BiggerPockets Money Podcast - 87: How to Save Money For Your Downpayment with Scott & Mindy

Episode Date: August 26, 2019

In Episode 83, Scott and Mindy discussed how to buy your first property. And they were peppered with questions about the buying process after it came out, but the top question they got was “How do you save for your downpayment?” In today’s episode, Scott and Mindy dive deep into the process that happens BEFORE you start looking for a property. Things like getting your credit score as high as possible, getting your taxes in order, and the TRUE cost of closing. They also explore PMI - when it makes sense to pay it down and when it’s OK to continue to pay. They even share a story from a listener who was able to buy out his $100 a month PMI payment for $1500. If you’re looking to buy a house, but not sure where to start, this episode will definitely put you on the right path. In This Episode We Cover: Things to do before buying a house Getting your taxes in order Disadvantages of self-employment Mindy's story of buying her current house Avoid making big purchases until after you close on your loan completely Understanding closing cost All about down payments Do you get your earnest money back if you don't buy the house On finding a good agent What Private Mortgage Insurance is On finding a good inspector How to save up for the downpayment And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Money Podcast 83: Buying Your First House with Scott & Mindy BiggerPockets Money Podcast 35: Hacking Your Life to Live for (Almost) Free with Craig Curelop BiggerPockets Money Podcast 10: Designing a Frugal But Luxurious FI Life by Age 32 with Liz Thames Scott's Email Mindy's Email Learn more about your ad choices. Visit megaphone.fm/adchoices

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Lately, I've been listening to Bigger Liener Stronger for Fitness, The Anxious Generation for Parenting Perspective and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more. All accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at Audible. com slash BP money. Welcome to the Bigger Pockets Money podcast show number 87, where Mindy and I talk more about

buying your first property. Don't do weird financial maneuverings when you're trying to buy a house. You want everything as black and white with no shades of gray as possible. Do all your financial craziness after you close. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast.

How's good, everybody? I'm Scott Trench. I'm here with my co-host, Ms. Minnie Jensen. How you doing today, Mindy? Scott, I am doing fantastic. We just got back from Ragbri, which is a bicycle right across the state of Iowa, and had a lot of fun riding the hillyest route ever in Ragbright history. So I don't love the hills, even though I live in Colorado. But I had a great time. It's lovely to be out in the open and

riding a bike. I mean, how can you have a bad day when you're on a bicycle? Yeah, a lot of my friends seem to have done the Ragbri this year. And I heard a lot of great things. So I'll have to check it out. Yeah, you should join us next year. Hopefully we're going to have another big group of people going. So let's get back into today's show because not everybody wants to hear about my bike ride. On episode 83, just a few weeks ago, you and I discussed the steps that you should take and the things to consider when buying your first property. We talked about things like house hacking and things like buying property that has where you

have multiple exit strategies. So you could maybe rent it out. You could maybe buy an ugly one and fix it up. Lots of different things to consider that I think a lot of people just don't realize they think to themselves, I'm going to buy a house. And then they do. And then they're like, oh, wow, if I would. have just bought that house over there, it would have been a better investment. So we got a lot of

feedback from this episode. And I can't remember what it's called when you know so much that you forget the basics. It's like confirmation bias or information bias or I don't remember what it's called. It's neither of those because I look those both up. It's called being a real estate nerd. Being a real estate nerd. Yeah, I've been investing forever. You've been investing for a long time. And sometimes you forget the basics. But we had one woman in particular who inspired this whole show, Elizabeth Nahara asked for a deep dive into pre buying a house, all the things you do before you find the house and put the offer in and all of that. And even a little bit of the things that you do afterwards. And she has her own tips. She shared a tip before we get started. She said,

I am a tax preparer. And my tip to you is get your taxes in order before you write an offer. There is nothing more frustrating than having a client call and say, oh, I need my taxes in two days because I'm buying a house. and then have the lender emailing us and calling us twice a day looking for the tax return, I would highly recommend that they consider that to start with. So, you know, in the beginning of the year when you're getting your taxes done for the previous year, you know, have all of your things in order. Buying a house is not a surprise. You don't just wake up one morning and be like, you know what, I'm going to buy a house today.

That doesn't happen without a lot of preparation and a lot of... I just found that funny. Keep going. You do a lot of work and a lot of thinking. and a lot of planning. I hope you do a lot of work in thinking and planning before you buy a house. So you get your taxes in order. Your lender is going to ask you for a lot of stuff. They're going to ask you for the last two years of tax returns. So if it's January and you don't have those yet, maybe you can put a little goose in your step and get your tax returns done quickly. You have until April 15th, but by all means don't wait until April 15th if you are

trying to get a loan. I can totally understand what she's saying there. Another thing she wanted to know about was, well, yeah, like, oh, I was just going to say, well, I mean, why don't we introduce a framework for, like, a simple kind of like, here are the keys in preparing to buy a house that you should be considering, among which are going to be, hey, what is a lender, you know, when you buy a house for a hundred grand, you got to put down a down payment and you got to get a loan for the rest of that, right? So you're going to need to come up with, again, you're going to save money and have a pile of cash. in your bank account, a down payment, right? You're going to need to have credit, so the lender will lend on what that's going,

will offer you a loan, right? Offer you a mortgage. And then you need to have steady streams of income, which is, you know, for many people, that's not a challenge. Many people are just employed at a nine to five job. But if you are a real estate agent, for example, and you have been an agent for less than a year, you're not going to be able to get a mortgage, in many cases, from your real estate commission income, unless you've had that history for two years. That's one of the primary

