How to Buy a Home

Season 2 E204 - STEP THREE - Credit Score

David is onto step THREE in his series that shows you how to buy a home. Credit scores can feel overwhelming and David gets it: yes, they can be hard to navigate. Thankfully, David is going to tell-all in this latest episode where he talks ALL things credit so you are armed and dangerous when it comes to prepping to buy your first home.
Here are some power takeaways from today’s conversation:
When you should start working on your credit score
The importance of time
FICO vs. Credit Karma vs. other apps
Where your credit score comes from
Episode Highlights:
[04:44] Don’t Rush It
The most important thing you need to know about building your credit score is that it takes time. We’re at the mercy of the financial system and we can’t change it, so there’s no point in getting all anarchal about it. It’s how it is. BUT, we can learn how to beat the system so we can use these systems to our advantage and still get the best deal. The key to it all? Being patient, especially if you or your partner are starting with a lower score. And remember, it’s not fun, it’s not sexy, but it’s very rewarding, so find a way to celebrate when you’ve built it up to your goal!
[18:44] Hard Pull vs. Soft Pull
The only way that you can get a full approval for a loan is to get a hard credit pull, which does give your credit score a hit. While you might have been warned to avoid this from other people, you have to remember that they need to pull your credit score for a full approval and if you don’t get this done it’s possible you could even lose the home. But, if you’re early in the process, you can get your credit pulled and then have time to build up your score again. Having the right team means that they can guide you through this process and make sure that you are on the right track.
[30:54] What Happens When Your Score Looks Rough
When you’re qualifying together, sometimes you’ll need both incomes to buy a home. However, it’s not an average that they use - they use the lowest the mid score. So, if your credit is 800 and their score is 620, well, they’re going to use the 620 score. But, there are some ways that you can boost a bad credit score and jump even a tier or two. According to credit pros, exceptional scores are 800 to 850, very good scores are 740 to 799, good scores are 670 to 739, fair is 580 to 669, and anything lower is not so hot. If you want to jump a tier, then you can do some things such as strategically managing your debt, asking for more credit, getting credit for paying rent, and dealing with your negative marks first. 

Season 2 E203 - STEP TWO - Find Your Guides

David is onto step TWO in his series that shows you how to buy a home. If you’re worried about being able to afford a home in this market, well, don’t be. With the right team behind you, this process can be made leaps and bounds easier and can make your goal of buying a home all the more attainable. Surrounding yourselves with experts is the key. 
Here are some power takeaways from today’s conversation:
Why getting pre-approved isn’t even the second step
Make sure you get helped, not captured
Not all lenders and realtors are the same
Do what makes you feel comfortable
Episode Highlights:
[01:15] Pick Your Unicorn Success Team
Okay, so you’ve decided that you’re ready to buy a home and you’re ready to hear the next steps. Great! The next - and second most important - step is picking your team to help guide you to your goal. And yes, this guy didn’t say “Get pre-approved!” Having a team in place can happen before you get pre-approved and should happen beforehand. The earlier you get them into the process the better because they can help you set yourself up for approval. Maybe you’re in a sticky situation. Perhaps you need some help navigating student loans. Whatever it is you need, having a team can help you overcome those challenges and get on the right track ASAP. BUT, you need to be on guard against the “turn ‘em and burn ‘em” part of real estate and, oh boy, does it exist. Make sure you are getting a lender and realtor who want to help you and not just capture a sale. 
[18:30] Finding the Right Realtor
Most realtors are not trained on how to work with first-time home buyers, so the experienced folks usually end up sending you over to the newbies. So, you’re their guinea pigs! Yay! Not really. When you’re passed off like this, it means that you’re less likely to get the screaming deal you were hoping for because you’re working with a realtor who doesn’t know their stuff. Oh, and another little dirty secret? Realtors only get paid at the end - the sale. So, they’re less likely to give you that call back when you ask for help because it doesn’t make them money. Yeah, I know. It’s twisted, but it’s the truth. A unicorn realtor doesn’t operate that way. Their goal is to help you, not get the paycheck. They’re in it because they’re passionate and knowledgeable and David is willing to have them help anyone. 
[40:42] Do What Works for You
David doesn’t expect you to use his unicorn lenders and realtors, because maybe you know someone who can help you or you want to try to take what you’ve learned and apply it out in the real world. The bottom line is that you need to do what feels right for you. That could look like anything. Just make sure that you feel comfortable and that you’re in touch with a team who will look out for you. 

