Buying a Home at 7% Interest Is A Mistake

First, let me start by saying that I genuinely enjoy your sense of humor and presentation style. I am concerned with your overall message and contribution to the downturn of society. I do not agree anyone should be buying right now at this absurd interest rate, and anyone who is condoning or pushing the narrative of buying should be ashamed of themselves. For a $400,000 home at a 7% interest rate, someone will be paying at least $558,000 in interest in 30 years. Honestly, how do you sleep at night knowing you are contributing so much debt to this country? I hope you know that you can do better by telling people to not buy and instead wait for the crash to buy instead. We can have a belief, and we can swing that belief around, and if it's a strong enough belief, it can be a very damaging sword to anyone. So, let's take that. And let's run with it. First and foremost, let's talk about right now about interest rates, okay? So, interest rates in all are kind of a crap show right now. This is as of December 2024. You might be watching this in 2025. Hi, how are you? Hope the future is good. Hope I look a lot skinnier in recent videos. So, rates right now are 6.95, but they, you know, 6.9, they dropped a little bit. Was it beginning of December? Low six is just for a tad, but we're basically floating low sevens, mid to high sixes. We had a nice little drop here. But overall, that's where we are, and that's where we've been. And to his point, he's absolutely right. If you purchase with a $400,000 loan amount, meaning you probably are buying for 10, for 20, and you have a 7% interest rate, if you never make any extra payments, you are going to pay about $558,000 in interest, perfect like on the money, and total loan cost will be 958K. So, if you fully pay it without any making extra payment, the bank's making a lot of money off of you. And, you know, I could say, well, you can make extra payments. If you make an extra $200 a month, it cuts it off significantly lower, but that requires more money. If the solution was always, hey, just make more money. I mean, how easy would that be? Yeah, let's just make more money. Okay, cool. No worries. I'll make more money. So, okay, for starters, let's talk about that direct belief system of talking about how I'm encouraging people to buy and what my thoughts are regarding buying and who should buy and what I think you should implement or at least consider if you are considering buying a home. There's two distinct ways of thinking about anything, any major purchase or any major decision, okay, is you look at the tactical way of it. So, in that sense, let's say we're talking about a home inspection. A tactical, very legal way of thinking about a home inspection is a 10-day period where you get to go and verify that the house is in the same condition that you saw when you looked at it and you're discovering any major issues, right? If there's anything discovered that you don't like, you can walk away from the house. Really, it's a discovery thing, right? Now, that's the legal way of doing it. It's either it's a yes or no, right? And of course, a lot of states have the ability to say, well, you know, if you want to ask for repairs, exit, whatever, whatever. But literally, that's what it's for. Now, my opinion on it is it's my way of building my to-do list. And if there's anything major that I find, it's a consideration if I want it or not. If I want it or not. Jeez Louise, my handwriting is terrible. So if I find a house has a, say, a terrible roof that's about to break down, okay? And I'm buying it. I think, I mean, maybe if it's like 30, like I had a situation recently, which I made a video and you might've watched it, where the house was like over 30 years old and the seller clearly has neglected the roof. I would ask them to replace that, right? But if it's like 10 years from breaking down, that's a decision I'm making to buy it. Now, the decision I now have to face is, do I want to buy a house where I have to replace the roof in five to 10 years? So it's like building my to-do list and building a scenario of like, now that I know this, do I even want to buy the house? Now in regards to home buying, it's the same way, right? There is technically a way to buy. You think about what your qualifications are. For example, for a certain like FHA, you need to be a 600 plus. You need to have a certain debt to income ratio of a certain amount. You need to have obviously the budget that makes sense. So you have all these boxes that can be checkmarked. And in theory, if you check those boxes, then you should buy a house if you think about things legally, right? Then there is of course the opinion aspect of it. The problem that I think we have, and if I could be 100% honest with real estate, is we go to our real estate agents and we go to our lenders to help us build this opinion. And we have to acknowledge, I just realized real estate's two different words. It's bugging me, but I'm going to leave it. We have to acknowledge that they're salespeople and they need to sell a certain amount of houses to survive. At the end of the day, that is going to be a very biased opinion. So where do we go to build that opinion? We go elsewhere, yada, yada, right? So all I have to say, my opinion is going to have some level of bias in it. And you guys should expect that and should know that. My opinion is this, buying a house isn't like a financial decision. I know a lot of realtors like to talk to you about the potential equity, right? Because let's face it, for the last 10 years, it has worked out, well, 14 years. It's worked out great for a lot of people. They bought a house and they sell it for a few years later and they make a bunch of money. You know, they buy it in, I don't know, 2012 for $100,000. They sell it for, in 2022, they made $400,000. Whoop-de-doo, they made a bunch of money, right? They're thinking about it as an investment part of it. And that's what's consistently being told and sold to you. But that is not going to be as easy anymore. That money is going to be difficult to obtain. Possible, yes, but difficult to obtain. So we know that you're being told that equity, it's an investment, it's all these factors, okay? In my personal opinion, using my personal beliefs, buying