. Is, is that something that you're seeing? Am I completely wrong on that? What, what, what are you seeing?

Yes, you're, you're completely right. It's, uh, it's happening across the nation. Uh, I will say people in my age range, the millennials, they are getting paid very well, especially if they're in the tech industry. So even with these rising prices, they can still afford a property. But right now, the first-time homebuyer limit, like just to give you an example, in California, it's closer to a million-dollar home. That's what they're buying as their first home to be able to afford a property here.

Jeez.

And they sometimes they have 20% down, sometimes they don't.

Oh.

But the biggest problem I'm seeing are people who have, who are at the average level of about a $450,000 purchase price, $500,000 purchase price. They do not have 20% down. Maybe they have 3.5% for the FHA loan or 3% for a conventional loan. That's where the real problem is because there's a lack of homes. at that price range. And then there's also, um, so many offers that they're not even looked at.

Mm-hmm.

So it, it— that those are the people who are getting priced out. The people who— they might not even be first-time homebuyers. This could be their second or third home, but they don't have that 20% down, um, and they have to have mortgage insurance. And it's, it's scaring sellers off because they think, well, My neighbor next door got a full price offer with 20% down, or I have a cash offer coming in. And at those price ranges, a lot of investors come in as well. And so it's, it's really just driving up that pool. And it's— you're exactly right, it's pricing people out. And it's, it's really hard. I don't remember the last FHA loan I did, to be honest with you.

Really?

Wow. Well, okay, so let me ask you this, because We, we just got through selling our house. We had multiple offers.

Mm-hmm.

And we had all these, we had a range of, of what people were offering, everything from VA, VA loans to, to, you know, someone, you know, they, they were actually putting 0% down because they don't have to. And, you know, we, we didn't have any full cash offers, but we, we had multiple that were 20%. those sorts of things. As a seller, yeah, let's talk to sellers for just a minute. Why does it matter if you, if you are confident, like, if you're, if your realtor can talk to their lender and say, yes, they can qualify at 3%, uh, conventional loan, and they are good to go, like, this loan will close? They're offering the most amount of money, only 3%

down. You should not, not have a problem with it. Or they've got someone offering 20% but less money, or maybe even someone who's coming in with a full cash offer but less money on the table. Why, as a seller, should you care? Or should you? Where does that line fall? As if, as you're trying to figure out More money, less money, this much down, this much down. What are your thoughts on that?

That's a really good question. And I would almost turn it over to you because as a seller, when you're seeing all those different offers come in, what are you most attracted to? Are you just like, oh my gosh, I have so many offers to choose from? Or are you saying, okay, well, this 20% down, that's just going to be more solid. What was your emotion when you started seeing these offers come in.

Kevin, Kevin really makes all of his decisions based off what kind of dog that they have.

Well, that's— you're being a little bit overdramatic. It's also if they own a cat. If they own a cat, I learn a lot about them in that moment.

Do you like cats?

What? You can be honest.

No, I don't like cats. I'm probably gonna get one. Now that I'm gonna buy some acreage, I'm probably gonna buy one. Yeah, off of someone selling it on the street for $0. So I'm probably gonna buy one.

You can get a free one at the brewery.

Exactly, that's what I'm saying. I'm gonna get one for $0. Anyway, um, okay, let me, let me go back to how much my realtor, Brandy Burke— I don't mind telling you, she's been on our show before— how much I love her, like literally love her. And how much I trust her.

Actually hanging out with her tomorrow.

I hung out with her today. So what's up? Because I trust her implicitly. And one of the things I trust with her is she, I mean, she laid all of the options out. She told me the good, the bad, the ugly. Be careful here. Be cognizant about this. Look at these things. My realtor, is so good that she was able to help walk me through that process. Because what she's told me, and this was, this was the very, very key thing, she said, you're going to find that you have one offer here that is way higher than any other offers, and it might not be the strongest offer.

Right.

And, and she ended up being right, because we went back to that to that buyer and said, we, we like your offer, but we need you to sign the appraisal addendum. They wouldn't do it. And so we went with the next best offer, and it was a nightmare. But because the buyer was a nightmare, go a couple of, couple of episodes back, and you can hear that. But I, I think that for me to, to really answer your question, For me, I was most in— I was most concerned about what was going to allow me to be in the best position to then buy the next house that I was going to buy.