reasons why tax returns are, you know, getting your tax return is important because if you have two years of tax returns, showing an income source, they'll be able to do that. Right. And I think a lot of our conversation today is going to go around kind of the basics behind those three keys. And then, of course, some of the technical stuff at closing around closing costs and what to expect and how to prepare your position for all those things. Yes. And when you said, if you're a real estate agent, I want to point out, if you are self-employed, it is much more difficult to get a loan, unless you have been self-employed in the same field for multiple years. When we were buying our current house, I was a stay-at-home mom, and my husband was a contractor for the government. At one

point, he was an employee of a contracting company, and then they came to him and said, hey, we'll basically double your pay if you strike out on your own, and then you're responsible for your taxes and your health insurance and all of that. He's like, he did the math really quick. He's like, yeah, that's a no-brainer. I'll do that. But now he was self-employed. He had had this same job for 11 years. The exact same job for 11 years. But now that he is striking out on his own, in air quotes, in the exact same position, he was considered self-employed and we could not get a mortgage. Thankfully, this happened after we had already bought our house. But going forward, you know, we like to buy a lot of houses and we like to flip them. And we have not.

been able, we were not able to get a mortgage for the first year, no, the first two years after he went self-employed, even though he was a well-paid employee, stellar credit, we've no debts except our mortgage. They were like, yeah, sorry, you're a huge risk because you're self-employed, which is so stupid. They don't even look at your bank account and your investments. I guess because you could pull an Enron and go to zero, but still, like somebody, somebody who has a million dollars in the bank and is self-reux. employed is less of a risk to the banks than somebody with a steady job working for somebody else with a lot less money in the bank. And I just don't understand that. But that's either here or there.

I'm not going to change the banks. That's right. To give you an example of this, when I first started out here, right, I'm making less than $50,000 a year and I'm buying a house. I have no trouble getting a mortgage because I have the same, you know, $48, $50,000 a year type of work for the last two or three years prior to getting my mortgage. The owner of the business, bigger pockets, had a harder time getting a mortgage, even though he paid my salary. They had to call me to confirm some of his income and all that kind of stuff, which I thought was ridiculous. The lesson here is if you're an entrepreneur or a contractor or self-employed, you're just going to have a little bit harder of a time getting a mortgage. It's not impossible. You're just going to have to have your

ducks in a row and maybe get a bigger jump on this than if you're a W-2 employee who's got a, you know, a very kind of typical job nine to five. Right. Exactly. You don't have nearly as much trouble getting mortgage. Exactly. When we were buying our current house, our lender had asked us for, you know, a stack of documents. I have used this lender the last seven times I bought or refinanced a house. So I think the world of him, I recommend him to everybody. He's wonderful. but I don't understand why lenders can't just ask you for everything all at once. They're like, give me 12 things. And then you give them all to them.

And they say, give me four more things. You're like, I didn't you ask ahead of time. Or, you know, maybe they did. And now the information in those 12 things requires the four more things. I don't know. I'm not a lender. I've never worked as a lender. But anyway, so he asks us for our things and we got them to them.

Here's a tip when you're getting a loan. Answer your lender's call all the time. He asks you for something, he or she, I don't want to be sexist, he or she, asks you for a document, get it to them immediately. When you're getting ready to move, maybe you start packing things up. Do not pack up your documents box. Put that to the side, leave that open because it doesn't matter how thorough you are in the beginning of your lending process, your lender is always going to ask you for something else.

So just keep your document box handy. That comes from personal experience. Where in this giant 20 by 25 storage unit is my document box? take that with you. Another tip, use the same lender if you're going to be a real estate investor or buy multiple houses, you know, because they have all those documents and it makes the process way easier. So be organized and he's the same guy. But that's, I guess, not really that relevant to saving it for your first document. Well, but that's, you know, if you have a good experience with your lender, there's no need to go out. And I mean, I continue to shop for rates because I want

the best rate. Nobody beats my guys rates, closing costs, or like, service. He's just amazing. So anyway, we were moving and he asks us for our bank statements, which we give him. We have all these weird. My husband is, I love him dearly, but boy, he just likes to optimize everything. So we've got a bank here and a bank here and a bank here and the online banks and whatever. During the course of one month, we took out a 401k loan for the down payment of $50,000. We put it into our bank account. Then we transferred that into the online bank. When he transferred it back into the regular bank account, he didn't transfer the entire amount. He transferred, like, we took out $50,000 and he only transferred $45,000 back into our bank

account. And this all happened within a statement cycle. So it looks weird to the bank, and we had the most headaches I have ever had in a closing ever in the history of my closings because of this one little maneuver. And we couldn't get a statement from the online bank that showed all of this, or we could do a screenshot and they wouldn't accept it or something. It's been a while since that happened. Bottom line, don't do weird financial maneuverings when you're trying to buy a house. You want everything as black and white with no shades of gray as possible. Do all your financial craziness after you close. Yeah, I think that's a really good point.

I think one of the temptation and one of the mistakes I made in my first purchase was I kept everything invested right up until the moment where I needed to close. And so then I had to liquidate my stocks or whatever. I will talk about why you shouldn't do that in a down payment saving up for a down payment system. Or we'll have a friendly little debate about where to store your down payment funds, probably not in stocks the way I did. But, you know, I had to liquidate everything.

I had to move it. I had to wire it from one bank to another. Just not a good idea. It creates a lot of confusion and headache. I couldn't agree more that in the month preceding buying a house, move all your money and have it sitting ready to go and you're going to lose a little interest for a month or two or however long it takes you to end up making an offer on closing. But you're going to save yourself a tremendous amount of headache on your first home purchase. And if you're talking about the majority of your net worth here, it's just too risky. I couldn't agree more. I wish I could thumbs up you and like you and preach and all the things that I want to do. That is such a good tip.

