The Housing Market Is Rigged (Here's How to Beat It) With David Sidoni

21:39So you want to get an attorney that sets this up, who is on your side, or look over all the documentation if you go and do this. But I think this is a great, great option. And for a lot of people who don't have good credit, or they're saving for a down payment, this is a fantastic option for you because it gives you additional time, especially if you like that specific property. And so buying more time for a lot of folks is what they are really trying to do. The next one is subject to. So this is a big one in the real estate investing community. You may have heard of someone like Pace Morby, for example, who's supposed to come on the show soon.

22:07But if you've ever heard of him saying subject to, he's got the to sign. This is something that a lot of real estate investors do, but you can also, and creatively, this is harder to do with your personal residence, but you can definitely do for personal residence too. So basically what you do is you take over the property subject to the existing mortgage staying in the seller's name. So you own the deed and they still have the loan on their credit. Now this is more common in real estate investing, but some people have used it creatively for their primary. And for a lot of folks who just can't make the mortgage payments, this works for them because someone helps them out by coming in and taking over those mortgage payments that they have been struggling to make.

22:42And if they are underwater on that loan, you can help them by living in the home, but taking over those payments and moving forward, then you have a situation where you're not putting a huge down payment down, but you're just taking over those payments. And I think it's a really cool way to do this. Now, the last one is gonna be my favorite one. And it is one that I think a lot of you can do time and time again. And we had Carl and Mindy Jensen on the podcast talking through their strategy on how to do this in the past. This was probably a couple of years ago now that we can link up down the show notes below on how to do live in flips.

23:12So live in flips are really powerful ways to build a tremendous amount of wealth over time. Or if you want to get a bunch of different rental properties, you can also do live-in flips and they can help you this way. But what you do is you buy a fixer-upper with strong appreciation and you live in it for two plus years while improving it. So let's say, for example, you buy a fixer-upper and it needs a new kitchen or a renovated kitchen and maybe needs some new flooring. Maybe it needs some new bathrooms. So over the course of the next two years, you got to be willing to live in a house that is always being renovated.

23:40But you start to paint the walls. You start to redo the kitchen. you start to renovate the bathrooms, you start to do all these different things and you live in the property for the next two years. Now, living in the property for at least two years is the key here. Why? Because what you're trying to do is then you are trying to renovate the property over the course of those two years and then you're gonna sell it. And when you sell that property, if you've lived in there for two years and you make less than$500 ,000 as a married couple or less than$250 ,000 as a single person, you don't have to pay taxes on the gains when you sell that property.

24:12So this can be a way that you can literally live in properties over the course of a couple of years at a time and pay yourself a true salary. Let's say, for example, you find a fixer upper that's$250 ,000, but when it's renovated, it's worth$500 ,000. Well, let's say you put$50 ,000 into it over the course of two years because you do all the work yourself, you're handy, and all of a sudden now you've built$200 ,000 worth of equity over the course of the last two years. That means you're literally making$100 ,000 per year just for living in a home. Then you sell it two years later for$500 ,000.

24:44You take that$200 ,000 and again, you just do it again. You buy another property, you live in it for two years, you make yourself another$100 ,000,$200 ,000,$300 ,000 just for living in that property. I think this is a wonderful strategy for a lot of people out there, especially if you're willing to move. The live and flip strategy can really be a way that you pay yourself a side hustle salary just for living in a house. And honestly, you're just slowly doing the work over time. You get to settle into a community. You get to live there for a certain period of time. And if you like the home, you can stay there if it makes sense for you.

25:15So there's a lot of really cool stuff here that I think is very, very powerful when it comes to some creative strategies to buying a home. And the live and flip is by far one of my favorite strategies. So these are just some of my favorites. If you are interested in any of these, let me know down below. I'd love to hear which one you would actually be willing to try. Live and flip and house hacking are the two that are overall my favorite. Some of these other ones we took from some real estate investing strategies, but you can also do them with your personal residence as well. Now we're going to bring on David Sedoni.

25:45Now David is someone who is the host of the How to Buy a Home podcast and he is a first-time home buying expert, or really in reality he's a home buying expert, and someone who is going to talk about if we go the traditional route, we go out and buy a home, he's going to talk about some creative financing options that you have available. We're going to go through ways that you can put$0 down on buying your personal residence. We're going to talk about 3 % to 5 % options, and we're going to talk about some other options that you have as well, and including creative ways to get seller credits, creative ways to reduce your interest rates and all these different things.

