The BIGGEST Housing Market LIE Being Told Right Now 

Protect Yourself: 1) Buy a house with at least 20% down 2) Don’t max out your DTI ratio with your payment. 3) Make extra principal payments as much as you can 4) Before you know it you will be debt free and own your home and feel completely free secure. Oh…. And don’t let ego play a roll in your decision. I have more respect for people with a smaller home that is PAID off then a person in huge debt with a large house!

My mom and my sister essentially did this to "take a break" from their monthly mortgage payments, then didnt maintain the house and need to be emergency bailed out when nobody could pay it back and ended up needing to borrow 50k from me and a ton of work from me, replacing three floors, a deck ect... just get the house ready to sell, my moms plan was to sell it to a "we buy junk houses" sign for 140k when i stepped in, we sold it for 260k eventually after months of pushback and telling me it wasnt worth it, i cant believe how foolish people are, its so disappointing

In 2017 we bought a home at 4% and when rates went to as low as 2.5% in 2020, we thought about re-fi because many were doing it, but after the loan fees, appraisal, inspection cost (we could either pay out of pocket or add it to the principle)-it would be $6k to refi to save $150/mo and reset back to 30 yr- we declined, didn’t make sense to us.

In 1997 we scraped together and saved up our down payment,bought our forever little 3bd 1bath cape cod and raised our kids in a wonderful neighborhood. It was fantastic with young kids, teens and young men until they flew the nest. The staying there was the best part about the house. Remembering all the milestones, the things we did to it. Memories

The "I'll just refi later" is a classic example of normalcy/recency bias. People fall into this trap all the time. Just because things have been one way recently doesn't mean that has any bearing on how they'll be in the future.

I'm not going to buy a house just so I can refinance it later. You never know if the rate will go down.

i did mortgage servicing for 5 years. one of my tasks was to call people with HELOC & advise them 10 years is coming up & NOW they start paying on principle, whereas before they were paying interest only & their payment will increase. i got told all kinds of things & called names. it isnt my fault they used that $$ to go to Hawaii. karma

When I tried to refi my house in 2003, the lenders tried that “you can always refi” line with me. Luckily, I had a very nice outside loan officer w tell me everything NOT TO DO, & said do a fixed, not an ARM. I walked away from the closing table. And then the 2008 crash came, home prices plummeted, so no one could refi.

Michael as a loan officer I did a lot of cash out refinances in 2022. People really pushed the limit on those and some have come back asking to do it again but a lot of them don’t qualify because of a higher interest rate or they have used up 75-80% of their equity. In general it’s just hard for most people right now. You really need a household with 2 people working each making $80-$100K to get ahead if you live in a big city. And the whole refinance later is bs. There is loans with close to non closing costs when you refinance but the equity needs to be there

I remember refinancing about 15 years ago because interest rates had dropped, not realizing I would be starting the 30-year clock all over again. This should be spelled out to borrowers, but it wasn't back then, and I doubt it is now. Because of what I went through, I bought my next property with cash. In my opinion, if you finance a house, you lose. If you don't, you break even. If you actually make money, it's a fluke. If you make money, it's probably because you bought something so posh that potential buyers don't care what the price is -- a celebrity home that attracts cash buyers from places like China. It's market psychology above all that makes houses unaffordable. People think they're "winning" when they pay too much. Be wise and buy something that's half the price of what you think you can afford. Pay cash if you can. Don't refinance. You might not get rich, but you won't be stressed either. You might live ten years longer.

This whole mortgage stuff is too complicated for average buyers. Too many fine prints, too many rules to do this or that, too many hidden fees here and there. Worst of all, it is so hard to find all this information. Thanks for educating people.

What scares me is the amount of leverage that so many people are getting into. As a society we’ve gotten so used to easy credit lines and “tapping” into the “equity” for anything.

You are absolutely correct, MB! One needs a minimum of ten percent earned in equity to refinance. Lenders and real estate agents who collude to sell this ideology should be held legally accountable - especially those who say this to buyers using low down payment loans (VA, FHA, USDA, etc).