Okay.

So if I needed, you know, X amount of money, I wanted to make sure I was getting at least that amount of money, um, because I kind of knew in my head this is where where my budget lies. And if I get this much money, then I can buy this much house, and my budget will fit. So I already kinda had that in mind. So I think you need to do your homework and kinda figure out how much do you need. And if, if someone offers, like, let's say you need $100,000 and someone offers you $150,000, great. But if someone offers you $120,000, that's also great. Right? Just because you only needed $100,000. So I think that, I think for me, it's knowing some of those things about

what you actually need. And also, like, for instance, I wasn't concerned with the VA loan that was at 0% down, right? $0 down. Because I know that VA is going to take care of that loan.

Exactly.

They are going to make sure that loan closes. It's going to be a headache for me, and that sucks for VA, uh, loan people, because it is hard to close VA loans for the seller. Because you— everything has to be perfect on the inspection, and you're gonna have to come out of pocket on a lot of stuff because they take care of their people.

Right.

But it, you know, I knew that it was going, going to close. And so I think that you can go back to a lender, um, to their lender and say, hey, I need you to help me understand, like, they're offering this much money, can they afford that? Are you gonna guarantee that that loan is going to close? And I mean, they don't fully know. I mean, I've seen loans fall apart in the 9th hour because something doesn't get funded or something doesn't happen the way everybody thought it was gonna be. I mean, maybe they lied about their finances or maybe something weird happened and maybe the loan officer isn't very good.

Smelled like cats.

Yeah, exactly. They didn't do their due diligence, right? And so I, I don't know. I think that for me, let me give you a fair— a really fair example. So we had a piece of property that we were interested in. It was 4 acres. They wanted $250,000 for it. It was completely uncleared. It was just raw land. Um, they were only accepting cash offers.

Only.

And I asked my realtor, I was like, Why? What, what difference does it make unless you're wanting it to close in 2 weeks instead of 4 weeks?

Right.

What is the difference? They're gonna get their money and you're gonna be able to go on about your life if it's a conventional loan or a cash loan or whatever. I don't get what the difference is. And so for me, I just don't think that you need to rule out a lower amount down just because it doesn't seem like maybe their loan is as solid. To be quite honest, I'm sure you could sit here and tell us examples of people that can put 20% down and their loan falls apart because—

Oh yeah.

Of something.

Time and time again.

So I don't, I, I don't think it's— I think it's dumb. I think as a seller, you need to go in with a, with a big trust relationship with, uh, with your realtor, and you need to know that she is going to help you make the decision on what's going to be the best for you. That's my ultimate answer.

Yeah, and I completely agree with you, and I love that she outlined everything for you because the one thing that I'm really seeing, um, my aunt is a real estate agent out here as well, and, um, We've had a lot of conversations about the greed that's really set in. So with these homes going so much over, people are putting their homes on the market for, let's say, let's say $500,000. And they're like, well, I want $800,000.

Oh my goodness.

So I'm going to have an open house and I'm going to ask for— I'm trying to get as many offers as possible. And I, and I, if someone comes in at $750,000, that's not good enough because I have $800,000 in my mind for whatever reason. I'm going to go back to that offer and say, can you give me highest and best? And the thing is, is people, when they offer on a home, they're giving your highest and best and what they believe your home is valued at. And so they're confident in that. They feel good. They've talked to their lender, they've talked to their real estate agent. And so with these people coming back and saying, I need highest and best, I don't— it's, it's just greed at that point.

Because it's— and it's infestuous throughout the country. I've seen it in Washington State, I've seen it in Oregon, seen it in California, and I've seen it in Texas. We have family out there and we've talked to them. They've all bought and sold homes recently, and it's wild what's happening. And the thing is, is what people need to understand is highest offer is not the best offer. Exactly what you said. You need to understand the numbers behind it. And if you are someone who needs the cash in 2 weeks versus 4, then maybe the cash offer is the best bet for you. But if you are a buyer in a situation where there's a lot of offers, always put yourself in second or third position

because loans fall out all the time on properties. Properties fall out of escrow constantly, even in a market like this. So if your real estate agent isn't telling you to go into second or third, if you love a home, go into second or third, get going on that because you never know. You're going to get a call one day and that seller's going to be like, are you still offering that amount of money? I'm ready to accept your offer.