26:16But again, always remember to run those numbers before you dive deeper into some of these things. But David's got some really, really good insights and I think you're gonna absolutely love this interview that we have with David Sedoni. So without further ado, let's welcome David to the Personal Finance Podcast. If you've ever felt like your bank is working against you instead of for you, you're not alone. Between overdraft fees, monthly fees, and just trying to access your own money, it all adds up fast. That's why Chime is changing the way people think. Chime offers fee-free banking built for you, not the bank.

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30:52So David, welcome to the Personal Finance Podcast. Thank you so much for having me. I'm really excited to be here. I am so excited to be here because you are basically a home buying expert and you have this fantastic show basically teaching first-time homebuyers how to buy their first house, but also even experienced homebuyers can learn a ton from your show. So I want to dive deep into creative financing today because this is an area that I think a lot of people don't realize that they can buy a house in some very creative ways. There are very creative ways to get financing on your home. And especially in 2026, a lot of folks right now are trying to figure out, oh, should I be buying a house?

31:28Should I not be buying a house? How can I actually do this where it makes sense? And so today we're going to be diving into creative ways that our listeners can kind of understand exactly what to do here. So the first thing I want to start with is if someone doesn't have 20 % down? Because a lot of places right now, they'll say, hey, you got to put 20 % down, otherwise you shouldn't be buying a house. But if somebody doesn't have 20 % down, what are the real options on the table today? Well, you bring up a great point because the 20 % down is an old rule that was made up by crusty dinosaurs. And it was before rents had the incredible increase that we've seen over the past 20 to 25 years.

32:02And there's two things about it. Can you buy a house? That's the creative side of it. And then what do the numbers look like? should you buy a house? Starting with the can you buy a house? There are so many misconceptions about down payments. So that 20 % down, it was created by banks. It's an imaginary number and it doesn't have anything to do with what real people are doing. The average home buyer, and this includes the people who have tons, hundreds of thousands of dollars worth of equity who are selling their home and buying a home, all home buyers, the average is only 15.2%. And the average for first-time homebuyers, last year it was a 9 % down payment.

32:40Traditionally, that's between 6 % and 7%. And that includes that low 9 % number. That includes the first-time homebuyers who are getting a big gift from their parents. So a lot of people, first-time homebuyers, most of the ones that we see, the tens of thousands of people every year now, it's a 3%, a 3.5 % or a 5 % down payment. but that 20 % headline, it's out there. And I don't know why it blows my mind. It's one of those areas, I agree, where you see all these people talking about 20%. And I go think back to the first time I bought a house and I didn't even put 20 % down on the first time I bought a house.

33:17So for a lot of first-time home buyers, I give them, you know, there's grace here. There's a grace period where I do not think that you need to put 20 % down. And we'll talk more about some of these creative options here. Even for someone who's rolling equity into another home, there's a lot of cool stuff that you can do here. I want to start with, And we'll talk about the 3 % and 5 % down too. I want to start with the 0 % down. Are there any 0 % down options for people out there? And do those actually exist today in 2026? The number one thing is VA loans are right now probably the best loans available for any first-time homebuyers.

33:49That's for your eligible military people or veterans. And I see military people that are moving around the country and I'm like, man, using a VA loan, if they're moving every two or three years from base to base, by the time they're 28 or 30 years old, they could have two or three homes and they'll easily cash flow for the rental, even if they're only putting 0 % down. So zero down options for VA. The other option is something called USDA loans. Those are for more rural areas. Occasionally they seep into suburban areas, but those two loans have been there forever and they are real. The things that kind of ebb and flow with a tie to the market.

34:28One of them is called a physician's loan. A lot of people will look into it and realize that maybe they're better off to put a little bit down, but there are zero down physician's loans. And the myths about it and the misunderstanding is because it changes all the time. The banks will change what they're offering. And in 2026, last year, we saw kind of a bifurcated market, a K market. We had half the country going up and half the country going down. And the places is where it's going down and or or up and on the other side to where it's difficult to get in. A lot of credit unions are starting to offer these local only zero down.

35:09So it's available. It just takes a little more work. What we're finding is that when you're working with a first time homebuyer specialist, a mortgage broker, they can help you find those options for you. And, you know, originally, we've had some people that came to us that they were originally told by one lender that they needed a 30 % down payment. When they got on an experienced team, they found out they had a zero down option. So it's definitely about finding the right local pros in your area who understand the ebbs and flows. Wow. And I think that's one or David and I have talked about this off air to a number of different times.

35:45In real estate, especially, there is a lot of people who just do not understand personal finance or finance in general and the optimal way to kind of buy a house where a lot of folks out there will say, hey, you know, you can only have 30 percent down. That's the only way you can buy a house. That's just someone who is uneducated or they're trying to push someone into a product that is going to help them make more money. And so you really have to know this stuff. It is very important that you understand that these loans are available to you if you're buying a home. Because if you have that education, then when someone says to you, hey, the only option you have is 30 % down, you're going to say back, hey, I already know this.