Don't like how much interest did you lose, Scott? A dollar? Like you're not, you're not losing that much. You know, if you're listening to this episode, you're probably, how do I say this without being snotty? You're probably not a billionaire with tons of money like where that's going to make a difference. That's not saying anything bad. I would love it if Warren Buffett.

listen to my show, he just probably doesn't. If you're listening, Warren, hi. But yeah, the amount of money that you are going to make by optimizing your savings is absolutely not worth the amount of headache you're going to deal with because the more time you have for a wire transfer, the faster it goes through. The tighter your wire transfer time is, it's like Murphy's law of wire transfers. The tighter your time frame, something goes wrong. You know, the transfer doesn't hit for another day or whatever. They're supposed to be instant, but it's not always, yeah, don't do your financial creativity. I like that the whole month. You're closing on July 1st, starting June 1st. Everything is boring as can be. Yeah. And again, there's a bunch of complex moves that you can all,

that you can think through and figure out how you want to do 401K loans, whatever. Make it create a simple experience for yourself. Dump it into a checking account and keep it there. once you're ready to purchase a home, right? And the entire down payment plus whatever else you're going to need for closing costs, which we're going to get into in a second tier. So that's kind of like the like don't screw it up with the lender discussion here. And I think the other three components that we're going to talk about are the down payment, credit score and income. Which of those do you want to dive into next year, Mindy? Well, before we dive into that, I'm going to say, go back on that, don't screw it up with your lender thing. And I believe we said this in episode 83, but I'm just going to

say it again. Once you are looking for a house, don't make any big purchases. You don't need a new car. You don't need new furniture. You don't need a $25,000 TV or I guess $2,500 TV. You don't need any of that stuff until after you close on your loan completely. I know at least two people who were buying, they decided to like, oh, I got to get new furniture. And then now they can't buy their house because they threw their debt to income or credit score or whatever. they threw that out of whack, and now the new house that all that furniture was for is not available to them. Your lender, in the week before closing, and I want to say just a couple of days before closing, we'll call up your employer to make sure you still have a job. They'll run your credit again to make sure everything's the same. Don't do anything. Make your life the most boring thing possible until you buy the house. Because, you know, once you buy the house, then you can go get the furniture. Then you can go buy a new car.

I mean, it's not the, what is that the job and become a- You can quit your job. Yeah. Don't become an entrepreneur right before buying your first house. Yes. Hold on to that job just another day. Yeah. But that's like the most frustrating thing is every once in a while.

Someone will call on bigger pockets in the post. I just quit my job and I'm ready to go into real estate full time. And it's like, no, no, you need to keep your job while you buy your first, second, I don't know these rental properties because that's what people are lending on. So yeah, no funny business. in the month before closing. Exactly. Look, it probably won't matter.

It's pretty minor blip on the radar. But even like travel rewards and credit card hacking, no need to open up a new credit card while you're under contract and trying to close in your first house. There's just not a need for any of that. You know, it's don't do anything that's going to show up on your credit report. Affect the continuity of your income streams or displace your cash. No big cash purchases.

No new lines of debt. No quitting your job or cutting off an income stream. step down from the soapbox. Yes, absolutely. No, no, no, I'm saying and now and then Scott steps down. Okay. Another thing that Elizabeth said is I'm having trouble with understanding the down payment and closing costs, mostly because you hear FHA is as low as 3.5% down. So you think, oh, okay, 3.5 times carry the one. That's $5,000 that I need to have it closing. But then you get to the closing cost. So, yeah, when your house prices, $100,000. thousand dollars, that's not all you're paying. You know, there's a lot of closing costs involved. There's the attorney if you're in attorney state. There's title insurance. Some parts of title insurance are paid for traditionally by the seller and some are paid for traditionally by the buyer. When in doubt, ask your agent. And if your agent can't answer these questions for you, that's not the

right agent for you. You need somebody who can answer these questions or say, you know, I'm not sure. Let me find out. Talk to your lender. Your lender will know all of the closing costs involved and they can explain them to you. And again, if they can't, that's not the right person for you. I think a lot of people are concerned about what other people think. I don't care if my lender thinks I'm the dumbest person on the planet. I'm going to ask questions and continue asking questions until I understand what this money is going for. Is this negotiable? Some closing costs are not negotiable. Some are. Ask your lender because closing costs are transaction specific. I can't even give, like, the most I can do for closing costs is to say

between 2 and 5% of the purchase price is going to be paid again in closing costs. But again, that's so transaction specific. I mean, it's like depending on the location of the property. Some properties have like transfer tax where like the city of Chicago, when I buy or sell in the city of Chicago, I have to pay a tax on top of everything. else just for the privilege of buying and selling in the city of Chicago. And it's been a hundred years since I did that, so I don't know what it is. But it's not insignificant. I think I sold my condo for $120,000 and it was like $800 more just for the privilege of selling my house, my condo in Chicago. So ask and ask and ask and ask and ask at the very beginning of the transaction.

And, you know, that's frustrating, right, as a first-time purchaser. I, I, I can empathize with that. Like, why is there no straight answer to this question? How much are costs, right? And the answer is it varies by location, like Mindy said. It's also a complete negotiation, right? Like, all this is negotiable between you and the seller, right? But like Mindy said, in many markets, there's traditional ways that things are formed, right?