My dad bought his house in 1997 for $260k, 26 years later he owes $280k after getting home equity loans...it's worth $580k but he's retired and collecting a pension/SS, so he is broke because all his money still goes to a mortgage payment/home insurance and property taxes (that all doubled) on a fixed income and now everything else doubled in the last year with inflation, so he's having to look for work at 73. That won't be me. I'm debt free at 37 and I'm waiting for the house prices/rates to go way down before buying, I have 1 credit card that I pay off monthly, I have 1 paid off truck that I plan to keep until the planet runs out of oil and I'm forced to get an EV, I am also staying single with no kids so I live comfortably on $45k/year.

New sub here. You nailed all the topics. I talked to someone last year that bought a home near Silicon Valley(San Lorenzo, CA) for $1.2 million. He said "its an investment" but its his primary residence. One year later, the home lost 10% in equity. Now he's saying "i will refinance in a couple of years". Doesn't make sense. I think he's stuck in that home for the next 10 years. They're already underwater. I foresee him walking away from the house in a few years. I see lots of smart people falling for this false hope.

In past RE cycles, typically when mortgage rates shot up, prices dropped to match the what the monthly payment was when prices were higher and rates are lower. It made sense that if you buy (at the LOWER PRICE), then wait it out, you should be "sitting pretty" after a refinance with the reduced price. That's the logic behind the refi later advise. This time however, rates have skyrocketed and for the most part, prices are staying SKY HIGH such that buying now is a losing strategy.

The moral of this story is to live below your means

A lot of people don't know this, but you can take a shorter mortgage term. If you have 23 years left on your mortgage and refinance, you most definitely can do a 23-year term. You do not have to refinance for 30 years. But, the mortgage cycle restarts, and you'll be paying mostly interest for a number of years.

When you purchase a home, get an amortization schedule. Then, when you make a regular payment, write another check for the next principle payment. (Make sure it is two checks and that second xpcheck is clearly marked 'pay on principal only. Otherwise the bank will apply it to interest, not principle.) You'll be paying off that mortgage quite a bit faster. Also, if you do refinance with shorter term loans.,if you lived in the house ten years, take a twenty year loan. It's exactly what we did and had our home paid off in in about 18 yrs, instead of 30.

In reference to refinancing later, didn't anyone one learn a lesson to all the ARMs, refinancing and equity loans from the past? If you can't afford a house, you can't afford a house. There's zero shame in not buying a house. Mortgage companies that have to bend, extend or change rules for a person to purchase a house are only thinking of themselves. They could care less if later you can't make mortgage, insurance or real estate tax payments. Or if you lose it. There's no skin off their teeth.

2009-2012 was a generational buying opportunity. If you were too young or missed it, well, them's the breaks. Similarly, 2020-2021 was a generational mortgage opportunity, it's gone every bit as much as the 2010 housing crash. Here's the moral of the story: seize the opportunity when it's there because it won't be there forever.

Happy Sunday Michael, Thank You! 93K, you are getting closer to that 100K! 👍

I agree, It's irresponsible and not financially sound thinking that you can refinance. I'm very cheap lol , I actually think about these things. the last thing you want is to not only be house poor but you have to think about the "What if's". Im getting a USDA Direct loan, luckily at a locked rate. I have no plan to refinance in the future and plan to buy well under my approved amount. I actually think about the future. I'm still very cautious and waiting until the late fall winter and maybe even next spring. Im in no rush.

My father works in HVAC as a lead tech/sales and not a month goes by that he gives a new home owner a bill for 10k-20k for a new system and they say they don't have any money because they used it all buying the house and didn't save anything extra for repairs to the house they just bought.

It just amazes me how many people are financially clueless and it always gets them in the end

I'll gladly pay you TUESDAY for a Hamburger TODAY. 🍷

also the rising costs of city services like water sewer trash and whatever else you’re required to pay regularly

At the absolute height of the market last year, I had a lender tell me "rates will be down next year and you can refinance" on an ARM. I am so thankful I didn't listen.

Bull, people are extremally happy with the their 3% mortgages. They might not be happy with the situation they're stuck in, but the rate makes it all good. Ridiculous to think otherwise.