36:17I listened to this podcast with Andrew and David, and they told me that there was something different here. And so I think that's one of the most important things in this real estate industry right now is people need to get educated on this stuff because exactly what you're talking about, it'll happen. So basically what you're saying is the 0 % down loans, they could be shifting all the time. We always have the USDA and we always have the VA loans. And the other loans are kind of shifting based on what the market is doing, essentially. And it's kind of dependent on your specific situation. Exactly.

36:41And it's always been that way. You know, when I started in real estate back way back in 2006, all of a sudden people like, hey, the FHA loan is back. Now that's traditionally a 3.5 % loan. During the run up, a lot of people weren't using it. But during the crash of 2008 to 2012, almost every first time homebuyer out there was using a 3.5 % FHA loan. It's the same with the zero down products. Individual lenders that are trying to attract people. But I think the key, especially for your listeners who are savvy people who are looking at their whole money, is that people will stop because they create a number.

37:19What they don't realize is a 5 % down payment, a 3 % down payment. Using some of the things that we'll talk about coming up, your grand total might be a 1 % down payment. And what people do is they try to save up to a number that a mortgage calculator gave them based on three pieces of information, and they delay their own process. I love that. I think let's do that now. Let's talk through the three and the 5 % options and what we have available there. So what are some of the good low down payment options that people have available? There's obviously the FHA, we have conventional loans, those types of things.

37:50Can you kind of explain which ones are out there and what the down payment methodology is behind that? Well, 3 % down payment is with what we call a conventional loan. So most people who are going out, if they're going to put 10 % down, 20 % down, or 30 % down, they're going to get a conventional loan. What a lot of first-time homebuyers and new buyers or uneducated buyers don't realize, and it's not their fault, no one's out there teaching it, is that 3 % is a traditional first-time homebuyer loan, and it's the one that most of them use. Now, if they're struggling or they have a higher debt-to-income ratio, and if their credit scores aren't great, that's where the FHA is a really good product for you.

38:29That's the 3.5%. I know a lot of buyers and I've worked with a lot of buyers that are putting 30 or 40 % down and FHA makes sense for them as well. That's the thing is to understand that if you're savvy and your people that you're working with are savvy, there's creativity, conventional 3 % and conventional 5%. Now here on my show, I've been coaching for years. let's do 8 % as your target, 5 % for your down payment and 3 % for your closing costs. And what is shocking to the people who do that is when they're working with a team, say they've only got 4 % saved while they're saving up. A lot of the buyers that come to us and buyers that I've worked with for 20 years, figuring all this out, they end up paying 50 or sometimes 70 % less than what they punch into a mortgage calculator online.

39:20They don't pay that full 8%. And that's where the low down payment strategies on top of picking your down payment first, then you add the strategies. That makes sense. And I think it's going to be the biggest thing that we see for most people out there is understanding those pieces and getting educated behind this. So let's say someone is wanting to do one of these strategies. Maybe they're trying to decide between a conventional or an FHA. What would you tell them to look at depending on, is it dependent on their credit score? Like what kind of credit score would they need for each and every single one of these?

39:51And is that a big, big factor when they try to make their decision? Well, the biggest mistake that I see first-time homebuyers make is not having this type of conversation with a mortgage professional early, starting with a realtor that can help you find a mortgage pro so that you have a cohesive team. They both work with each other. And what happens is people save up and then they call in and they ask the questions. Well, at that time, we might be trying to put a square peg in a round hole, just trying to get you an approval because you saw an open house and now you suddenly decide to call someone.

40:23What you can figure out is, okay, three and a half percent down, yes, you're going to be able to use with an FHA a lower credit score. They say credit score is as low as 580. Now, my advice to someone like that is you can buy a house with a 580 credit score and a 50 % debt to income ratio, but should you? So if you reach out early enough, maybe we take six months to build up a little more savings and also to build up that credit score. And now if you do that in six months, you still may find a FHA product is better for you. So a lot of times FHA works for people that have higher debt. So a lot of times we use this for people with big student loans, if that monthly payment is large.

41:03But if you're coming in and you've got, let's say you've got like about 15 % down, that's where I say, get out and talk to somebody. And then you can compare and contrast a 3 % conventional or 5 % conventional versus that three and a half FHA. When someone is thinking about this, and I can already see these questions coming in, and they're things that a lot of our listeners would kind of ask about is PMI. And PMI is a big area for a lot of people because they say, hey, if I put less than 20 % down, how big of a deal is this? Am I going to have to pay PMI forever? Is this thing where I'm just stuck paying this extra payment within my house payment?