Right.

Because even in a hot market, things happen all the time and you can't predict it.

Yeah, you know, we, we, you know, even, even buying the house that we're working on right now, we put in what we feel like is a very, very strong offer. And you're right, we have no idea what the other offers were. We know there were multiple offers, but we have no idea what they are. We don't know if ours is the highest or the lowest or anywhere in between. And so whenever, whenever someone comes back and says, okay, we need your highest and best, that plays mind games with people, and it makes you go, okay, do I have another 5? Do I have another 10? Do I have another 20?

Yes.

And, and you may already be the highest, and now you're getting screwed over because they asked for something that you didn't even need to, to do.

And so, um, see, this is, this is, this is where I, like, I, I can't, I can't play that game. Like, I am the contrary warrior when it comes to this. Like, you come back at me with the highest and best, and I'm dropping my by 20.

Yeah, I mean, we literally— we basically—

Just because you annoyed me with that question.

Yeah, we had that happen. We had that happen and we were like, we did. That was our answer. That is. Like, we came in, did you not see the offer? Like, that was stupid what we just did. And now you're— I don't know, it just makes me mad whenever people are Like you said, they're just greedy. And, like, you're, you're toying with people's lives here. At the end of the day, is, is another $20,000 gonna change your life? As a, as a buyer, as a seller, is it gonna change your life? Probably not.

Right.

Probably not.

No. And, and they're doing this over $2,000 or $3,000, let alone, you know, like that $750 to $800. You know, they're doing that with $2,000 or $3,000. Does that really matter?

Although after last episode, it could change my refrigeration.

Oh, that's true.

And I'd be spending $20K.

Oh, man.

Oh, bring me a Sub-Zero, dude. I know.

Bring me a Sub-Zero.

Did you, did you listen to that, Haley? That episode?

No, I didn't.

So we, we had Chef Colin on the show repping Sub-Zero and Wolf appliances. Are you familiar with them at all?

Yes, of course. That's so cool. Yeah.

And so he was telling us that like just the refrigeration unit alone can save families like $2,200 over the year.

Yeah.

Just by food not spoiling. Yeah.

And, and I believe him because he's a chef.

Yep. He's got no reason to lie to me.

Exactly. Why would he lie to me?

Over $2,200.

That's right. He's not a greedy realtor out there trying to— No, that's exactly right.

All right, Haley, I want to circle back around to my question about first-time homebuyers because before the show, I was asking you if you'd heard about this 40-year home loan and you were like, well, they already have 40-year home loans. And then I was like, well, what about the FHA? And you were like, no, that's not a thing. And they're talking about it being a thing. And is— because we're talking about— we were talking a little bit about how people are getting priced out of the market, how, you know, it's becoming more and more difficult for people to get into the market or even like move in through the market. Do you, do you think

that offering a 40-year FHA loan is going to remedy any of this that we've been talking about?

To be honest, no. I don't— I do not think so.

I agree with you. That's— I mean, so we can— yeah, but like, why?

Yeah, exactly. So when you're looking at a 40-year loan, people who take those want the lowest monthly payment possible, right? So, but what you're seeing on those is obviously a 15 fixed compared to a 30-year fixed, you're going to have a higher rate on a 30-year fixed. And 30 versus 40, you're gonna have a higher rate on 40. So this, a 40-year fixed-rate mortgage is really, um, not something that people should do because this is kind of a product that was built way back in the day when people weren't as mobile as they are now. They weren't moving, picking up and moving their families. They weren't, um, they weren't interested in living anywhere else except

for right next to their own families and having their tight-knit community. That our world is completely different now.

Yeah.

People want to move. They want to be able to say, okay, I'm done with California, which apparently I wasn't, but most people are. I'm done with California. I'm moving to Austin, or I'm moving to Florida, or wherever. And they want to have that flexibility. So if you're looking at a 40-year fixed-rate mortgage, that's not that you have to have that mortgage for your whole life, but It doesn't make any sense because the average loan that people hold nowadays is 5 to 7 years.

Mm-hmm.

So a product that actually a lot of people might either not know about or might not want to even explore are the adjustable rate mortgages.