Your video hits so many valid points! Now is not the time to buy! Here in the Tampa Bay area so many properties suffer physical and functional obsolescence. Most homes built in the 70’s and 80’s make up most of the market. Remember, Florida has been largely older owners and the homes on the market reflect this. You paid top of the market prices for a house or condo that needs major repairs and some serious updating. Going to cost some righteous bucks to make it livable for the average person, even if you do the work yourself. And sure the appliances sold today last about 5-7 years and HVAC 10 to 12 years. Home ownership is waaaay more than that mortgage payment. Oh and hopefully your neighbors take care of their properties and don’t find themselves in over their head and end up in foreclosure. I’m a broker and I rent because I see major heartaches for the people that jumped on the FOMO train.

Better not lose your job for an extended period, you need those 2 years of income tax returns. And you'd better be still employed when those rates drop. Getting a divorce at the wrong time could screw it up, too. There are so many things that could prevent a refinance should rates suddenly drop.

The roads are better in Florida by the looks of all those neighborhoods.

Don't forget the real estate agents take 6% of the pie. There goes almost your entire down payment

Everyone financial situation varies. !!! I like my idea better, live within your means, just not above !!! Debt Free feels 100% better .

i still remember the rates in the 80's were 14 percent. so i waited until i saved the money to pay cash. then it still cost a lot to have a house.

here in western colorado prices dipped a bit last year but now they're at all new highs.

My parents bought their house 35 years ago and are still paying it off. They probably owe more on it now that the initial purchase price.

Heloc loans are only good if the interest rate is lower than Higher interest rates on other credit you have. But you have to remember that they are Varible interest loans based on the Federal Interest rates. So that is the problem with Heloc loans.

I remember in 2017/18 i was looking to buy a house and my uncle was trying to sell me a house at any cost. He kept telling me i can afford it but i knew i was not comfortable with the prices. I was going to be house poor if i bought what he was showing me. I later on waited until i was ready and i am so glad i did i saved up for a decent down payment and that made a difference for me. Never settle on being house poor or buying what you cannot comfortably afford.

You cannot say with authority that we will never see 3% mortgage rates again. I have lived to see 18% rates and 3% rates and we will very likely see both again

Corporations are still buying a large majority of the single family units for sale. That needs to be corrected.

I love that you mentioned the fact that after you pay off your home you still don't own it due to property taxes. The word tax is actually used because if the government used the phrase 'Lot Lease,' it would imply that there is no ownership of private property in the USA. People need to understand that you only lease the access rights to the property, but you can never outright own it.

Wow. This guy really makes a lot of sense. Great advice 👍

Buy now refinance later is what my mortgage lender keeps saying

The financial roosters are coming home to roost. People need to stop living “like” they are rich. How much can you shell out comfortably a month ? I saw this in 2000’s houses got bigger and bigger. Four bedroom home were too small five at a minimum, media rooms, expensive vacations, cars , the list goes on and on. Modest size homes people thumbed their nose at. Live below your means you’ll sleep a heck of a lot better and won’t be sitting in a hole of debt.

@18:14 Let’s qualify that statement a bit. Putting a new roof on your house is not an emergency UNLESS your homeowners insurance company sent you a 45 day notice to replace the roof or face non-renewal.

Contrary opinion : There is a housing shortage--New builds are not keeping up with population increase. Inflation is still trouncing along--building materials heading upwards--eventually, interest rates have to decrease (law of supply & demand). Rents are rising---always be a buyer.

Hi, Michael! Long time no post! I’m so happy to see you enjoying your time in MB, CA. 😊 I agree with you on all points. Patience is key in this insanity. And even if things don’t get better for those of us, in our individual circumstances, who are being patient, at least we aren’t putting ourselves in financial peril. I mentioned in a comment or two, months ago, that I put an offer on a home, in Jacksonville, FL, back in March of 2022. The owner was asking $325k. It was a double lot and I was absolutely smitten with the place and the owner accepted my at-asking offer. Once I had the inspection completed, along came a bunch of contingencies. This is a cinder-block, solid construction home that was built in 1958. Flat roof, all original electrical and cast iron plumbing (nope), and the HVAC was near the end of it’s lifespan, and the fireplace had not been maintained. The owner agreed to repair all of my contingencies, but as we moved closer to the date that I would lose my binder deposit, he said he would not have time to replace the electrical components to get the house up to code and offered me $5000 at closing to offset this blip. I did give it careful consideration, but my gut told me to back out. I believe my mortgage payment, at that time, was predicted to fall in the $1800 to $1900/mo range (the lender, Cross Country Mortgage couldn’t seem to provide me with any definitive number, which I also found to be problematic). Anyway… fast forward to today and that house sold in Sept. 2022 for $297,600. It’s current, estimated market value, according to Zillow, is $283,800! I’m quite sure it was an all-cash purchase by a corporate landlord. It was recently listed for rent at $2145/mo. Whew! I’m am so thankful that I went with my gut and got out of that situation. So I’m still renting this condo that I’ve been in for four years, patiently waiting for the rental market in Jacksonville to cool down. I’m hoping if I wait it out until around Nov/Dec, I might find a reasonable rental house with a fenced yard, in a decent area. Hoping my patience will pay off. Thank you for your awesome content, time and effort, Michael! 🙌🏼