41:39And or is this something that can go away? Is it really as bad as people think? Or is this something that you can kind of work through and figure out. If I won the lottery tomorrow, I would pay a PR firm to put me everywhere in the world to tell them that PMI is not bad. I have a podcast from 2022 called PMI is not the devil. I am so mad at the Dave Ramsey's of the world and the old people that put this out there. This is, here's the math. And I'm saying this out of love, even though I sound like I'm frustrated. I'm frustrated because the American dream is being crushed by PMI. Here's the math.

42:17On a$300 ,000 home, PMI is between$25 and$60 a month, depending on your loan amount and your credit score. $500 ,000 home,$35 to$100 a month,$700 ,000 home. It's$55 to$140 a month, and it's temporary. It goes away. So a lot of times when people come in and say, David, I did an example on a recent podcast. I want to buy a$450 ,000 home. We got like 15 % saved and we run the numbers. It's$2 ,900 a month based on today's interest rates. So we're going to keep saving up because we don't want to pay that lousy PMI. And I'm like, okay, well, it's$2 ,900 a month to 20 % down. It's$2 ,600 a month. That's the difference just in the loan.

43:02So that's$300 difference with a 10 % down payment. The PMI is only 60 bucks. So it's a$360 difference. And if you're putting 20 % down or 10 % down, that's 90 grand on a$450 ,000 home versus$45 ,000. You could keep$45 ,000 in the bank and only pay$360 difference every month with 45 grand in the bank, which helps people avoid the number one thing they want to avoid being house poor. 45 grand could supplement that$360 extra for 10 years. and think about it, even if you could save$2 ,000 a month, you're sitting there and you're at 10%, you got 45 grand. If you save$2 ,000 a month, it would take you two years to save up the other $45 ,000 just so you can save 360 a month.

43:53Now I don't even preach. It's only 60. It's only 60. I always make sure that we do the full extra loan amount, but still even that math, it's preposterous. PMI isn't the devil. PMI is a privilege. PMI is a way for you to get into. And that part of it, I understand because this is the can you and then the should you side. That's a whole different equation that we can get into later of what are the benefits of owning with a low down payment versus renting for two or three years until you can get to that magic 20%. Sure. And I think that's where a lot of people need to run this evaluation, run the calculation based on their situation to understand exactly what you're talking about here is to see if that fits your situation.

44:36So when does it make sense? Hey, putting three and a half, maybe, you know, three to 5 % down. When does that make a lot more sense than just looking at something and putting 20 % down traditionally? Is there scenarios that you've seen time and time again where that does make more sense than maybe just putting that 20 % down? Well, you're a finance guy. So I'm sure you've seen people who say always have a mortgage, never have a mortgage, Right. Those arguments work and that will depend on your own risk tolerance, what you want to do. Are you going to invest other money? There's math for either way.

45:06But I have had many, many people that have either listened to a podcast episode. I do a PMI episode and a low down payment episode and a rent versus buy episode every single year. And it's never been more important than in 2026. And when people run those numbers, I've had a lot of people that might listen to you or other financial people who are offering them advice about something called leverage. And they might realize that even at 6%, they'd much rather have money in the bank, which what makes them not house poor. So a lot of people will decide to go ahead and go with a 3 % or 5 % down payment once they see the full math of the benefits.

45:45Now, here's kind of the basics. It's different for everyone. That's number one. But are you renting for the average rent in your community? Well, traditionally, an average starter home has been about the same as that rent. Now, in the past few years, that's kind of gone. Maybe the PITI, the principal interest taxes insurance, full payment is$500 more or$800 more or$1 ,000 more. That's when you really need to understand all the rest of the numbers. But in general, it's most of the people who see that they'd rather have cash to the bank, they'd rather leverage, and they also have an in-depth understanding that the first three years of owning a home, that's going to be the hardest time that you ever own a home.

46:29After that, it gets easier. And then you weigh the benefits of that versus continuing to rent and lose potential benefits and lose the number one thing about owning a home, and that's your time in the market. I love that. I think that's the number one thing. It depends on your situation and it depends on you actually doing the math, running the numbers, which is the biggest thing that David and I have talked about in the past, too, is especially I went on David's show as well. And we were talking through, hey, you got to run the numbers when it comes to understanding your specific situation so you do not become house poor.

46:58That's the biggest thing we want most people to avoid is becoming house poor because there's no more stressful situation than when the roof over your head is the thing that is causing you the most financial stress. And I think for most people out there, once they learn this concept, it'll change their life forever. Most people just don't run the numbers on the biggest purchase they're going to make in their life, which is absolutely crazy to me. And I think that's really, really important. So can people, you know, there's a lot of down payment assistance programs out there. There's a lot of other things that you can kind of look at.