Season 2 E202 - STEP ONE - How to Buy a Home

David jumps right into the first step in his 10-step must-do list for first-time home buyers. Before anything else, deciding that you’re ready to buy a home is the necessary catalyst in leading you to all the other steps and, ultimately, a home. Check it out.
Here are some power takeaways from today’s conversation:
Why deciding is the most important step
Over-researching does exist
Trust the process
Believe in yourself
Episode Highlights:
[01:15] Don’t Fall to Analysis Paralysis
The first - and most important - step in the home-buying process is deciding that you want to buy a home. You can research all you want, but nothing will actually happen until you make that commitment that you want to be a homeowner and you’ll do what’s necessary to get there. So, don’t waste time cruising the Interweb for months on end - just decide whether or not you’re ready to take that step! When you’ve decided, then you can start assembling your unicorn team and get some REAL answers on how to move forward, no matter how far in the future you’re prepared to buy. And remember: buying a home is not a crazy big expense. It's a rent replacement strategy.
[15:10] Trust the Process
The decision starts with you. And in order to make the decision to buy a home, you need to trust the home-buying process and have CONFIDENCE that this is the right choice for you. When the going gets tough, which it probably will, you need to have unshakeable confidence that this is what you want so you can keep pushing through. That means you shouldn’t buy a home if it’s what you feel pressured to do, but it also doesn’t mean that you shouldn’t buy a home because you don’t want to “conform.” Do whatever you want, but make sure it’s actually what you want. Note, too, that the first step has nothing to do with getting pre-approved. That comes in the next step. The most important part of the journey is making sure it’s the right one for you. 
[22:53] Believe!
The bonus step within step one is that you have to believe in this process. Believe in the numbers. Believe in your experts. You don’t have to have the perfect credit score, or $20,000 in the bank, or have paid off all your student loans. You have to be able to ignore the myths and trust that when you see the numbers and develop your plan, it’s going to get you where you need to go. 

Season 2 E201 - HOW TO BUY A HOME - Step by Step

Now that we’re into a new season of the How to Buy a Home podcast, David is giving a step-by-step look at how to buy a home in a 10-part series. This series is going to help you figure out what you need to do to be able to buy a home, so David is going to cover everything from debt and student loans to picking the right team and finding the right home. 
In today’s episode, David kicks it off by giving you a brief overview of what to expect in this series and how you can start TODAY.
Here are some power takeaways from today’s conversation:
What to expect with this step-by-step
Why you need a team
Make sure you have an experienced realtor
Why David Sidoni is your guy
Episode Highlights:
[02:00] New Series Forecast
There were 1.5 million first-time home buyers in 2022 and the average age of this home buyer was 36 years old! Well, that’s just crazy. David spent years watching first-time home buyers get jilted in the process and this data proves it. That’s why he left his brokerage and started a podcast to help revolutionize real estate by empowering first-time home buyers with the knowledge and resources they need to successfully leave renting in the past and buy their first home. A successful first 200 episodes of home-buying education leads into a 10-part series where David will take a lot of the information from the previous episodes and combine them into a step-by-step that allows home buyers to feel more prepared. Learn about everything from tackling debt to navigating closing in the new series.
[10:25] You’re All Special
Every first-time home buyer is SO unique! You all have different stories, circumstances, and finances that will influence your decision. And guess what, Google can’t totally help you. Even David can’t hand out one-size-fits-all plans for buying a home. You need a specialized team that understands your situation and can offer the advice you need to make smart choices. Yes, Google can help you on some things, but it doesn’t know you well enough to be your end-all be-all influence throughout the process. You need to start preparing as soon as possible to buy a home because the market is constantly changing and you need to be able to roll with the punches. That’s why a specialized team - who knows the industry - can help you get there.
[17:09] Who Is David Sidoni?
David is your guy for this series. Why? Because he left the industry for YOU. After years of watching first-time home buyers get handed off to rookie realtors and subsequently get screwed, he was fed up. He knew that first-time home buyers are just as valuable as second- or third-time buyers and knew that something needed to change. So, he left his brokerage to start his passion project: How to Buy a Home. His goal? Revolutionize the industry by empowering first-time buyers with the knowledge and resources to help them be successful.