It cost $50.00 for family of 4 to eat at McDonalds.

New home buyers are snatching up new home listings regardless of the higher interest rates. I feel exceptionally lucky I started investing in my early 40s and grew to a 7 figure well-diversified portfolio just by following Trisha Jean Webb's recommendations and having exposure to different prolific investments mainly blue chip stocks, bond and high yield dividend funds. Now house and cars all paid off and no other debt.

HELOC loan interest is too high around 7% or 8%, don't risk it, leave everything as it is which is the smartest thing to do. Don't try to save money or trying to make that extra $1000 a month, chances are you are going to hit quite a lot of bumps down the road and suffer a mental breakdown. Not an easy task at all during these high interest rates environment.

Hi Michael. Couldn’t agree more. Not only that, as a lender I’ve been telling clients the opposite. Powell has been pretty clear about higher for longer. I wouldn’t expect lower interest rates. So long as economy holds there’s no reason for the fed to cut. On top of that they’re doing quantitative tightening. So long as they’re selling notes I don’t see the spread between 10 year coming down either. I try to prep my clients to expect rates to stay high and be ok with where they are. I don’t want someone getting into something they feel stretched on with some suggestion that they’ll be able to lower their payments a year or two down the line. What if they overextend based on that suggestion? I’d feel terrible if someone did that.

Such VALUABLE truth!!! Thank you, Michael, for what you do!!!

There are no coincidences.

Facts folks ; those people that that borrowed cheap money / purchased a home @ 50% above value( especially in California

A house is the BANK'S asset, not yours.

Thank you Michael, I think this is probably the most important video you’ve made yet, and that’s saying a lot.

@MichaelBordenaro how right you are about the "refinance later" mentality. I remember the real estate crash of 2008-2011. During that time banks & appraisers were ultra careful with appraised values as they were crashing as well. People stand to lose equity unless they're prepared to stay in that home for the next decade

3:35 selling every 7y is one of the reasons prices are that high. At this point you added 14% just in real-estate commission and closing fees. We as a country are horrible at saving money. If you don't have 20% you shouldn't buy a house. .... and if you are wearing $250.- sneakers you don't get to complain. Ps : last sentence at 23:55 --- find that.

Spot on Michael. I never understood why people do not understand the financials of the largest purchase of their life…….

I just thought about doing a HELOC or equity loan on my place to get a newer used car and pay off some debts recently, and yeah I decided against doing so because I'm already on track to pay off the debt by the end of this year at my current payment plans. As for the car it's not an issue to buy another Hooptie car for another 2 years of use before replacing it. My goal in 5 years was always to buy an income property, and I'm going to sick to that now, thanks to your video swaying me in that direction, thanks Mike for keeping me on track.

Thank you Michael for always bringing us the BEST current information regarding Real Estate and the economy in general. You always make so much good sense with what you share. Do you miss the hot humid weather from Miami?😂 Prices are still too high and it’s just not a good time to buy. So many people are going to be upside down if they buy right now. First time home buyer’s BEWARE AND WAIT. Don’t be another sucker and take your time to save money and pay off your credit cards. Best of luck to all of you. Blessings, Carlos ✝️🙏❤️😊🇺🇸

This guy is just handing out free important financial information that schools have never mentioned EVER to me.

In Florida, they cannot take your house if you cannot pay your medical bills. From what I was told, they write it off after three years.

Thanks for schooling people on these issues, Michael. People need to plan for the future.

My mother did a reverse mortgage on her home and has reached her principal limit. Now my oldest sister watches over all her finances because my mother has never really been a financially responsible person.