Mm-hmm.

So there's a 5— there's a 3, 5, 7, and 10-year ARM. products, adjustable rate mortgages. And those are fixed for a time period and then they start adjusting. So the big product right now is the 5-year, 5 to 6-year ARM. So what that means is it's fixed for 5 years, then it adjusts every 6 months after that. Um, people are scared of that because they're like, well, what if interest rates go skyrocketing up, um, and I can't pay down once They start adjusting on that level. And I see that point. But the thing is, is how the interest rates have gone up so much, that's not going to continue because it's just not sustainable and the housing market will crash because of that. So what can I—

Are you saying that because of the— what you were talking about before, how fast they've gone up, it's not going to continue to go up?

Exactly. That's just not sustainable and that's not going to continue. And with home prices continuing to go up, um, interest rates can only go up so far before it prices everyone out of the market.

Mm-hmm.

And then all of a sudden there's no buyers anymore. Um, and so, so what's going to happen is interest rates are going to start evening out. Then once we hit an economic recession in about a year, year and a half because of inflation, where things are going to start moving downwards. And historically, when we hit a recession of any type, interest rates go down. The only time that that didn't happen was in the 2008 to 2010 housing crisis, and that's because mortgages were the problem and they were the creator of that recession. So, um, my point to all this is just to tell people, do not be afraid of these ARM products because interest rates are going to start evening out soon. They're going to start

going back down in a year or 2 or even 3 or 4. And once that starts happening, you can then adjust your rate to a 30-year fixed and be comfortable for the 30 years if you see yourself there. But a 40-year fixed, it doesn't, it doesn't make any sense because the interest rates on these ARM products are way lower and you'll save so much more money. And the, the, the idea of you keeping your mortgage for 30 years even 40 years, that people don't do that anymore. That's not something.

And I think people are afraid of them because they, they hear what you're talking about. We're like, okay, after so many years it's adjustable every 6 months after that, because they feel like they can't get out of that. Like they can't, you know, like that refinance isn't like an option or something that they want to mess with. But like, that's, that's why you do that, so that you can get it in a better position to then, you know, hopefully interest rates will come down. You could, you know, maybe move into a better 20-year loan, 15-year loan, 11-year loan. Yeah. Well, what we did is we just paid enough money to where it got down to 11 years.

I understand. Yeah.

But still, I mean, that's the thing is like, pretty sure there's not an 11-year product. I could be wrong.

But no, you can make it any year.

Okay.

Wow. And you heard it here, folks. There you go. But I think that One of the things that's interesting though is, is I want to hear a little bit toward that point. Haley, you said before the show that you are definitely not a proponent of paying off mortgages. Like, like having a sustainable mortgage is healthy. So can you, um, can you speak into that for a minute?

Of course, yes. So, um, the reason why I bring this up is because A lot of people follow Dave Ramsey's idea of paying down your mortgage and paying off your debt and being completely debt-free. And I support that to a certain extent. There is good debt and there's bad debt. So when you're looking at credit card debt, that's obviously bad debt. That's not something that's going to help you over the life— over your life. That's going to affect your credit score. That's going to affect the amount of loans that you can get. And the amount of money that you can get. So, but when you're looking at a mortgage, that's actually a good debt because what happens is

homes are so— they're very valuable right now and they always will be. People always need a place to live. So the value of a home over time continues to go up. And so why pay back the bank to own your home outright when you can pull cash out on that property, have a mortgage that you can pay off monthly and feel comfortable with? Of course, that's the main— that's the main thing. You want to be able to be comfortable in your monthly payments. But pull that cash out. And let's say that you're at a 4.5% interest rate, but you can take that cash that you just pulled out of your, your property and start investing it elsewhere and make 8 to 10% on that money. all of a sudden you have 2 different buckets of

investing and diversifying your wealth. And so I, to be honest, I never really understood, um, why keeping your mortgage is a good thing because that's what I work with my dad and that's what he would always tell me. He's like, yeah, I have a mortgage on our property. And I'm like, well, why, why wouldn't you pay that off so you don't have a monthly payment? He's like, well, cause I take this cash out of my own property and I go invest it elsewhere and I make tenfold the amount of money that I would if I was just paying back the bank to own my property outright. So there's different schools of thought on this, but to me, using that equity to your ability really

maximizes and diversifies your wealth over the life of your loan, over your entire life, to set you up for financial success for yourself, for your family, uh, and your loved ones.