You have to know the customs of your local area, which is why you're going to work with your real estate agent. And they should be able to kind of write an offer that really more or less kind of fits in with what is it, what the seller is going to be expecting in an offer, right? But sometimes, yeah, seller is going to pay title insurance. Sometimes a buyer will. It's just going to depend on your market in those circumstances. And if there's anything that could be close to a rule, here's what I might offer. If you're buying a more expensive property for $5,000, $700,000,

you're probably going to move closer to that 2% range, generally, broadly speaking. If you're buying a cheaper property, $50,000, $150,000, you're probably going to move closer to that $2,000,000, probably going to be closer to that 5% of the property's price in closing costs. And again, that's as an unhelpful, unhelpful specific as we can really be when it comes to the closing cost discussion, I think. So the bottom line is, understand that you're going to have closing costs. There are closing costs. It's not going to be just the cash. Yeah. And, you know, another part of Elizabeth's question was, who pays for the closing costs? And again, this is market specific, but it's also market condition specific. Right now, in

Colorado, I know you've heard me say this 100 times, it is the hottest real estate market we've ever seen. There are traditionally seller paid costs that buyers are offering to pay in order to sweeten their offer to get their offer accepted because when you put a property on the market, especially in the $2,000 to $400,000 range, those are getting snapped up instantly. And what makes my offer stand out over Scott's offer is that Scott is asking the seller to pay. pay all of these traditionally seller paid costs, whereas I am saying, nope, I'll cover that. I'll cover all of the title company. I'll cover all of this.

I'll pay my own real estate agent commission. These are all really big things that buyers can do to sweeten their deal. If that's not something you want to do and the market allows you not to do it, then the seller pays. But if you are trying to get your offer accepted, sometimes having that in your offer can sweeten your deal enough to get you the opportunity to buy the property. which kind of stinks as a buyer. I hate to pay things that I don't have to pay.

As a person, as a cheap-o person, I hate to pay things that I don't have to pay. But when it comes to getting a property or not, sometimes that's the deal. But I would say that in my experience, you have probably more hands and boots in the ground eye on this than I do. I've never heard of someone paying the buyer-agent costs in a primary residence purchase.

Are you seeing that a lot? I'm not seeing that a lot. I say it's the hottest market. It was actually hotter like a year and a half ago, but it's still like, it's still really, really hot. I have seen people pay, like, offered to pay the buyer's agent costs out of their own pocket. Hey, you don't have to pay my agent. I'll pay my agent myself. And for those listening and trying to follow along with this, why this is so significant is because when you sell a property, right, there are just cost associated with the transaction. The biggest is probably going to be the fees to the real estate agents, which are they're not allowed to be standardized, but. I have almost never seen a property listed in Denver where the buyer and seller agents were each 2.8%. It's just a weird thing that goes on. So agents get out there and offer less than that. But 2.8% times 2 is what, 5.6. 5.6% of the purchase value. If that's 300 grand, that's whatever that is. 15,000, whatever. Yeah, 15, 20,000, probably 30,000, 15 to 18,000. Yeah.

Sorry, wait off. But you know, you've got these fees going to each agent, which is, okay, so let's round it up to 6%. Because your market might be different. Then you've got, again, title. You've got inspection, appraisal. You've got your loan origination costs, right? Which could be what are $2,000 all in for those types of fees.

And all of these services need to be paid by either the seller or the buyer. These are the closing costs, right, associated with a purchase. The vast majority of this is going to come from those agent brokerage fees in most cases, right? And that's almost always paid by the seller, at least in my experience. It would probably be a rare exception to see that is paid by the buyer, although that could happen in really hot market like we just described. So the remaining costs, again, are this negotiation piece that we're talking about. And the question here is how much cash should you be ready to front for these things in relation to the purchase? Again, we said that that's two to five.

percent, those costs are going to be two to five percent for the buyer in one of these transactions. But the question is, how much cash are you going to need and how much is going to get wrapped into the loan? What do I mean by that? That means that if you're going to buy a $100,000 property with $10,000 down, right, you're not going to get a mortgage of $90K. You might wrap those loan closing costs or other closing costs into the mortgage and have a $92, $93, $94,000 mortgage on your you know, bring $10,000 down, $94,000 mortgage on your $100,000 property, right? And that is not a crazy scenario. That happens all the time in the world of buying and selling your first home.

Yes, wrapping some of the costs into the loan is very common. So that may or may not be a piece of the puzzle that you need to prepare for in terms of having the cash ready, right? But like, as we transition into talking about the down payment, I'll tell you, you should definitely have a lot more cash on hand than just the down payment and any closing costs you expect to pay out of pocket for another type of reason. But yes, you may or may not need to pay these closing costs with cash, but you need to be prepared for them and understand that they're coming. And now they're going to be very nuanced and specific to your market.

Exactly. And what's the downfall of, okay, I need $10,000 for the down payment and I have an additional $10,000? Oh, I only needed $6. I guess, now you have $4,000. You can put that on the loan. You can, you know, go buy a new car or a used car, I guess. Yeah. The new car. Yes, I love it. Go out to a fancy dinner, go on vacation. After you close, not before. But having more money is never a problem. Having less money is where you find yourself in hot water, which leads me to our next question, do you get your earnest money back if you don't buy the house? This is very maybe. Yes, you can get your earnest money back. if you cancel the contract in the proper way. So let's say I'm buying Scott's house and I go through the home inspection. I decide I don't like it. In your contract, you will most likely have an inspection contingency deadline,

which is the time that you have to cancel the contract for whatever reason. Let's say it's August 5th is my inspection contingency deadline. I need to write up a specific. specific document that says, I am canceling this contract, or my agent does, and submit it to the seller's agent before the end of that day. And if I don't, I can still cancel the contract for other reasons, but I can't get my earnest money back for the inspection contingency. Now, hopefully you, if you are a first-time homebuyer, you have multiple contingencies. There's a mortgage contingency. There's a appraisal contingency. There's a lot of things that you can.

can still cancel the contract for. But if you want to cancel the contract, don't mess around. Just do it. Cancel it. Contracts get canceled all the time. Don't feel bad that the seller is, you know, has lost market time or whatever. If you don't want to buy the house, don't buy the house. But don't lose your earnest money because you feel bad for the seller. Or don't buy a house that you're not comfortable with because you feel bad for the seller. This is a business transaction. It's an expensive and stressful thing to go in under contract on a property and then cancel it. So you really want to go in on a property under contract with the intent to close. And then if something comes up that is going to derail this process for you,

that's when you want to explore your options and how to get out of the contract. And this is, again, why you really, in my opinion, should not consider purchasing a first home without a buyer agent that's representing you. because this is where that level of risk can really get mitigated on this, right? Again, the seller is paying, in most cases, the buyer agents commission, and they can save you in these situations, right? Happens all the time. I rarely hear a story of someone losing their earnest money.