Hey, what happens if that Washington couple one of them gets sick or falls or has a health issue? Not only losing one’s job.

“I didn’t plan to move to Miami Beach, it kind of chose me.” *A few seconds later* “I decided this was an area (Miami Beach) I wanted to come to.” Got it Mike.

Wow, I totally forgot that if you refinance, the amortization starts over again. That is definitely NOT a good financial decision, especially if you are trying to build any sort of wealth imo! Thanks for the info Michael!

There are situations in some cities where you are saving up to 2,000 dollars a month renting as opposed to buying. That's 24, 000 a year. Investing year over year that amount that you are saving, with even a paltry 5% ROI annually, equals a total of about 160,000 dollars. Considering the first 5 years of most home mortgage's goes almost entirely to interest, you would be hard pressed to get even close to that kind of money after 5 years, and that's AFTER already putting in $4,000 mortgage payments each month. Furthermore, by investing to get 160k in the end, you have a whopping down payment for a house in five years. To put things in perspective, even government backed T-bills have a 5% return, so it's not completely out of reality to get a 5% ROI YoY. You are not going to get that with a house right now. These are very different times.

Our rate is 2 something. I've been talked out of selling twice because I need more space and lots of modern houses. 13 years in now, I'll just stay here. Great points and advice.

Not to pour too much more fuel on this fire but, you also cannot refinance a home if it has been listed for sale recently. I know this, because back in 2005 when Lawrence Yun was saying "housing never goes down" my home was going down, would not sell, and then would not be eligible for refinance due to having been listed in the MLS. So Michael's advice to beware of what you pay for a home, is good advice. If you get underwater, your options actually shrink when you need them most. You get kicked when you are down people. Work hard, and be careful getting out over your ski's.

I always try to buy with paying 25 % down. This way you are not just giving away money for MIP Insurance. I feel that insurance should be paid by the banks.

Honestly me and my girl are thinking about just getting a nice rv for really cheap or getting one of the "tiny homes" like the ones from the HGTV show. It just makes sense. Especially after going the Dave ramsay program and realizing debt is just another form of slavery

Michael, if you already haven't seen it there has been very heavy advertising for AVEN. It's a cc tied to a HELOC and being pushed hard right now. It is exactly the thing that you advised NOT to do!

Wow. How are folk even comfortable with a monthly mortgage that high? 😮 I remember back in 2020, my prospective lender looked at my credit and said that I could go after up to $XXXXXX for a home and I asked him 'And how much would that be a month? He says $1900. And I say 'Nope'. Having a nice cushion is how I got my credit where it is.' then I revised everything down.

That's a crime taking your equity from a tax liability.

In 1982, I bought a house for $69,000 with a 20% down payment at a 8% interest. I refinanced it twice in the 6 years I owned it, and had to put an extra 1-2 thousand to still have a 80% mortgage. The first refinance I had to do, as it was seller financed with a 3 year ballon, and it would go to 10% for one more year. I sold it in 1988 for $72,000, which was a loss after selling expenses.

I refinanced my ballooning mortgage to stabilize my mortgage payments. It was expensive and I ended up having a mortgage payment that was $100 less per month. When I eventually sold my duplex, I had bought it for 160K and short sold it for 90K. In 11 years, I had paid over $100K to the mortgage company but I owed 120K. You pay a lot on interest not so much on principle.

This is why I am suggesting FHA loans because an FHA Streamline Refinance does not require an appraisal.

They have to keep the commission's rolling in. It's not any more complicated than that. Especially if it's a transactional broker. If you get screwed, remember, they just represent the "transaction"...got it?

Seasons at Potter Ranch is 250 Home tract in San jacinto which opened in mid-2021. Medium size SFH's w differing plans lowest starting in $300,000 range and they sold out fast. This is one new housing tract and likely there are several hundred all over west Riverside county(RC) and coachella valley in various stages of construction. My 30 sq mile area which i have observed has 1000 to 1500 New const homes in the pipeline Multiply that by 100X and we could have 100,000-150,000 brand new homes in west riverside county completed by 2024. That is more supply and means decreased prices all over SoCal in near future. Lots of housing stress in RC. See lots of abandoned ghost homes/REO;s/foreclosures with weedy lots in upscale housing tracts. RC is already in RE collapse but The CA RE industry is hiding this. CA needs their property taxes so fake appraisals and housing bubble fantasy abounds in Cali

"Marry the house, date the rate" has always made me cringe when I hear it.