Yeah, because I would assume someone would come back and go, okay, well, let's say I'm— let's say I'm paying a $2,000 mortgage every month. I pay it off. Now I've got $2,000 a month that I could then invest in those very same buckets, right? So they're, they're, they're doing that. But, but I mean, it's very different than taking $25,000 out and investing $25,000 versus $2,000 every month, right? Because the money you invest today is going to gain more interest over time than the money that you invest over an amount of time, right? So I can see why there are different schools of thought on that.

Yeah.

And not necessarily saying that one is so much better than the other, but it does make sense. And again, having smart financial sense is not something that most people were brought up with, I would say. And so figuring some of this stuff out is difficult, right?

It is. It is really hard to figure out. It's really hard to find a good financial advisor or someone who's going to help you understand that because there's a lot of fees involved in that as well. So actually, one of the books that I've read recently It's by Tony Robbins, Money: Master the Game. He breaks down all the buckets that your money should go into. And he spoke to 50 different people, 50 different investors. So Ray Dalio, Warren Buffett, all the big names in the investing world. And he asked, okay, if you couldn't leave your kids all of your money, what, what kind of investment strategy would you give to them? to be able to create

the amount of wealth that you would have given them if you could. And so in the book, it essentially breaks down exactly how to invest your money through these gurus, through these investor gurus. And it's a book that I wish I had read when I was 18 years old because it is invaluable. And I think you're correct in that A lot of us do not know how to invest our, our money. We do not understand what it means to be fiscally responsible, and that's due to our schooling system. I was never taught how to do any of this. I was taught at home because I have a father and a mother who focused on that for us and helped us understand what it means to save and invest your money. But never once did I take a

class in financial literacy. in middle school, high school, or even in college. And, um, or what, what a mortgage is, how to buy a house. I never had that opportunity, and I was given every opportunity thanks to my parents. So I can't even imagine someone who didn't have as many opportunities as I did. Um, they, they don't have this knowledge, even don't have parents who have the knowledge either. And so I think, in my opinion, across the board, schools need to start having this in their curriculum to some extent. It can be really simple, but just having those words mixed around. I mean, a lot of people don't even know how to spell mortgage and they don't know what that is. And that's okay. But that's also a problem. And

that's something that we should all know.

Yeah, there's a T in there.

Yes.

Just saying.

There is a T. Thank you.

Sorry, I don't know much. Craig, but I know there's a T in mortgage.

Don't know where. It's in the mix.

It's somewhere at the end. I'm pretty sure.

Pretty sure.

I'm pretty sure it was in the name of my lender. So I guess.

Exactly, man. I tell you, we're hitting on so many great, amazing topics right now. I think that these are types of things that they just don't get talked about enough. And that's Really, to your point, we, we don't talk about this enough. And, um, you got people out there that are, that are scared to do things because they're just not educated. And it doesn't mean they're dumb, they're just not educated. And that's fine.

Exactly.

But at some point down the road, and that's really why Craig and I even started this podcast to begin with, was to just to help educate some people. And we've learned so much just doing this podcast ourselves, you know.

Can, can I, can I ask you a question about the, uh, the Tony Robbins book? Yeah.

Yes.

It's one I haven't read yet, but it's in the queue. I'm curious as to what—

That's spelled Q-U-E. Okay, keep going.

Not your head. Okay. What was the most surprising bucket that he laid out in that book? Because I don't know anything about it. I know about it. I've heard him talk about it a little bit, but I don't know. I know that there's buckets. I want to know from you, what was the most surprising one?

So one thing is the whole life insurance, and they call that the rich man's Roth IRA. And, um, I don't have— I don't have whole life insurance right now, but my husband and I are working on getting it, um, because we're young enough and it makes sense for us. Um, but, you know, looking back, I wish that I had started it when I was 20 years old, when I had started making money. Yeah. So that was the most surprising thing because there is a lot of negative talk towards it. So I learned so much about it. And also, I'm really motivated to get it. I'm just like, oh, good.