E200: Forecast and Predictions 2023 and 2024

Welcome, folks, to the 200th EPISODE! This one is going to be all about predictions for the rest of 2023 and 2024. The bottom line? Um, David has been right so far about these predictions and many economists are following right along. But, he’s going to give you all the facts so you can follow along and make some of your own predictions along the way.
Here are some power takeaways from today’s conversation:
What experts are saying - the good, the bad, and the ugly
Why a crash is impossible
What’s up with mortgage rates
What is going to happen to housing prices
Episode Highlights:
[04:15] A Quick Recap
Despite high interest rates and high home prices and high mortgage rates, it’s all going even higher this summer. Patterns indicate that the numbers will steadily increase through 2024. If you’re hoping that they drop, well, they did drop. And you missed it - sorry! The only time home prices dropped month over month was from July 2022 to January 2023. Now, we’re right back where we started - that steady increase. And what’s the cause of that? Well, How to Buy a Homies, you know the answer. Say it with me: “LOW INVENTORY.” Because of this, David predicts that there will continue to be a steady increase with very little evidence showing that there could be a decrease.
[15:45] Will There Be a Housing Crash?
Well, probably not. According to the research David did, there are a few folks out there who think there could be, but the majority of sources say, “No, there won’t be one.” As David says, a housing crash, or a housing bubble, is financially and physically impossible when you break down the data. A crash can only happen when the number of homes outweighs the demand, but as we’ve said over and over and over again, inventory is low. There aren’t enough homes to keep prices down, so we’re going to be stuck in the slowly rising prices here for a little while.
[34:34] Recessions Aren’t Always Bad for Housing
As in many cases, our trusty friends the Feds like to jump in and get involved with the banking process. According to some experts, inflation occurs when the Feds raise the bank rates too fast and lower them too slowly. This can cause a recession, but not always a big one. In today’s economic climate, it appears that we’re in a mini recession. But, typically in recessions (besides that crazy time in 2008), house prices go up. However, even in recessions, housing is a safe and stable investment.
Resources:
2023’s Housing Correction Could Be The Largest Since Post-WWII 
4 Signs That a Housing Market Crash Could Happen in 2023 
Housing Market Predictions For 2023: When Will Home Prices Be Affordable Again? 
Housing Market Predictions for 2023 
US Housing Market in Trouble: Moody's Predicts Home Prices Will Fall in 2023 and 2024 
Buffini & Company
Housing Market Predictions: The Forecast for the Next 5 Years 
Could Housing Market Become Affordable Again by 2025? New Report Makes Shocking Prediction

E199: Boomer’s Homes Were CHEAPER – Plus Credit Pull Myths!

David is back to help explain a couple important things. First, everyone is complaining on social media (as they like to do) about the price of homes and how they “can’t buy a home the way the Boomers did because the prices are out of control.” Second, he’s going to (again) talk about why it’s so important for you to get your credit pulled months before you’re ready to buy a home. So, buckle up as David dispels even more real estate myths in this episode.
Here are some power takeaways from today’s conversation:
Why it’s actually hard to buy a home these days
The numbers behind the problem
Rent to mortgage ratio
Why you should have your credit pulled
Episode Highlights:
[01:35] Don’t Miss the Facts
The wage gap and number of people living paycheck to paycheck definitely makes buying a home difficult. But, when it comes to housing, the math shows that there is another problem. In 1980 the average home price was $50,000 which translates to $184,000 in today’s economy. Well, we know you can’t get a house for that price pretty much anywhere today, but ten years ago, you could. So, here’s the biggest difference: in 1980 the average rent was $300. Today, the average rent is $2,000. This number shows the real disparity between the generations. So, it’s not the wage gap that’s the problem, it’s the crazy inflated rent prices. The key variable is the mortgage to rent ratio - how doable is it to swap a monthly rent payment for a mortgage payment? 
[11:23] Look at the Numbers!
Interest rates are also a huge factor. In 1980, you could pay $300 for rent, or you could pay $700 a month for a house with 5% down. That would be an over 250% jump in your monthly housing payment! In 2023, you can do the same thing where you change from paying $2,000 a month in rent to $3,200 in a mortgage payment. That’s only a 60% increase, not a 250% increase like it would have been in 1980. So, is housing affordability unfair right now? If you’re just looking at home prices, yes. If you look at the whole picture, then the answer is more complicated. 
[17:34] Pulling Credit Scores
One of the biggest myths David is dispeling today is that your credit score will get hurt by having it pulled before buying a home. Well, nobody needs to pull your credit score to help you plan. There’s something called a “soft pull” that will help you and the right lending team will use this strategy to help you. This will get you an idea of what you should do to prepare to buy a home. And, yes, you SHOULD get a soft pull months in advance of buying a home so you know how to properly prepare. This myth makes people wait to start planning out of fear, causing them to miss out on more time and more money.