a home isn't a financial decision. It's not an investment. It's not about the equity. It's a conversation of power. Let me explain. Not everybody can relate to this, but go check the comment sections. Ask somebody who's dealt with it before. There's nothing quite like being told by a landlord that you have to leave the house in two months because of X reasons. Or, hey, we're raising your rent by a few hundred dollars. Or, hey, maybe, you know, I don't know. Like, hey, your grass is not grown enough or you're leaving your cars parked out there and it's not blah, blah, blah. This is not okay. Or, hey, your AC broke down too bad, too sad. We're not fixing it. A lot of things, right? When you're in that position where you have goals, you have families, you have all these needs, you have a house that fits those needs, get your kids in a certain school district, house your family, and you have this like overlord. Really, it's, I mean, the reason why it's called a landlord. You have this overload who can at any moment completely remove that from you and take that safety and security away from you. To me, at least, just me personally, I hate that. I hate that. For those that don't know a lot about me, I'm happy to tell you if you ever want to be a client or something. But I was in a similar situation where I didn't have control over my life. Jeez, Luis, I'll even share a little anecdote. I grew up with a dad who's very, very controlling. And although he's done a lot of changing and I love him to death, but growing up, it was very much a controlling household. And I just kind of was grew up and I just really love personal freedom and love the ability to make my own decisions. And the idea of renting to me was just, regardless if I was a real estate agent or not, it's something that it just goes against my core, right? And I get it. Sometimes we have to do it because we want to get out because here's the reality. For example, I know Jeff came hard at me. I'll say your name, Jeff from Michigan. You came hard at me thinking you're anonymous, bro. But if you're going to come hard at me, you got to back it up, right? That's all I'll say. I'm not going to tell your last name or anything. So Jeff from Michigan wants, like what does Jeff from Michigan want young adults to do? Do you just want us to stay in our parents' homes for the rest of our lives? These young adults want to move out eventually. What does he expect us to do? Just continue to have one to two year contracts, paying a landlord, a company who owns these properties while the market crashes, right? So that's the thing is that that independence will happen eventually. And the question of where you're going to go, it's just to me when corporations start taking over our housing, the thing that is supposed to provide a shelter that we own, that is a part that concerns me. So if you end up making money off your house, great. I'm happy. Good for you. It makes my job easier when I sell it because there's nothing worse when I have to sell a house that there's no equity there. And I'm just like, I seem like such a freaking ass, right? Because sorry, dude, I have to lower your price. I have to keep lowering your price because it's not selling. I don't have any more equity. I'm sorry, right? So it's great when that happens. But when it doesn't happen, let's say you buy your house at 500,000. And four years later, it's worth 400,000. You might feel that's a complete loss. You might feel that you are underwater and almost spelled uwu, underwater. You might feel like it's a complete loss, but you know what? In those five years, you were in complete ownership of your home, right? And it only will affect you if you want to sell. See what I'm saying? And if you guys think I'm just BS-ing you and telling you, well, you know, I bought in May, 2022 when it was absolutely high on the market. So I'm a little underwater in my house too. But you know what? I bought a home that's going to fit my family's needs for the next 10 to 20 years. And I'm not going to sell this house for a while. My kids are going to be raised in this neighborhood. They're going to come home from college with their girlfriends or boyfriends. This is where we're going to build our family. And I'm not concerned about the value going up or down, blah, blah, blah, right? If the rate drops to the point where it's lower than mine, great, I'll refinance. But at the end of the day, this only gets affected when I sell. So my philosophy is not a philosophy of financials. Finances or whatever. And I hear what you're saying about me contributing debt 100%. But I think the reality that Jeff from Michigan says is there is a lot of people that tap into. I don't think I've ever spoken about this in my channel. This is probably the first time I talk about it. But there's a lot of people out there that have that desire to be independent. They're going to go out there. They're moving out of their family's house. They want to have ownership of where they live because to them, that's what's important. My beliefs is you have to have this. You have to have the need of independence. You have to have the need of ownership because if you don't have this, you're going to have a hard time looking at the numbers. You're going to have a hard time analyzing if it even makes sense to buy right now. You have to have that strong, I call it the why, right? Why you're buying. What's making you actually go out there and get a mortgage and get into that house, okay? And one thing, I think the only really good thing that you should look into when it comes to a housing market is you want to compare the rent versus the mortgage payments, right? So if the rent payments are significantly super cheap, it's like $1,000 to rent and the mortgage payment in your area is like $3,000, then it might make sense to rent so you can save a lot more money. I will give that, if there's a market like that 100%, which I think, please correct me if I'm wrong, California prices are so insane that mortgage is probably going to be like, well, 5K plus, I don't even know. And the rent's like one or 2K, 3K maybe. That might be a situation where if you want to be in a certain area and you can't afford the giant massive payment yet, renting makes sense 100%. So comparing that rent versus mortgage is 