Thank you for exposing this big lie that mortgage officers and real estate agents keep telling buyers.

Just paid off property, gonna take max equity loan and bet it all on black to quickly and easily double my money!

Some neighbourhoods rarely sell, usually by death, rather than moving away, I grew up on such a street, we were the exception in that we were there only about 40 years and my mother regreats that move, most people left by the grave except for the renters in the apartments. Also, farms and rural properties tend to turn over very slowly. It is a generational thing for many famlies, but sometimes one wants to move to a better farm. In contrast, there are some cities where people rarely put down long term roots. One of my friends keeps putting money into fixing up his house which people will never pay for, the plan is to keep the house and pass it on to the coming generations and the next generation is on board with that plan.

Mortgage jail. Can't refinance, cant move to get a better job, cant sell. They're in mortgage jail.

I agree that getting a lower payment with a new 30 year loan is a big mistake. What people should be doing is getting a shorter loan with a lower interest rate. With interest rates drop instead of paying less every month you get a 20 year or 15 year loan with the same or a little higher monthly payment. I really wish that I waited to refinance my mortgage from a 30 year to a 15 year as the interest rates dropped even farther. But oh well I did not know interest rates where going to drop even farther and I dropped better than a decades off the length of my loan. Now my monthly payments went up a lot as I had just gotten my 30 year mortgage a few years earlier. My monthly payment went from the mid $800s to just shy of $1,200 including my escrow for insurance and property taxes.

The interest on home loans are also front loaded. It isn't till even like 15 to 20 years that you make significant principal to interest gains. So if you can't afford to almost immediately start this buydown quickly your still screwed, and if your interest is higher it makes it even harder.

Bought my house at 2.73% 15 year mortgage 150k in major city, pretty happy. Did not overpay. Was recently renovated.

Purchased our home in 2008 no money down @ 5.99% and refinanced the balance in 2015 @ 3.99% for the remaining 23 years. We did not want to lose the 7 years we all ready paid into the by starting over at 30 years.

It’s crazy this scenario is literally how someon i know lost her house in 08’. She was a surgical technician and could barely qualify for a loan on a duplex. Original agent had ethics and told her he wasn’t gonna do this deal for her because she would eventually lose the house. She had variable interest payments and was banking on refinancing and sure enough found a new agent to do the deal and ended up losing it all.

Dudes spitting straight facts

Few of my friends have moved out of Florida because of the insane housing drama. I don't blame them at all! Enjoy m beach Michael & Lisi 🙂

Houses are ILLIQUID. What does that mean? It cannot be sold when someone wants it sold. It sits there waiting for a lowballer in hopes to buy it. So when your house plummets and still no buyers, then you are screwed paying high prices over a cheap property...

I’m not that smart but sometimes I got lucky. In 1984 a tree fell on my home I was renting. I was a single parent and spoke to my mother about me buying a home and having her and my son living together for a while in that house. I also paid her $500 a month for caring for my son. I bought that house for $90,000 and got a variable mortgage rate of 14%. Fortunately rates start heading south and so did our. Eventually that home was paid off in 15 years. I moved my mom to Tennessee years later and that home sold for $360k.

Mike, now we just need to have "MB" ... equate to "makes billions". Cheers.

My sister is wondering, is "buy a couple of Gucci bags when they have a sale" count as "an emergency"??...😅

Paid off my house about 5yrs ago .. but between property tax and insurance .. I still need to come up with $1K per month to just live in my house! America is a crazy place!

Do your home work before you buy, Example.... 1000 Gerly Way Deland Fl. Originally listed for $629,000 after several price reductions, sold for $580,000..... Deal right? Sold in 12/2022, little over 1 yr later house is back on the market. Why?, let's look at the charts At the time of listing in 2022, property taxes were $4008.00, the new buyer came in, purchased at a high price, the township reassessed the value from $244,000 to current amount rate and now new property tax amount is $8500,00 , most likely the friendly home owners insurance, tacked on & an extra $1000 on top of their $2500 ins bill, making it $12,000 a year, and now we can continue to speak about the mortgage part of it...... What a cash cow a home can be when people get "stupid" right?