By the way, should we just find the term earnest money? Yes. For those listening? Yes. Yeah. So when you submit an offer on a property, you're going to submit it with earnest money. Money to prove that you have the means to close, money to like hold the property.

Yeah, shows you're serious. Yes, yes. And it is also a real estate contract is not binding, legal, and valid until it is signed by both parties in writing and with consideration, which is some sort of funds or, you know, collateral. So Ernest money says that you are serious about buying the property. earnest money varies from state to state to market in my current market. It's approximately 1% of the purchase price. I've seen other markets where it's 2 to 5% of the purchase price. That's a huge chunk of change that you have to give them. Pro tip, they will cash that check as soon as you give it to them. I didn't realize that during one transaction. So I gave them the check, but all our money is in these internet bank accounts and I just wrote out this check and then it bounces. I'm like, crap. I forget to transfer. answer the money. Yeah, but this might be a big revelation for somebody who's never kind of come across

us before. Yes, as soon as you go under contract, before you bring your payment for the down to close or whatever in a month, you're going to need to bring, you know, if it's a $300,000 property, $3,000, $7,000, I don't know how much. It's going to depend on your market and the recommendation of your agent. And that is going to get cashed by the seller in a kind of trust account, right? So you're going to, this money is going to move from your bank account and you're not going to access to it anymore. In the event that you close, this will be counted towards your down payment in closing costs. So you're not losing the money, but just know that that movement of funds will be the thing that will be the first significant movement that will come out of your bank account

in the transaction process. Other movements of funds will be when you hire an inspector, an appraiser, whatever, along those things, a couple hundred bucks here and there. And then, of course, when you close, you'll be wiring the down payment, the funds to fund the transaction. Oh my goodness. You just said so many things that I want to explain. Okay. The first, I want to clarify, when you write out the earnest money check, it does not go to the seller. It goes to the title company, the seller's attorney, or the seller's real estate agent who will then hold it in their trust account. But you don't want to give it to the seller because it isn't the seller's money. It's your money that somebody else is holding. So that's the first thing I want to say. The second thing I want to say is, yeah, I cannot believe how dumb I was that my check. bounced because I didn't have money in my account. They will absolutely cash that check. If not today, then tomorrow. So don't write it if you don't have the money in your account. And there's usually two or three days after, like you make the offer. You can write out the check and have your agent like Xerox it or fax it, whatever, show them that they've got the check,

even though they haven't cashed it yet because the check won't be made out to your own real estate agent. I can't believe I just cost that Xerox and fax. Do you even know what those are, Scott? What a blockbuster comes to mind as well? I don't know. Oh my goodness, when I was on Ragbray, I saw two video rental stores. Nice. Like you can walk in and still read videos.

Well, that's probably DVDs. But still, like, I thought that was very funny. Okay, anyway, this is the point of the show that I want to say that while you are not required to use a real estate agent to help you buy or sell a house in any market in America, if you're buying your house for the first time, you need somebody looking out for your interest, somebody who's done it before, somebody who knows what they're doing,

somebody who can walk you through the process. So if you're using, if you're buying a house for the first time, I think you should definitely use a real estate agent. Yeah, we can't stress that point enough. We're going to hammer that home the whole time. Like there is, and I just don't see, there's like this question seems to be popping up.

Why do I need a real estate agent? You're not paying the real estate agent. The seller is paying the real estate agent. right? So you're not really getting the advantage that you think you're getting by not using your real estate agent and you're assuming an incredible amount of risk, in my opinion, that is just not appropriate for giving your, perhaps the largest financial decision of your life to this point. Yeah. And if you don't feel comfortable with somebody after you've been using them for a little while, find somebody else. So this is kind of getting into the weeds a little bit. But if you have a,

let's say you are my client. I have a signed document, assigned contract with you to be my client as I represent you in a real estate transaction. But you can't ever get a hold of me, which never happens because I always answer my phone when I'm representing someone. You can't get a hold of me. So you're getting frustrated and more frustrated and more frustrated. You actually don't have a contract with me, Mindy Jensen. You have a contract with my employing broker, John. And you can go to John. and say, you know what, Mindy sucks. She's not answering her phone. She's not keeping me in the loop.

I want a new agent or I want to cancel my contract. John is not going to let you cancel. Well, he would let you cancel the contract if you were really truly unhappy. But he's going to try and keep you. And he's going to give you somebody else. Because he is my employing broker, I am technically not allowed to enter into contracts or it's not with me. It's with him. So if you're unhappy with your agent, find a new one.

There is no shortage of agents out there who don't answer their phone, don't answer their text messages, but there is no shortage of agents who do. So find somebody who works best with you. So let's take a step back here on this one too, right? So you're in the agent selection process. What are we talking about here? Well, when you meet with agents, right, they are going to want to sign a exclusive buyer representation contract. What's the term for this, Mindy?

Exclusive buyer agency contract. Exclusive buyer agency contract, right? And that's going to say, like, hey, you're not allowed to use another agent to buy your home. You're exclusive to this brokerage, right? Or this, and generally speaking, the idea is you're exclusive to this agent. That's what the intent behind the agent and getting to sign that is. Right. So this is an important step in the process here that we might have glossed over previously.