E198: PMI Is a Privilege

If you’ve talked to a Boomer about buying a house, it’s likely that they’ve given you some bogus advice: “Don’t pay for private mortgage insurance! It’s a scam!” Well, David is here to tell you that they’re just WRONG. You should definitely not avoid PMI because, as a Gen Zer or Millennial in this economy, it could save your bacon. 
Here are some power takeaways from today’s conversation:
Why grandpa and grandma are wrong about PMI
What is PMI and how does it work?
The benefits of using PMI
Why it pays off in the long run
Episode Highlights:
[05:27] What Is PMI?
Now that rents are going up and up and up, the old-timey math that makes Boomers think that PMI is not important is no longer relevant. Yep, these Boomers are out-of-date with their real estate knowledge and this is one situation where you should ignore Grandma’s advice. PMI, or private mortgage insurance (can also be known as MI), is a monthly fee that you pay on top of your PITI that makes up your monthly payment. This is required if you paid less than 20% down on your home. It’s an insurance policy that’s for the bank, not for you. That’s because they want to be assured that if you don’t pay the loan, the house goes back to the bank and they have less of a chance of losing money. So, you are paying extra, which sucks. But when you look hard at the math, are you really paying extra?
[13:49] Paying PMI Isn’t Forever
Now, here’s what the Boomers don’t tell you: you don’t pay on PMI every month forever until your house is paid off. No! Instead, you only pay until you’ve paid past that magic 20% mark. So, eventually, you won’t be paying it all. Also, remember that because you’re paying off some of the interest and the principal each month, your equity position grows stronger each month. So, it’s a temporary extra payment that you pay because you earned the privilege of being in a position where people trusted you with their money to buy a home and so you don’t have to throw $2,000 away on rent. 
[22:24] The Benefits of PMI
Not all loans require you to pay a PMI, but most do. So, you need to factor in $75 a month for a brief period of time. But, only $75 a month to be able to afford even more home faster? Sounds like a win. So, if you pay 10% down on a $400,000 home, you have to save $40,000. If you save $1112 a month, it would take you three years to save that amount. That’s quite a chunk of change and this is all while you’re still paying rent! So you’re avoiding $75 a month because you don’t want to pay a PMI, then you are saving $1112 while also paying $2000 in rent. That’s a lot of money. 

E197: Buying in 2023 feels like climbing Mt. Everest

The United States only has about 1 million homes for sales nationwide. While that sounds like a lot of homes, it’s actually 40% less than the average number of homes you usually get to pick from. That even includes the crash around the pandemic! So, fewer options means for more competition, which means first-time home buyers are going to have a tough time. Today, David talks about some tips to help make the process easier as well as dispel some misconceptions about the market floating around. 
Here are some power takeaways from today’s conversation:
What you need to know about credit scores
Overcoming rising mortgage rates
Saving for a down payment
Paying off debt (especially student loans)
Episode Highlights:
[04:12] Credit Score Lore
First misconception is that you can’t buy a home if you have a bad credit score. Well, that’s simply not true. Even if you have a 580 score, you can still buy a home. But here’s the real question you should be asking: should you buy a home with that score? So, yes, you can buy a home with a low credit score. But you can save a lot more money in the long run if you take some time to build it up. That’s because if you have a better score, you can buy way more home for way less money. Here’s another big misconception: Many people believe that talking to a unicorn team can hurt your credit score because they have to pull it in the process. However, talking to a team is VITAL in making the process go smoother and you could miss out on so much more money by avoiding this step.
[15:27] Overcoming Mortgage Rate Challenges
Now, there are rising interest rates and that’s no surprise. But, it doesn’t mean it’s any less possible to buy a home. Yeah, it makes it a little more challenging, but that’s okay because there are so many ways to help get around that. Listen to any of David’s other episodes where he talks to other How to Buy a Homies about all the creative ways they dealt with this. Of course, the best way to start on that process is by consulting a unicorn team! 
[18:30] Savings, Debt, Credit Score
 After getting some help, which is the first most important step, there are three other important steps that will make your home-buying process more effective. And those include saving money for a down payment, paying off debt, and improving your credit score. We already talked about your credit score, but we can’t ignore savings and debt. These are two things you can do simultaneously while also working on your credit score. Getting some professional help to develop and savings/debt plan can help you buy a home much sooner than someone doing it on their own. 

