How to Buy a Home TODAY and Get a 20% DISCOUNT

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Michael Zuber (0:28)

All righty, folks. Do you want your own housing crash? Well, get ready. We're going to go through some math, some numbers. So please get out a piece of paper, because we're going to give you a lot of numbers, but it is important that you understand this math. Because if you want a 20 percent discount on your next home purchase, I know exactly how you can do it.

Matt, the mortgage guy, I sent you a task this morning, about five and a half and eight percent. Sounds like you've done some homework for us, right?

Matt (1:03)

Right. Yeah, because that's the thing. People are up in arms about interest rates, interest rates are up, down, they're sideways. That's only part of the equation. The purchase price is another big part of it. And to your point, payment is what matters to people. I know that, you know that.

And investors and owner occupants alike, they're trying to get to a certain payment that fits in the budget. And so, yeah, the task you told me, you said, hey, let me know what a 400K purchase looks like from a monthly payment perspective with a 5.5% rate versus 8% rate.

Michael Zuber (1:44)

Yeah. And the reason I wanted to do this is, again, I want to push the idea of using this buyer's market to your advantage.

And I figured back at 5.5%, it was still very much a seller's market. It was a lot of competition. Inventory is low.

So I want to go, hey, let's if we could snap our fingers and make interest rates 5.5 today with a fixed purchase price, the question was, what's the payment? So let's run that through that scenario first. So again, if you could get a 5.5% mortgage, what is the outcome of this decision?

Matt (2:21)

If you did 10% down on a $400,000 purchase, and I did taxes and insurance that are California numbers, but for this example purpose, 5.5% interest rate, $400,000 purchase, your monthly payment all in is about $2,600 a month.

Michael Zuber (2:38)

So let's set this up again, folks. I told you to get a piece of paper. So you're going to write down 400K purchase, which is today's price. You're going to assume 10% down, so 40K. And we're going to assume you had a 5.5% mortgage. And the first number to write down in circle is $2,600.

Because we know, or at least I think we know, we can't get 5.5% mortgages today. They're not available, right?

They were yesterday. But we're trying to help you understand how you can get a great discount today. So there you go. So now we're going to fast forward and understand the problem. So same deal, $400K house, 10% down, and now we're going to assume an 8% mortgage. What is that payment, Matt?

Matt (3:27)

That payment is $3200 a month, $600 more.

Michael Zuber (3:32)

Yeah. So circle that number too. So we've circled two numbers, $2600 is what we want, what we're comfortable with, $3200 is what we get today. That's a $600 delta. We are not happy, we are not participating, we don't qualify, yada, yada, yada.

Now the question is, because we are in a buyer's market, because it is Q4, because it is winter, because sellers are distressed, because this, that, the war, the other, blah, blah, blah, blah, blah. The question is, if I'm comfortable at $2600 and not $3200, and today's interest rate is 8%, not 5.5%, how much house can I afford and have a $2600 payment? And that answer is?

Matt (4:21)

$325,000 purchase price.

Michael Zuber (4:24)

So folks, congratulations. You just got a $75,000 discount. Now, if you understand this math, you could actually use this when writing your offers. Now, this is not going to work on first day listings. It's not going to work. It's not going to work every time.

But if you can communicate to your real estate agent or the buyer's agent that you are qualified for $2,600 a month and you really like this house, but given today's interest rates, you can't afford it and you can't afford this, you are at least giving the seller an option.

Now, in reality, what should happen is that seller should go, you know what? Instead of giving you $75,000 discount, what if I gave you $15,000 in rate buy down? So instead of paying 8%, maybe you're paying 7%. And then instead of giving you $75,000 off, maybe I'll sell it to you for $450,000. Again, this is all about negotiating to your $2,600. The beauty about real estate investing, the beauty about working with Matt, the mortgage guy, is there's lots of ways to play with today's numbers to get you to a $2,600 payment. So folks, get your head out of your ass, use this buyer's market to your advantage, write dozens of offers, and go get your $2,600 payment. Stop waiting on the sidelines, because if you wait for rates to drop to 5.5, you're going to get run over. Don't get run over.