Yeah, absolutely. My, my wife loves taking out policies on me. I don't know if that's concerning, but it doesn't concern me at all.

I know exactly why she does it.

I know exactly. No, I, I actually got my first one when I was 16.

Wow.

Yeah.

Wow.

My, my parents did a really— like, that was one of the things they did really, really well. So it's not a huge— it's not a huge policy. Like, my mom, my mom sat me down when I was like 16, 17. She's like, hey, I want to let you know, we, we started this, uh, this financial vehicle for you. And so when you're 60 years old, if you want to, you can cash it out. And I forget, it's like, it's a couple hundred grand or something like that. But that's what it'll be worth then.

Right.

And she's like, once you get to adulthood, you've got to continue to pay this. And it's not that much, but here's something for you for when you get older. And so you're absolutely right, Haley. I mean, just one, having the knowledge, and then two, being able to apply the knowledge early on enough can pay dividends.

Yeah. I mean, what's that It's something like if you, if you, and if you max out your IRA between 18 and 28, you'll make more than if you max out your IRA between 28 and retirement age.

Yeah.

Right?

Yeah.

So that, that's that, that power of compound interest, but we don't really talk about that kind of thing, you know? So, you know, and, and again, I just told you that in 4 and a half years, I made 50% of what I spent on a mortgage in 4.5 years. That's ridiculous, right? That number is ridiculous. There's no other investment that could have done that. There's not a single one. And so investing in the, the real estate market—

There's Bitcoin people out there screaming right now. Well, okay.

If you were smart enough to go buy— Not only that, like, if you would have invested in Tesla during COVID whenever it went down, like, oh my gosh, you would have been stupid rich. But okay, there's like 2 things, okay, other than the real estate market. And honestly, like, those other 2 things, who would have known? I mean, yeah, you can't predict that. You can't predict that. But the housing market, like, you have an opportunity and you have to live. Like, You don't have to buy stock in Tesla. You don't have to buy Bitcoin, but you have to live, right? You have to have a place to put your head at night. And, and I'll just tell you, like, I, I get it. I

really, really get it. But those of you out there that are renting right now and have been renting for 5, 10, 15 years, come on, people.

Yeah.

You're throwing throwing money away. I mean, I, I made a stupid amount of money in 4 and a half years paying less, most likely, than what you were paying to rent. And now I'm buying something that I never would have thought I would have been able to.

Well, that's almost certainly the case right now. I mean, rent, rent prices have just skyrocketed. They're ridiculous. They're ridiculous. They've met with the market.

Exactly. I mean, they have to. I mean, you're— here's the thing. Unless you're in an apartment, and apartments are their own you know, piece of evil. But, you know, those people who have bought a house and are renting it to someone, they are pay— you are paying their mortgage plus.

Yes.

And you could go out and pay the same to get a mortgage and not do the plus, and then you're, you're making money. So it's, it's one of those deals that I, I hope that I hope that people are listening to what we're saying and we're going, look, this is smart. It's smart to go buy a house. And even whenever it feels scary, even whenever it feels like you're spending more than you thought you could or whatever, do it. Make it work. Because at the end of the day, you want to retire. You want to travel the world. You want to give money to charity. You want to help support that single mom, whatever it is you want to do. You have the opportunity to do it if you

make wise investments. And if you don't, well, then, then you're gonna be living paycheck to paycheck every day for the rest of your life. And if that's what you wanna do, that's fine. But I don't. I just don't. I wanna— I want my money to work for me. And so anyway, I don't know. We're— now we're getting off on a tangent. So—

I, I was just looking up to see what the average uh, 3/2 was renting for around us, Kev.

Okay.

It's around $2,000.

Jeez.

So, which, I mean, like, we, we say that to Haley and she's like, oh my gosh, can I buy like 10 of them? But, um, yeah, like, because I would imagine it's significantly different where you're at.

I mean, I'm in a 2/2 right now and I'm paying $1,500.

Okay.

And that only includes water. So, um, there's, there's other stuff on top of that. That I will tell you right now. I was in a 4/2 that was more than double the size of my— the— what I'm renting right now, and it was roughly the same price.

Yeah.

So I, I, I don't know what to say other than that. Like, that ought to tell you go do something else. But anyway, Haley, we cut you off. What were you about to say?