Don't sign that contract until you're ready and have chosen an agent that you want to work with. Maybe you've interviewed several and know what you're looking for. But also, don't ask an agent for. tons and tons of work and to show you a bunch of properties if they're not signed to an exclusive buyer contract, right? So you need to kind of understand, hey, the process won't really get underway in a meaningful way until you sign one of these documents typically in many cases. This is a pretty standard, at least in Colorado. But it's also a step that excludes you from working with other agents. So know who you want to work with before you sign the contract, but don't

expect to begin the offering or doing any real steps towards buying your first home until that contract is signed. Yes. Don't feel pushed into signing a contract. If you're not sure, wait, because they're not going to punch you in the face if you don't sign the contract. Or if they do, you know, that's definitely not the person you should work with. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually

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Visit Northwest Registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registered Agent.com slash money-free. Okay. So we've talked a lot about agents. We've talked about things not to do with your money around closing. We've talked about where closing costs are our pay. paid, generally what they are, flow of funds. Should we talk about saving up for the down payment and mechanics behind that? Yes, and I have two comments about PMI a little bit later as well. So the down payment is the amount of money that you are putting down on the house and the rest of the purchase price, the difference between the down payment and the purchase price is the amount

of loan you're getting with additional costs as Scott already covered. PMI is private mortgage insurance for conventional loans. And MIP is mortgage insurance premium for FHA loads. They're basically the same thing. I'm just going to call it PMI because that's how I always call it. Unless you're putting 20% of the purchase price down on the home, you are going to get charged PMI. It is a monthly cost on a conventional loan.

And it is, well, it's a monthly cost on an FHA loan too, but it's for the life of the FHA loan. Whereas with the conventional loan, once you pay down to a 20% down payment equivalent, the PMI can go away. You can request it be removed. And at 22% equivalent 22% down payment, it has to be removed. I have a client named Jake who recently bought a house with 10% down. He has excellent credit, a very well-paying job.

He's been with a company for a long time. He is about as low zero risk to a lender as you can get. But his extra funds, the difference between a 10% down payment and a 20% down payment, were tied up in the stock market. And to sell them would give him a capital gains tax hit on the increase on his stock price. So he found a lender who would do a 10% down payment with PMI. And his monthly PMI is $75. The difference between his 10% down payment and a 20% down payment, that chunk of change makes more money in the stock market. than the $75 that he's paying every month.

So he's like, I'm just going to keep paying that $75. And then when the new year comes where you can pay, you can sell taxes and not take the capital gains hit so much, which is a story for another time. Then he'll take that out. But he said, even if I take that money and put it into one of these bank accounts that pays, you know, 2.3, 2.5% interest, I'm still making more money than the $75. I am not incentivized to pay down to get this PMI removed. It's not worth it to me.

So do a lot of calculations. See if it's worth it to pay down 20% or 10%. It's not always worth it. Yeah. And to give you context, you know, when I bought my first duplex, I put down $12,000 on a $240,000 property, right? And it's 5%. So I put down 5%, much less than 20% that is needed to get out, get rid of PMI. right and so I had an FHA loan so I think I had MIP which is the same thing it's just different

terminology right and my PMI was $250 a month my payment was $1,500 a month so that's a huge chunk of my payment right that's going to this PMI right and you might say Scott you're insane why didn't you just bring more cash and not pay the PMI right and there's an obvious reason that everyone is you know I didn't have that cash right I didn't have $60,000 to put down so I only had 20,000. So I put down 12, which is the lowest hurdle I could get to, within reason at that point, I'm using an FHA loan, and I assume this MIP. But my goal became, how do I refinance out of this loan as quickly as possible so that I can get rid of, I can lower my payment. So a few years later, I was able to refinance, get a new mortgage at a higher equity appraisal, and that allowed me to

reduce my payment by a couple hundred bucks. So that math is going to work both ways. In my case, it would have made much more sense to bring the 20% down payment, because I probably couldn't have gotten, what is that, a $2,000, $3,000 a year in for sure reduction in cash flow. That's a pretty reasonable bet. So just something to think about as you're kind of going along this path is, you know, MIP, PMI may be unavoidable, but it is directly related to the size of the down payment

as a percentage of the purchase price of whatever home you're buying. And here's a new tip that I heard. Anthony sent me a note after he heard episode 83. He sent me a note about his own experience with PMI. He was also putting 10% down. His PMI payment was going to be about $100 a month, but he was able to buy it out at closing for $1,500. And this is something I had never heard before.

I didn't know you could pay off your entire PMI for a lower dollar amount. And this was in 2014, he said, so definitely ask your lender about this. But the difference between 10 and 20 percent down payment was surely a lot more than $1,500. So he was able to kind of game the system by paying it all off up front. That's only 15 months worth of mortgage insurance. So I would definitely ask your lender about that if coming up with the 10% is, or the 20% is not working out for you. Yeah. So let's talk about the size of the down payment and things to consider around your cash position

generally going into purchasing a property. And to do that, I want to kind of introduce the concept of risk here, right? And why do you need a down payment? Well, one is, in order to get a loan, you're going to have to show some collateral to the lender, right? So you need to bring something down on the property, right? But how do you assess your risk position going into purchasing a property? So suppose that you are buying your first home and you have $20,000 in cash and you're trying to buy a $100,000 property, right? We have two options. You have several options here. You can put down 3 and a half percent. You can put down 5 percent. You can put down 10 percent, all of which are going to require PMI or you could put down $20,000 and not get PMI.