47:24Can people kind of stack some of these programs? So maybe they do a low down payment program and they do down payment assistance. Is this something that they can kind of stack together or is there ways for you to combine some of these to get even more creative? Yeah. When you're looking at, again, looking at the down payment assistance, you have the down payment assistance. You also can be looking at negotiated seller credits. It can be the same thing as down payment assistance. In 2026, this is going to be huge. Zillow just changed their forecast for this year. They dropped it down to 0.5 % appreciation.

47:56Well, a bunch of sellers out there, Christmas time, they were all excited to sell their home. They're thinking about selling right now, well, they're going to get a nice sticker shock when they realize that they can't up the price$25 ,000,$50 ,000,$100 ,000 over, you know, Betty's house down the street last year. What that means is there's more room for those negotiated seller credits. There's more room for down payment assistance programs, and you can stack them. You don't have to use just one. A lot of people don't even look into it because they think that they make too much money for down payment assistance.

48:26That's not true. We're seeing a lot. There are over 2 ,500. There were 70 new ones that came out in the fourth quarter of 2025. They're consistently adding them. And what we see is people stacking the down payment assistance, maybe using a seller credit. And sometimes people use that seller credit to do what we call a mortgage interest rate buy down. That's a lot of math. And again, the whole point is, gang, planning to buy a home and starting a year earlier, that's where you save the money. It's not talking to someone a month before and figuring it out. We're 15 minutes in and I've just hit the tip of the iceberg on what you can do.

49:04I've seen people that have used down payment assistance programs. We've had people come on our show. There was a couple that bought a duplex for$12 ,000 all in because they used down payment assistance. There were people that are buying$450 ,000 homes, 25 ,000 bucks all in and a bunch of them, 10 ,000 and 5 ,000. And I'm not saying everybody can do this, but I've had single moms that have stacked that are like less than a thousand bucks. I had a couple that stacked. They bought a$275 ,000 home, but it literally cost them$120 and 95 cents. Wow. All in. And one single mom, that interview was, she was so funny.

49:44Love her to death. Single mom, later in life, children, and was like, well, once you talk to the people and then her team helped her find down payment assistance. She did a little research. She bought a$313 ,000 home for$31.25. Now, I don't think everybody can do this, but I do know that if you're not calculating in one of those three strategies, you're all in or potentially even your monthly payment is probably a lot higher than most people who work with the right team, what they find. I love that. And I think let's dive into the seller credit portion, because I think this is a big piece for right now specifically.

50:23I think a lot of people can take advantage of seller credits and some of the things that you can do and rate buy downs and some of the other areas that they're So if someone doesn't know what seller credits are, can you explain what they are and can you explain how they work in today's market? So if you're looking at a$400 ,000 home, I do a lot of my examples around$400 ,000 or$450 ,000 because that's kind of the median price that we've been playing with for the last 12 months or so. Sometimes there are savvy lenders, and God bless that will talk to the first-time home buyer and say, okay, they want$400 ,000.

50:54The prices right now are pretty good here. I think we can get the home to appraise. Instead of offering$390 ,000 and then trying to negotiate back and forth, let's offer$410 ,000 with a$10 ,000 cash credit. Everybody understands how cash back works on credit cards? Same thing. So we're going to offer $410 ,000. Now you get that cash back. Now what do you want to do with it? One, you can reduce, that can go directly into your down payment and that will reduce your down payment, the total you owe there. Two, you could use it for your closing costs, same principle. But the third one that's really interesting is you can take that$10 ,000 and pay up front.

51:31People don't realize most of the mortgages you're being quoted are what we call a zero point loan where there's no fees involved. You can take that$10 ,000 and buy it down a quarter point, maybe even a half a point. And that could be a pretty big reduction in your monthly payment. So.

52:17a$390 ,000 home reduces your mortgage payment, I don't know, eight bucks, where a$410 ,000 home, if you got the$10 ,000 credit and you still paid$400 ,000 for the home, you might be reducing your monthly payment by hundreds. And I think that is one of the most powerful tools overall. For most people out there, they know what the opportunity cost of the time value of money is. And if you can reduce it over, especially if it's a house you're going to stay in long term, if you can reduce those payments overall during that time frame, it is a big, big difference to buy down those points and make sure that you're reducing the overall interest rate that you were paying on that home.