Oh, no, no, not at all. I— so I completely agree with you. And I heard something interesting just the other day. When you talk to people who are renting and they are scared to buy because of the interest rates going up, well, the question you have to pose to them is, why are you so concerned about the interest rate when you're paying 100% interest right now while you're renting?

Yeah.

And so that was a really interesting way for me to talk to people and start helping them understand what interest really means and how it can benefit you over the long term. And it's not— I think that buying a house, because there's a lack of education around it, I think it's really scary and it's overwhelming for people. So they're like, well, I'm comfortable right now in my apartment and my family's comfortable and we're okay. And that's understandable. But you can also be comfortable in a house if you just go a little bit further. If you just explore and start opening up your mind to other possibilities, it just goes so much further and you start building your own equity and your wealth. There are so many articles out there

about people who start with literally nothing and they start building their empire through real estate.

Mm-hmm.

And there's a lot of different ways to do it. And I think it's really just starting that conversation and being okay feeling a little bit vulnerable and feeling like you don't know everything. Because even with me being in this every single day, I still don't know everything. And I won't know everything at all my whole life. And I'm okay with that. Because I get to keep learning. I get to keep growing. And that's where the education from these books, from your guys' podcasts come from. And it just, if you start listening and reading every day, little by little, you just start growing and things can start happening. It's not going to be overnight, but it will happen.

Yeah. So you mentioned Tony Robbins, the book there, which is, what did you say the name of it was? I just lost it. The Money, Say it again.

Money Master the Game.

Money Master the Game. Yeah, that one. And then, I mean, Rich Dad Poor Dad is the one that Craig handed me one day. I mean, obviously very, very good. But then there's stuff like the BiggerPockets podcast. There's other things you can go out there and listen to. And it's, you know, educate yourself and talk. I mean, talk to someone like Haley. Like, find a lender to just chat with and say, man, what can I do? And I— because I've heard a lot of people that have told me things like, Well, I can't qualify for a loan. Well, people do it all the time. They qualify for a loan all the time.

Well, and there's, there's always a— there's always objections.

Yeah.

Right? It's like, well, my credit's no good.

Okay.

Well, like, talk to somebody about fixing your credit.

Right?

You know, like, there's so many times people's minds are closed once they just want to say no.

Mhmm.

You know, instead of saying, how can I do this?

Right?

What's, what's the process to get to the end goal? Right? Instead of just shutting your mind down and going, well, I'm— can't do that.

Yeah. Because at the end of the day, what I wanna tell someone is, oh, so you don't want to?

Yeah.

Really? I mean, I think that pretty much every problem has a solution there. I mean, I've yet to find a problem that doesn't have a solution. I mean, we're still working through solutions on problems, right? But answers are given every day, right? So find your answer. And honestly, I think that if you, if you find a lender that tells you no, find one that'll tell you yes.

Yeah.

You know, I mean, I actually had my, my lender right now. I wanted to buy that $250,000 piece of property that was 4 acres, or I wanted to buy— I wanted to at least, you know, I put it out as an idea. I wanted the option. I didn't have $250,000 cash. And so I, you know, she, she actually told me, she was like, I actually don't lend on land only. I used to, but I don't anymore. I was like, really? Why? And she goes, it's not worth it. It's not worth it for me. Um, and, uh, she said, but there are plenty of people that will. Go find one.

Right.

And, and I did. I found someone that would, that would do it. And ultimately, that's not what we, what we are doing. But, um, I, I found someone that would do it.

You—

just because someone says no doesn't mean that someone else will tell you no as well. You know? So I don't know. Well, Haley, what have we not covered? I mean, we're approaching an hour and a half here. What have we not talked about? I mean, I feel like we've talked about a lot, and we could talk about this all day long. But is there anything that you would kind of sum up or that you wish we would have talked about?

I love what you just said in just talk to someone, and it can be a professional, and tell them right away, Listen, I don't know if I want to buy. I don't even know what I can qualify for, but I just want to understand the numbers.

Mm-hmm.

And having that conversation is really empowering. You could be at your goal or even higher today and you don't know it, or you can see a number and say, okay, I kind of want to be a little bit higher. What do I need to do? How can I save? Or what can I do in my business to really start creating that life for myself? And I think