And what I want to point out here is that while it seems like the low risk option is to put down 20K and not get that PMI, I actually think that that's the highest risk option for you in a scenario like this. Because, you know, if you put down three and a half thousand dollars and get a 94 and a half percent, I'm doing some weird math here. Ninety six and a half percent loan. Right. Yeah, you look like you're incredibly leveraged, but you have 17, five, I can't do it. 16, five. Left in the bank account, right? And when you become a homeowner, just like when you become a real estate investor, you are subject to the risk of maintaining that property.

form of capital expenditures. When the roof goes out, you're going to need to have access to liquidity to help you fund at least part of that roof replacement. If you have a major appliance, you're going to need to buy that. If you need to do a plumbing overhaul, right, these are all things that can come up in the ordinary course of owning a home. And if you don't have cash, these are going to be disasters. If you do have cash, they are capital improvements. You see that different in terminology there. And so I think that there's a component of having 10, 15,000-ish in excess cash after you've closed on the property that you have set aside for emergency funds related to your life and homeownership. And if you don't have that, you're in

big trouble. You're at really, really big risk, in my opinion. And so with that context, let's go into the discussion around how to save up for this down payment and those kinds of things, or unless you have anything to add there. Oh, I do have something to add there, Scott. I don't know if I mentioned this in episode 83, but I'm going to mention it here. When you buy a house, something breaks, like the day after closing. It's like the law of real estate of home ownership. But the cost of that repair is inversely proportionate to how much money is in your bank account. So if you put that $20,000 down and you have $1.50 left in your bank account, you're going to need a new furnace, a new roof, a new air conditioner, like depending on what season it is. You're going to need something big

immediately. If you have that 16-5 left over in your bank account, you're going to need like a new switchplate or like a new number for your front door. Like it's so, I have bought and sold a lot of houses. And this is almost 100% guaranteed something's going to break. And it's something really, like if you can't afford to pay it, that's what's going to break. And if you can't afford to pay it, then, you know, it's not going to break. Yeah. And this is this is going to be bad news. And we understand that, that, hey, you know, you're, not ready to buy a, when you've saved out of the down payment. You're just not. You need to have saved up three and a half, five percent or more of the whatever the percentage of down payment you're going

put on, again, plus $10 to $15,000, at least in cash that you can have access to after closing, after closing costs, after town payment. Yeah, like I said before, what's the worst thing that happens when you have extra cash sitting around in your bank account? Nothing. Well, the worst thing that happens and the bad news and why this is going to be painful for some to hear is, because it's going to delay your first home purchase by six months a year, maybe longer, while you save up those funds. But I think it's absolutely critical and is not, really should be a non-negotiable because you're putting yourself at way too much risk if you're not able to do that. I could not agree more. Okay, so we talked a little bit about

something will break, which leads me to another question that Elizabeth gave was finding a good inspector. How do you find a good inspector? I mentioned that Jay, my client Jake, he had bought a house. The house he bought had been under contract twice previously and fallen out of contract. There were some issues. Jake was looking for a fixer-upor anyway, so it wasn't a big deal. We got the home inspection report from one of the previous people who was going to buy the house and walked away. And this was the most thorough report I've ever seen in all of my decades of buying and selling real estate. This guy was amazing. And now I have a new inspector. Before that, I had a different inspector that I would recommend to people. He's very good,

but this guy is amazing. I don't know that I ever would have found this guy. He's so good. He says, I just work with people I want to work with. If I have a bad experience with somebody, I don't work with them anymore because he's so good. He's in such demand. Ask your real estate agent. Ask all of your friends. And if you're in a certain location, one name is going to keep popping up over and over again, or two names are going to keep popping up over and over again. And those are the people who can inspect the home and give you the status of the home, not inspect the home and make sure the contract goes through. And unfortunately, there are home inspectors who want to keep getting the business from the

real estate agent so they make sure the property's closed. And that's not necessarily what's in your best interest. You want somebody who's going to tell you the status of the home as it is right now. and a home inspection is not to tell you, oh, the furnace is going to break tomorrow. The home inspection is to tell you the current status of the home. Yeah, and I will say that the inspector in your first home purchase is likely to terrify you.

Just to be frank about this, right? Like the inspector is going to produce a 20, 30 page report spouting all of the different little problems that he's uncovered. The paint chipping here, the roof. Oh, oh, you know, And it's all like mild, moderate, whatever, high risk. And you're just like, what mild, moderate risk of the roof? What does that mean?

Am I going to be out 15 grand tomorrow? And so just understand that it would probably be productive to go over this report with your agent because your agent's going to maybe perhaps have a less CYA approach to some of these things than your inspector. His job is to find every little potential issue with the house and give you a statement that kind of gives you, here's the areas to look out for. here's certain things to be aware of. And that can be really scary when you're buying the largest financial commitment of your life.

It can be very scary. And I'll go one step further. And I will recommend that you be present at the home inspection, if at all possible. Take a day off from work, go there and ask. Because your home inspector might do one or two properties a day. They're not going to remember in a week why they wrote this one thing down. They can consult the report and hopefully say, But while you're there, you can ask them questions.

Like they'll say, oh, you need a new flux capacitor in the refrigerator. So you say, oh, is that a $10 fix or a $10,000 fix? When they say it's a $10 fix, that's a lot more reassuring than just reading it. I don't know what a flux capacitor is. That's an 80s reference, Scott. Yes, I got that one. They were almost right on the Chicago Cubs and Back to the Future. Go see you back to the future if you haven't seen it yet.

Spoiler alert. They have a flux capacitor in there. So yeah, they will list things. Oh, the compressor is about to go out. Well, is the compressor a dollar fix or is it a $5,000 fix? These are the things you can ask your inspector while you're there. They can say, oh, you know what? This is a red flag for me.

