https://www.youtube.com/watch?v=3TkKkLcEyPc

Summary:

1. Avoiding New Debt Post-Closing: The speaker cautions against taking out new loans or credit lines (like for appliances or a car) immediately after closing on a house. This is because additional debt can jeopardize your ability to refinance in the future, especially if interest rates drop.
2. Being Mindful of Debt-to-Income Ratio: Prospective buyers are advised to understand their debt-to-income ratio, as a high ratio can impede refinancing options. The video stresses the importance of asking lenders about one's debt-to-income ratio at closing.
3. Exceptions to the Rule: The speaker notes two exceptions to this advice: buyers who are 'stupid rich' with a very low debt-to-income ratio, and veterans who can utilize VA loans that do not consider debt-to-income for refinancing.
4. Practical Advice for Buyers: Buyers are encouraged to live minimally post-purchase and avoid unnecessary expenditures that could increase their debt. The speaker suggests being proactive in financial planning to avoid later complications in refinancing.
5. General Caution: The overall message is one of caution and foresight, urging buyers to consider their financial decisions carefully to avoid hindering their ability to benefit from future refinancing opportunities.

Today, we're going to be talking about what you need to avoid if you are buying a house in 2023 or 2024. So, right now, there's a lot. And look, we've seen this for the last year: "Date the rate, marry the house." Every single lender and real estate agent is pitching to you, "Yes, we know rates are high, but you can always refinance." This video is about ways that will make it so you can't refi, what you need to avoid. And here's my biggest concern: I was on Reddit last night, and this guy typed in and he said, "Hey, I close on my house next week, and I want to take out a credit card so I can get new appliances and new furniture for the house. Should I wait till closing?" And everyone's like, "Yeah, you have to wait till after closing."

Okay, but wait a second, wait a second, wait a second. Let's say that this guy is closing at 7% and 12% interest right now, okay? And let's say his debt-to-income was already high. And let's say rates drop in six months, and he takes out a big line to buy a bunch of furniture and a fridge, he won't qualify to refi. Nobody is talking or thinking about that, and that's why we're doing this video, because I want you guys to have the information so that you don't make this critical mistake.

If you are buying right now and you intend to refinance when rates drop, do not buy a car, do not take out a bunch of debt. You need to live as bare as possible, okay? Now, there are two exceptions to this: Number one, you're stupid rich and your debt-to-income is very low. If your debt-to-income is very low, great. That's not what we're seeing a lot of right now because of affordability in America, so that would be the one exception. The second exception would be if you're a veteran. That's right, guys. VA loans, you know, they're one of my favorites. With a VA refinance, we can do an interest rate reduction loan. We don't look at debt-to-income; every other loan type, we do.

So, if you're a conventional buyer, and you did 5%, 10%, 15% down, and your debt-to-income was on the higher side, and you go out and get a car, guess what? Even if rates are a percent lower, the difference in payment is not going to make up for that new car. You could easily put yourself in a position where your debt-to-income is too high to refinance. Mhm, yeah, we need to start talking about that. I didn't even, I can't believe it didn't even occur to me until I saw that Reddit post, but I thought about it, and I was like, "Whoa."

Okay, so what can you do to protect yourself? Once again, if you're a veteran, don't worry about this video. You have the VA interest rate reduction loan, but at the same point, guys, like, let's not get into any trouble. Um, everybody else, okay, when you close on your house, ask your lender what your debt-to-income is. Say, "Hey, like, I know I'm closing. What did my debt-to-income end up being, and how close to the max am I?" And if they go, "Why? Why are you asking this?" I would just be honest. I'd say, "Hey, look, like, I have the intention of refinancing, but I want to get a car, and I'm worried about if that car payment will make it so I can't refinance."

And if they say, "Oh, don't worry about that," but they already said your debt-to-income was high, like, I wouldn't trust that. Like, here's the thing: if I have a buyer and their debt-to-income's high and they say, "Hey, I'm going to, I really want to refi, but I'm going to buy a car after this," I'm going to say, "No, you're not. No, you're not. If you want to refi, you need to not buy that car." You know, if you want to refi, you can't go buy all that furniture. It's that simple.

So, this is yet another fun thing to talk to your lender about, but it is something that I think we could see problems with down the line. So, better to be warned and proactive, then close on the house, get a car that you don't need or furniture that you don't really need, and then go to lower that rate, and you're screwed.

Okay, so as always, thanks for watching, guys. I'm a lender licensed in 48 states. I'm here to help you. Um, thanks for watching.