Here are three stupid things you should never do if you are a brand new home buyer. Two quick notes: I'm gonna be in the air flying today so you can follow me on Instagram to see what I'm up to I'll be at a special place and you're gonna see a lot of cool stuff so follow me on Instagram And we did extend the flash sale to the end of the week for those of you who emailed us and for anyone else 69 off largest percentage basis sale for the programs I'm building link down below now what I'm doing is I every day I'm going to try at the beginning of my market live streams where we hang out around 4 30 in the morning. I'm going to try to provide three sort of little bits of financial suggestions for you I am a licensed financial advisor real estate broker as well. This is a personalized advice for you, but I want to try to give three solid pointers that I think can help you build your wealth and so sort of bring it to the basics right? And so three stupid things that almost all home buyers start with are things we're going to address here.

The very first thing that you should pay attention to is the down payment. In my opinion, the worst thing people could do is save up a 20 down for a home in America The reason for that is our government via Fannie Mae and Freddie Mac Loans provides us a 30-year fixed-rate loan options where you could put three percent down and potentially even get your down payment covered by calling up a local Community Development Corporation So just type into Google Ventura County Community Development Corporation or whatever County you're in and look for potentially down payment assistance options to help you even with that three to five percent. Now, a lot of people get angry at me when they say wait a minute, why shouldn't you save up 20 for a home? Then you don't have to pay mortgage insurance. So let's break this down in two ways.

Number one: when you save up 20 for a home, the odds are you're probably not going to be buying a home out of college or or in your first job. so you're probably not buying a home before you're 25. Realistically, you're probably not going to buy or be ready to have 20 down until you're in your 30s. And the downside about being in your 30s is once you're in your 30s, you might already have a significant other.

You might even already have children I'm 31 and I already have a seven-year-old and a five-year-old I Don't have a baby anymore I don't even have a toddler anymore. but I Bought my first home when I was 19 because I bought that home with three and a half percent down an FHA loan you have to live in the property obviously to put any less than 20 percent down. Generally, if you're an investor in residential real estate, you're going to put a minimum of 25 down. And if you're an investor in commercial real estate, you're generally going to put 35 percent down.

But for a home buyers who agree to live in the property for at least a year, they can put down three, three and a half. Five. Ten percent doesn't matter if you're a veteran, you can actually go as far as putting zero money down. And so why is it important to think about getting into real estate earlier? Well, the problem with saving up that down payment is that by the time you actually do save up a 20 down payment, your housing needs have dramatically changed.

Generally see, if you're 18 to 24, you could get by with buying a studio or a one bedroom, one bath house. Something really small, well beneath your means, doesn't have to be a dream home. In fact, you might even pay less for the property to buy than you might pay to rent. especially if you end up getting, let's say, a three bedroom home.

And then you rent out two of the rooms and you essentially old school house hack right by renting out the rooms, say your mortgage is 200 bucks. You rent out two rooms for 700 bucks. Now all of a sudden, you're only paying six hundred dollars to live there. plus of course, some incidentals.

So in my opinion, starting when you're younger, without familial obligations, whether it's a spouse or children or whatever is a fantastic way to start getting into the ride of real estate. Now, we already know that the average net worth of a homeowner is in excess of 20 to 30 times that of a tenant. This is relatively easy to study, and it's relatively available on the interwebs. But the reason it's important is because you want to get on the path of owning many properties quickly.

You want to do that as soon as possible, so the benefits of compound interest can actually start working for you. The beauty is when you start with a smaller property, at some point, you're going to move up to a larger property, and that allows you to bank hack. Which means you're putting three or five percent down on your first property. You live there for a year or two, and then you move and you do it again.

So you go from a one bedroom to a two bedroom, and a two bedroom to a three bedroom and a three bedroom to a four bedroom. And before you know it, you've got four or five properties. How many poor people do you know that own multiple properties? Well, anecdotally, the answer is probably zero. Generally, property owners who own multiple properties not just one rental and maybe their own home, but multiple properties are generally independently wealthy individuals.

They could retire and live off their rental cash flow if they wanted to at some point. And so, the benefits here are pretty obvious. But by waiting for a 20 down payment, most people not only delay when they end up purchasing their first home, but I would venture to say a vast majority of people never actually make it to 20 down. See, there's something regarding the psychology of money that I talk a lot about in my courses on educating folks to build their wealth.