52:54For those of you out there, if you're in an environment right now where you're thinking through and saying to yourself, man, the interest rates are just still too high for me, this is one of those things that you can do and one of those tools that you can do to help you reduce the overall monthly payment to make it affordable. Because a lot of times on this show, we talk about, hey, we want you to make sure that your mortgage payment is 30 % or all your housing costs are 30 % or less of your income. And this is one of those ways that you can start to maneuver towards that direction. If you feel as though some of these housing costs just are not fitting into your budget, you can do some of these strategies, which I think are really, really powerful as we go on here.

53:28So how can buyers use seller concessions to kind of lower some of their upfront costs or monthly payment? Like, what do they do? They do this within their negotiation process. Is it upfront when you send the offer? And then how do you kind of make sure that the agent on the other side, I guess, understands this as well? The biggest thing to understand about seller concessions is that depending on how it's negotiated and when it's negotiated, the home will still have to appraise for that value. So if you do it upfront, the example I just gave, instead of offering$400 to give them their list price they want right now, you offer$410 with a$10 ,000 concession.

54:02Now, what that means is there's no money exchange at that time, but the net to the seller is as if you came in and offered up$400 ,000 on the house. What we're hoping is that the home will then appraise for$410 ,000, and then you're going to get that concession from the seller based on the total amount that you're going to pay for the house. Now, the other big thing about seller concessions, negotiation, one of the things that first-time homebuyers don't realize is they want to grind so hard on that initial, let's figure out the price. And they're going back and forth and back and forth. Hey, guess what?

54:38You're not done. That's the very first negotiation. If the appraisal comes in low, you're under contract for the home, moving boxes packed. There's a whole second negotiation. If you really ticked them off during that initial, grinding them down for like$750 or$1 ,000 on their initial price, they're not going to be as apt to be as graceful with you going into the next level. But the big one that most people know about is home inspection. Once you do a home inspection, seller concessions can come back to you in the form of a credit. A lot of people think that what you're asking them is fix this, fix that, fix this.

55:15I personally don't recommend that because number one, they're going to fix it with their guys their way. And number two, you don't get to inspect that stuff till after you've removed your contingencies or your conditions or your due diligence, which means that your deposit is now gone. You can't back out of the deal. You do that walkthrough checking up on the inspections later, sometimes three to four days before you're actually supposed to get the keys to the house. So one of the big concessions happens after the home inspection. Now, I've had a lot of buyers who find some big ticket items and they figure out, you know what, they ask for$10 ,000, they come back at$5 ,000, they end up getting a$7 ,500 credit.

55:53It doesn't mean you have to put that stuff into the house. You could get that$7 ,500 credit, realize those things need to be fixed, and use some of that money to pay down your closing costs or use it for a mortgage interest rate buy down or for your closing costs. I love it. I think that those are such valuable tips for people out there is when they get through this process, just realizing that, you know, this is just layer one of multiple layers of negotiation. And it's really important to make sure that you understand this entire process and get educated on it, like what David's talking about here, so that you understand, you know, when to get aggressive and when not to get aggressive in some of these negotiations.

56:25And guess what? Most of you out there might be dealing with an agent who is not as good at this as like someone like David right now, who's explaining this. There are agents out there who just don't have an understanding of even the negotiation process and how to do this. So it's really on you to make sure that you're kind of commanding some of this as you go through this process. It's very, very important. Or find the right agent who has a lot of experience in doing this in the past. So this is very, very important to note for sure. So if you had to choose between something like a lower price or a rate buy down, how would you think about that?

56:55Or how would you choose between those two? First and foremost, it doesn't matter what I say, because that's a black and white question. And the answer takes about 30 to 45 minutes of understanding not only your entire financial picture, but your personal goals. What are you using this house for? I've had a bunch of people I've interviewed recently that used what the old crusty dinosaurs would think is terrible. They're using adjustable rate mortgages to get a lower payment right now. That's the way that they're getting their lower monthly. Well, they're smart people. Probably listen to your show.

57:29Those are the type of guys that understand. man, I have seven years to adjust and work before the adjustable rate mortgage adjusts. That was, I said adjust like 15 times there, but that's the way it works. But in general, I would say that if you are starting the process and you should know ahead of time by working scenario A, B, C, and D based on your credit score, the amount of savings that you have, if your monthly payment is really important to you, then you might look at using that concession for a buy down. A lot of times, I think the biggest thing, the most general answer, Andrew, is that people go crazy trying to get them to give all these concessions to lower the price.

58:15It's a$400 ,000,$500 ,000,$800 ,000 loan. Lowering the price, $10 ,000,$20 ,000 really does very little for you. The idea that cash can come back to you, and then you can utilize it either way, that's what's most important. Now, there are some people that, like I said, we talked about the FHA loan, bringing it all together here. There are a lot of times people will opt for an FHA loan because it has a little bit more upfront fees, but many times, depending on the market, it has better interest rates than someone looking at a conventional loan. Pretty much the same area, three to 5 % or three and a half percent down.