E196: The One Day Mortgage!

Imagine a website where you could find out how much mortgage you can afford with just ONE CLICK. Sounds magical, right? Well, unfortunately, it is too good to be true. There’s no website that can tell you - honestly - how much home you can afford with just one easy step. David explains why you should be on your guard with these kinds of institutions and helps you understand the mortgage process better so you can protect yourself.
Here are some power takeaways from today’s conversation:
The history of the “one-day mortgage”
What happened to Better.com
Why you shouldn’t trust these agencies at face value
How a mortgage works
Episode Highlights:
[02:39] The History of the One-day Mortgage
A year or so ago, someone invented something called “the one-day mortgage” and claimed that it would be “revolutionary” for first-time home buyers. Buyers could get approved for a mortgage from one click on their mobile device from a digital lender called Better.com. Sounds great, right? But then some sketchy stuff surfaced about this one-day mortgage process. First, not many people who actually applied were then qualified, even at the exorbitant interest rates they were offering at the time. Then, they were purchased by another company who hired 900 employees to help move the company towards a dazzling success… right before they fired every single one of them. So, do we believe them when they say they have the key to first-time home-buying success? Um, NO.
[09:07] Surprise, Surprise: It Wasn’t About You
Their whole business model was centered around getting easy money. That’s why mortgages for first-time home buyers aren’t even what they specialize in - it’s refinancing because that’s where the money is. Why is all this important? Because David wants to open the doors about what really goes on in these institutions so you know how to be better prepared. They want you to buy into their craziness because they want your MONEY. Not because they care about you. And you, How-to-Buy-a-Homie, are not even their first priority. You’re their last-ditch effort to save their bottom line. So whether it’s Better.com, RocketMortgage, or any other digital lender, BE WARY.
[17:49] How Does a Mortgage Work?
First of all, “one-day mortgage” is a lie right off the bat. Why? Here’s the deal: you need someone who is going to really help you through the entire process because mortgages do not happen overnight. You can find out how much you’re approved for on these digital lending sites, they will certainly tell you how much you can afford… right in that very moment. Instead, unicorn lenders are unicorns because they are helping you simultaneously understand your situation, understand it well enough to improve it, and support you the whole way. Trust David - it makes a difference. 
Resources Mentioned
Inside the Human Cost of Better.com’s Brutal Layoffs
Better.com Lays Off Real Estate Team and Shutters Business Unit

E195: INTERVIEW - Myths of Medical Student Loan Fears

The myth around student loans preventing you from getting approved for other loans is just that - a myth! With flexible payment plans and careful planning, you too can own your dream home. Listen to this couple's story about taking the leap into homeownership. Both of them had some HEFTY student loans. Find out how they were able to navigate their way into getting another loan so they can walk into their beautiful model home!
Here are some power takeaways from today’s conversation:
Jumping into the unknown
Dispelling the myths around student loans
The process of buying a model home
The benefits of owning a home
The importance of taking your time 
Episode Highlights:
[02:49] Jumping Into the Unknown
Don't hesitate to take the leap into the unknown, even if you're uncertain or scared about your current position. With a little guidance and direction, it's definitely possible to succeed. The biggest hurdle for people is often fear of the unknown, but once they educate themselves and gain knowledge, the process becomes easier and less daunting.
[07:36] Dispelling the Myth: Student Loans and Future Borrowing
Many believe that having a large student loan will prevent them from getting approved for another loan of similar or greater size. However, this is a common misconception. Unlike car loans or personal loans, student loans often offer flexible payment plans that are spread out over a longer period of time. This means that the monthly payments are much more manageable, which can actually increase your chances of being approved for future loans. It's important to educate others on this topic and have an open discussion to dispel this myth.
[19:14] The Process of Buying the Model Home
Do an inspection walkthrough and use blue tape to mark any issues, and speak with your mortgage lender to figure out which loan would be best for you. This requires research on the differences between FHA and conventional loans to decide what's best for you. 
[25:14] The Benefits of Owning a Home
If you're currently paying more than you'd like for housing, consider the benefits of owning a home. While the price tag may seem daunting, a home offers many intangible benefits that can make the investment worth it. Walking through your potential home, you may feel excited about the natural light, yard, and extra space it provides. But the true value of homeownership is felt every day when you get to come home and live in it. Besides improving your financial situation, owning a home can also positively impact your mental health by providing a comfortable and stable living environment.