100% key. Fourth thing, I think when I'm building on my philosophy on when you should buy is we're talking about your relationship with your credit. Are you in control of your credit or is your credit control of you? Are you maxed out on your cards? Hey, maybe let's not go buy a house right now. Are you in a position where you've been making minimum payments for a while? Hey, maybe let's not go pay for them here. Are you like, if you have some credit cards that are half balanced, but you're working on them, you're working them down, great. If you are at the point where you get your credit card, you pay it off every month, great. If you don't believe in credit, you don't have any credit, well, you need some credit. Hopefully you have a car or something. But it's like that relationship with credit really matters because I mean, we were all there. Some of us are still in it. We get a card and we run it to the top. We stop thinking about it. We just keep making minimum payments. That relationship is going to bite you in the butt when it starts stacking with house payments and all this other stuff. And what happens if your AC breaks down, right? You don't have the funds, emergency funds to do it. That sucks. But now you can't get a loan for the freaking AC replacement because you have your credit cards maxed out. Or maybe it makes sense to, I don't know. It's just your relationship with your credit really matters. And the fifth thing that you need to explore before you consider buying is your relationship with money in general. More savings, more budget, right? I've lived myself. I've been some times in my life where I'm scared to look at the, you know, when you're scared to pull up your bank account, you just don't want to pull it up because it's just like, oh my gosh, how low is it? Or I don't even want to think about it. That's not a healthy relationship with money. You know, maybe you're in the relationship with money where you go up and it goes down, you have a bunch of money and then it goes away. I don't know. You really explore your beliefs with money and how you relate with it. How does that look like? And if you're in an, you have to really be like vulnerable here. You can't just be, I'm fine. No. Is there something you don't like about money? Are you in positions where you're out of money a lot? Maybe it's time to explore that and figure out what your savings looks like. Do you have your emergency funds? Do you have your investments set up? Budget, how's that look like? Like, do you have a healthy budget? Do you know what you can afford monthly payment wise using the 25, 33, 35% rule, whatever is out there. Your relationship with money really matters. So to answer your question, gentlemen, sir, I think, I hope at least with my videos, I haven't just pushed this idea that you should just buy right away. I think right now I'm still at a firm, a firm yellow light of, hey, caution buying right now. Only people in an excellent position to buy should be buying right now. But for really, I think the message I've continued to push or I'm deciding to push now is I think if you have these five ideals, I think you should consider buying. I just do. And the reality of the situation is there's a lot of people that don't watch my videos that have these five items. So by me making videos, talking about the housing market or helping people buy a home, I think it's providing some, like at least cause they're going to be buying. And my thing is I'm trying to help people and bring them value so they don't get taken advantage of by people in the industry, right? So these videos are being made. They're not being made for you. There's a lot of people talking about the housing market crash. You can go watch a hundred percent, but I don't think I've ever pushed this idea that everyone should buy. Please correct me if I'm wrong. And nor do I think everyone should buy. However, to me, there's nothing more liberating than owning your own home with a monthly payment that you can afford. You can work on it. You can paint it. You can have projects in that is it's rewarding. It really is. And yeah, if, you know, in five years, 10 years, you outgrow it, consider selling it. I would maybe hold onto it. I don't know what your situation is, but it's just that we do have to make a deal with the devil to get with the bank and whoever rates are, it does suck. But if you are in these five positions and you're healthy with each one, right? You have a green check mark next to this one. You just kind of go for it. You just have interest rates are seven. Oh, that really sucks. Okay, well, let's go get, let's go get a houses. Oh, the interest rates are high, but there's less people looking to buy. So let's go make offers that are aggressive so we can get a good deal, right? Oh, interest rates are low. Now's the time to buy. But now there's like five, 10 offers per house. And now we have to really have a lot of cash to compete. It's not all like cherries and pistachio ice cream. Good combination. You should try it. Where is like, oh, low rates is the best scenario. Low prices and low rates are the best. Low rates and low prices. You need to have a lot of cash because you have to compete with the investors and everyone is fighting for houses. At least in a high rate environment, you can get yourself some solid off the price to get solid negotiations with the seller as long as they're reasonable. And it's like, you have a, you enjoy your time even though it sucks because it's a high rate. You enjoy your time more because you can actually take your time looking for house, making offers, et cetera. So I hope this video has clarified what my position is. And I hope that you might be flirting a little bit with both sides, can see the philosophy you need to have. And at least hopefully this calls the action you to say, hey, maybe I should just really explore why I feel like I need to buy right now. Why am I getting this itch to download this app to start looking at houses? Why, why, why? Right? So thank you guys. If you're interested in Arizona real estate or the buying or selling, there's a channel for my Arizona hobby channel link below. Also, if you're looking for an agent or pro anywhere in the country, links in the description. Thank you guys so much. I'm gonna go back to this event.