58:52So a lot of times people will take that concession and they'll use it to pay the extra upfront fees on FHA. And that works out to be a lower payment without even technically doing a buy down. They're just using a different loan product to get a better rate, which completely is dictated on how the mortgage markets are reacting at that time. Exactly. I think that's a huge key in and of itself is I think most people just need to understand that portion and kind of go through this in a way where, you know, once you understand kind of how all this works, it's going to change your perspective on just buying houses and the structure and the way to think about this, where you get some of those lower rates, like you said, having an adjustable rate mortgage.

59:31Well, if it's not shifting over the course of the next seven years, the biggest risk you're taking is that it does, you know, the interest rates do go up for a prolonged period of time, which never happens for seven years, usually. And historically, usually we use a ton of historical data on some of that stuff. So I think that's really, really important for a lot of people to know when they go through this. Now, I'm going to give you a couple of scenarios here. If you were going to structure something, like let's say someone comes to you and they don't have a lot of cash on hand. They don't have a lot of cash saved up.

59:56And let's just say in this scenario, you know, this person, maybe they're having a baby on the way and they just got married. And, you know, this hit them out of the left field and they didn't know this was going to happen. But they want to put down some roots. They want to go out and buy their first house here. But they have a high income. They don't have a lot of cash, but they have a high income. What would you tell that person to do? First thing I would do is we would look at their numbers right now. you know, if you're, if they've got a high income and they're renting for three grand a month and a potential home purchase was 4 ,500 a month, I would ask them is the three grand month place that you're renting, is that going to fit your lifestyle that you want for the new marriage or, you know, possibly a growing family.

1:00:34And then we look at that$1 ,500 difference by using a low down payment, a 3 % or a 5 % as the$1 ,500 extra. So number one, They have complete control over their life. High income people see more rent hikes than lower income people. And they're crazy. I mean, I had someone in Boston who this was three or four years ago, someone I interviewed for the show. His rent went up 60 percent and there was a potential increase for 90 percent for the following year. So he did what a lot of times I'll refer to as kind of a lateral move. He went from a two-bedroom apartment, or they went from a one-bedroom apartment to a larger two-bedroom, two-bath condo with the idea that they would eventually keep this as a rental.

1:01:21So that's one way to look at it. The main thing that I want to look at is$3 ,000 a month in rent. You're going to pay more, but let's break down the entire situation for you and let's try to get you in as soon as we can. Maybe with a 3%, maybe with a 5%. So I'll start them with an 8 % conservative number, 5 % down, 3 % closing costs, and we start a savings plan. Now, one of the things we're going to look at while we're doing that is, are you contributing above and beyond a 401k that's matched by your employer? Are you investing in other investments? Are you investing in other retirement plans?

1:02:00Maybe there's a six-month hiatus on that so we can build up so we can get to that down payment that we need to buy a home. Now, after that would be another 30-minute conversation where I explain the math and the benefits of home ownership. Because even with one year, if you're renting for$3 ,000 and you're at$4 ,500, there's math that shows that the buyer comes out ahead. And that, of course, all goes back to the biggest thing about any sort of investing, it's time. You know, that old thing, Andrew, that they talk about that the guy who puts five grand in from 20 to 30 and then stops and the other person who does it from 30 to 50, that when they're 50 years old, the 20 year old has way more money, you know, thanks to lovely compounding interest.

1:02:44It's not exactly compounding interest in homeownership, but the numbers work out. So I've been preaching this for years and people think I'm crazy. The American dream has shifted. The old rules don't work. Inflation, the economy, heck, the war, interest rates have jumped half a point this week. You just figure out a way to get in. If you're listening to this show, it's on your mind. I'm not telling this to everybody, but I'm telling this to the people that are listening today, just figure out a way to get in. So for them, I would show them all those options. And then after they see the initial, just the starter point, that's when we start talking about down payment assistance potentials, seller concessions, and potentially a mortgage interest rate buy down.

1:03:27Things that could take that 8 % to 4 % or 3%, and suddenly they're ready to buy a home in three months. I love it. And I think that's the big thing. And what I love about what you're talking about here is always running the numbers and always understanding where you stand, doing the math, having an understanding of all of your options, and then making the most educated decision for your specific situation. The last question I'll ask before we wrap this up is if you were starting over today from scratch, you personally, what would you do? Or how would you approach this? How would you approach this market?