Whether it's the real estate, higher income, or stocks, whatever it may be, there's a psychology to money that the more money you have sitting in a bank account, the more you, whether you realize it or not, take your foot off the gas, the Richer you feel. The more you feel like you have a lot of money sitting in your bank account, the less likely you're to actually a potentially work harder or that side hustle to make some more money and the less likely you are to actually save that money. In fact, in a study by Harvard they found that an individual who has one dollar sitting in a savings account is nearly 100 percent likely to spend it, whereas one dollar the same dollar of cash sitting in a brokerage account like a TD Ameritrade or whatever broker you would want to use is nearly 100 likely not to spend it. How Wild is that? Think about that if you see the money.

not only are you less likely to make more money, but you are more likely to spend it. meaning you never actually get to the 20 down payment and you never get into. Home Ownership It's better to live beneath your means. Get something small when you're younger because again, you don't have the familial obligations, but you get in.

You get started in home ownership you also have and and this is sort of like something that I'm I Don't expect people to actually follow this path that I'm about to say, but this is supposed to be sort of like that worst case scenario in the back of your mind because I understand a lot of people who watch my channel I think they're very analytical and they're very smart people and they want to get better in life and so they think through their decisions very well. Maybe they're less impulsive and one of the things that regularly comes up is, well, what's your worst case scenario? If you can't pay for your property anymore, right? And let's say you had to give the keys back to the bank, that'd be terrible, right? It could damage your credit for four to seven years. You don't want to be in a situation where you're in above your head, right? But let me ask you this: Would you rather go through such a terrible situation when you're 19 and you have basically nothing to lose? Or when you're 32 and you have kids and a family? Huge difference, right? Not only from an energy point of view, but the distance you have to fall so the risks are actually substantially later. The longer you wait, the more you actually increase your downside.

the more intimidating you make it to buy and the less likely you are to actually buy. Now that brings up the second big issue and a lot of people complain about mortgage insurance. They're like Kevin But if I have to pay mortgage insurance for the next 30 Years that means I'm paying an additional half to one percent on the interest rate. Essentially it's it's a mortgage.

Insurance is calculated based on your outstanding loan balance. It's calculated the same way the interest is calculated. So usually what you do is if you have, let's say a five percent mortgage and your mortgage insurance is one percent. You could basically do the math by just saying okay, my interest is six percent because it's calculated the same way.

They're different items and the reason they're different items is actually really important Because what you can do and most people do is after a few years of owning a property. Once you get your properties loan paid down to about 80 percent, you can actually apply to request a removal of mortgage insurance. Now that doesn't work when the market is going down, which in 2023, the Market's probably trending down. That's probably not the best time to be buying until maybe later in the year, but who knows.

Rates are still high. There's a lot of macro economic pressure, but that's really outside the purposes of of this video. What's more important is that you can get rid of mortgage insurance at some point in the future. So usually people who think that they're stuck with mortgage insurance forever aren't thinking about the fact that the average length that somebody holds a loan is only five years.

The average length of time somebody actually lives in a property is seven years, and most people sell. So most people end up getting rid of their mortgage insurance solely by refinancing by year five. But as soon as year two. worst case: year three.

you could potentially just apply by paying for an appraisal with your mortgage servicer to get rid of mortgage insurance. So you're generally not looking at keeping mortgage insurance very long. In fact, I bought a really good deal when I first bought my property my first home. I bought a wedge deal and because I bought a wedge deal I bought a property with three and a half percent down Finance The fix up through a three okay, 203k renovation loans an FHA chapter instead of 203b which is a non-renovation loan and by doing so I was able to build so much equity in the property within the first year of ownership that I refinanced in the second year, qualified completely on my own, my income had gone up.

Everything's great, and what happened? Boom. Mortgage Insurance gone now I'm in a conventional loan then I now I have equity in the property and no mortgage insurance. What do I do? Get a home equity line of credit which now I could tap 10 of the an additional 10 of the equity my property for. and what do I do with that 60 Grand Boom.

Buy my first rental property now I could have also used that to just buy and move into my next home. It's not the path that I went down, but it's an option. The third mistake that a lot of people make and this is a simple one, is they just wait for their dream home. I Think this has a lot to do with the fact that they're saving up their down payment.

Amen. And they're trying to avoid mortgage insurance and they're so anxious about uh, their their, you know, getting to that 20 that by the time they actually are ready to buy their home, they have no choice but wanting their dream home. and then they potentially never end up buying So kind of crazy. but in my opinion I would highly encourage looking into real estate sooner rather than later and I would really encourage making sure you avoid the three mistakes we talked about in this video.

So if you found that helpful, leave a comment down below. share the video and thank you.