1:03:55Because I know a lot of people are just worried of even kind of coming at this market. They're worried about the pricing. They're worried about baby boomers holding houses and they really are not able to even get into some of these houses and they're holding strong in their prices. How would you attack this market? How would you come at it if you were starting over today? I'm a nerd. I could talk philosophy till I'm blue in the face. It's all math. Number one, you need to understand that the housing inventory is the only stat that matters. I will tell you this. 98 % of first-time homebuyers spend a hundred times more time researching interest rates and prices than they do understanding that low inventory is the one thing that really is the reason why what we're having happen with home prices is happening.

1:04:38It's illogical. It's irrational. It does not make sense until you do the math. In 2008, we had 4.7 million homes for sale. Right now, we have 1 million homes for sale. And as of today, there's 46.3%. This is an article that just came out yesterday, 46.3 % more sellers than we have buyers right now. But the demand for people getting out there is slow. So people think, oh, I'm going to wait for it to crash. Well, once the buyer's seen the interest rate they like, and they get out there, the market's going to adjust. So I would tell people right now, if you were looking to start, the demand is going to eat up the inventory slowly, which is probably going to keep things more on a flat level.

1:05:20Now, if it starts to go down, great. But what it just I'm rarely speechless, but I am when it comes to people who are waiting for something as opposed to running the numbers. The unaffordability has created this stall in people to actually even look at the numbers. And the numbers are insane. If you're at a$450 ,000 house, you know, or if you're looking at the changes that might happen, let's talk about people thinking about, well, I want to wait for the market to crash. Okay. A 5 % crash. That's where when you're looking at, I think I did that, yeah, on a$400 ,000 house. The difference is$115 a month.

1:06:05Yep. So if the market corrected 5%, and if the market dropped 10%, it's like$225 ,000 or$230 ,000 a month. A 10 % correction has only happened in 2008, in the last 90 years. So waiting for that math. And so then what you have to do is you have to understand the other side of the math. People look at the difference now between renting and buying, and they think that's the one economic factor. That's the signal. But what they're looking at is they're looking at three columns. They're looking at the upfront cost, the current rent they pay, and then the potential mortgage they would pay. But the real formula for all my spreadsheet nerds is six columns.

1:06:48There's an upfront cost. There's the rent. There's the mortgage. But now you add these three. There's the potential appreciation, the principal reduction that you pay every year that you're paying into it, the tax benefits. And then you even could add the inflationary control that you're going to have in a fixed income product that's not going to go up, unlike your rent. And I ran the numbers on that for my annual rent versus buy. Even today, we ran it at 6.25, I think. Like, you know, we looked at people who were looking at a$540 a month difference because that was the exact difference between a rent and a PITI for the median home in America.

1:07:31The first year, the buyer, their savings and gains were$16 ,000 versus the renter at$9 ,000. And the second year was$17 ,000 to the buyer and$8 ,000 to the renter. And the third year was$18 ,000 and$7 ,000. So it keeps increasing for the buyer and keeps decreasing for the renter. And I didn't even add in. I was being tilting the scales in favor of the renter. You could also make maybe another two or three grand if your tax situation works out that you can go beyond the standard deduction, itemize your taxes. And that's something that home buyers can use and home renters never get a chance to touch.

1:08:10So I could talk the math on that for hours. but the biggest math that I see that knocks people's heads off is it hasn't corrected 10 % in years and years and years and if it does go down it's probably going to go down slowly and you're waiting for a difference of a hundred bucks but the time in that's where you make that crazy money it's a time value exactly the time value of money is that the big piece that that a lot of people miss out on when they wait too long and I think that's uh that's one of those areas. Once you run total cost of ownership, you understand what your total cost of ownership is, then you can definitely figure this out pretty, pretty quickly.

1:08:46Well, David, thank you so much for coming on here. This has been incredibly valuable. Can you tell people where they can find out more about you, your podcast website, everything else you have going on? Yeah, it's all at howtobuyahome.com. The podcast is the How to Buy a Home podcast, and that's everywhere that you listen to your podcasts. We have people that come in, And I love they walk the dog, do the dishes, commute to work. And then like two months later, they call me and go, bro, I didn't know all this math. And then that's where they go to howtobuyahome.com. And we've got a very small group of specialized people that understand this all over the country that can help people see the real math.

1:09:25Because the American dream, it's not gone. It's just hidden. And it's time that first-time homebuyers got the real education that unfortunately just isn't being taught by, you know, the, what was the stat? 71%, 71.1 % of all licensed agents sold zero homes in 2025. So make sure you talk to the right people. Exactly. I completely agree. Well, David, thank you so much again for coming on here. We truly appreciate it. And we'll definitely have you back on again when the market shifts again. Thanks, Andrew.