I wouldn't buy this house based on the black mold in the ceiling or this has a meth house or whatever. Ask your inspector while you're there. And you're making a really big purchase. Make the time investment to be there. for the home inspection, because it can really help allay your fears or alert you to the fact that this is a really big problem. Yeah, I would say in addition to the just vast amount of time and mental energy, you're going to expend learning all of the jargon that we've been spewing as you buy your first home, that the two actual time commitments that require you be physically present

are when you first view the property in the hopes of making an offer, and then at this inspection point. And then, so there's actually going to be three moments where you're going to spend time, right? You have to go see the property, which is on your schedule. You have to go be at the inspection, which is on the inspector's schedule and per your purchase agreement, right? And then the third time you're going to have to be there is at closing, right? And that's going to be a couple hours. So just be aware that you're going to be committing five to seven hours maybe of your day during work hours, during the business day to the closing process here, most likely. And most employers are cool with it.

They know you're going to buy a house once, not every week. But yeah, you definitely want to be there during the home inspection. And at closing, there's ways to get around being there during business hours. But yeah, just plan on being there. And the purchase will slightly offset your alcohol cost for the month because your agent should provide a bottle of champagne or something. Do you do that? I don't.

I did a closing credit. With two of my last closings. Cash would be better too, yeah. Yeah, cash is nice. They did a lot of work when I was showing them the houses. They found a lot of stuff themselves. But yeah, I mean, real estate agents get paid so much money to help people buy and sell houses. Well, let's go back one more time to the down payment because I think that a lot of people,

it seems like, have a question around mechanically, how should I save or invest, if applicable, my down payment for that. And I think that, is that fair? Have you gotten that question before, Mindy? Lots of times. Where should I put my money as I'm saving for a down payment? That's a huge question that I get very frequently. And my own personal opinion is you should not invest it in the stock market,

even though it's fairly liquid. The stock market is also very volatile, whereas a savings account is not volatile at all. It will pay you. I mean, the amount that it pays you might go down or up, but for the most part, it's like you put your money in and it's there. Yeah. I think that when it comes to saving up for the down payment, you know, most people buying their first house, this is a huge chunk of their non-retirement account funds or just generally of their net worth. So you're feeling like you're missing out by not investing optimally in a lot of ways. Because I've been there. I know that feeling, right? I know, hey, I'm excited about

fire. I'm excited about financial independence. I want to be a homeowner and investor. all that kind of stuff. What I'll kind of chime in is where you invest your money is much, or how you kind of store the payment for the down payment is much less important than the rate at which you accumulate that down payment. What do I mean by that? Well, if you need a $50,000 down payment and you save $5,000 a year, you're going to be saving up for 10 years before you buy your property. And if you invest that in stocks, you could easily get wiped out and have that move to 12 or 15 years. So your risk is at a much higher level because if you're investing in something that's volatile in your down payment account. If you're saving $25,000 a year, then your timeline is not going to really be thrown off by the market forces.

So the simplistic answer is save really quickly for your down payment. And it doesn't really matter where you store it. But really, as you get closer to your down payment and purchase point, you should probably put it into a check in your savings account because you don't want that volatility to mess with the timing of your purchase in any meaningful way. So my philosophy, when I did this personally, was I just saved up as rapidly as I could within a year.

And yes, I put that in index funds. I do not recommend saving your down payment in index funds to anybody else. But the point is that it doesn't really matter if you're able to get your savings rate high and accumulate the down payment in under a year from the generation of your liquidity between your income and expenses. Did I go too far there? That I lose everybody, Mindy? I don't know that you lost everybody. I would say that our current market, our current political climate with no comment either way, is very volatile. You want the lowest risk possible

when you're storing up cash or your down payment. Like you said, you don't want to put it in index funds and then there's all sorts of things going on in the world that you have no control over. So you put $10,000 in the index fund and then it's only worth $5,000. Chances are really high that it's eventually going to get back up to $10,000 and even surpass that. The past performance is not indicative of future gains, but the stock market traditionally goes up into the right or flat and then up into the right or sometimes down into the right and then up and to the right. But people don't invest in the stock market hoping it goes

down, knowing it goes down. People invest in the stock market knowing that eventually it will most likely be worth more again. But you're not looking for eventually. You're looking for now in a year, in three years, whatever. You want to make that as unvolatile as possible. And you give up the potential gains for the relative risk. So a money market account could be a better option. I don't know that much about money market accounts. So doesn't that lock your funds in? It's not very liquid. So it locks your money into an account,

but then for a set period of time, like six months or something, it's not 25 years. But it locks your money into an account for a set period of time. And then you can get it out, but it pays higher interest than a regular old savings account.

Yeah. So CD, like for example, would be an example of that that would do really well. The general order is like checking. You can move your money in and out as frequently as you like. A savings account, you maybe get to move it five times a month, which is plenty for which overkill for even this purpose. You know, you're not going to withdrawing this money at that frequently. Money market, I think there's still more inflexibility. I don't have

that much in it. I don't have anything in money market right now. So I could be wrong. But I think it's like you can move it once a month or maybe even more frequently. So all of those are very acceptable liquidity options. A CD would just be one step further where you just locked in for six to nine months or we know, there's a whole range of CD options. that go from six months, three months to several years, offering progressively more interest rate in exchange for the locked in, you're not able to access it without penalty. So there's a lot of ways to do this in order to get access to that

a little bit better interest rate while kind of setting yourself up for that purchase. But again, my main point in that kind of spiel about the stock, all that stuff is that your best bet is to just increase your safety. and your savings rate by listening to the other 88 episodes of the Bigger Pockets Money podcast and get your financial house in order because the faster you can accumulate your down payment plus the extra $10 to $15,000 in liquidity, the better off you're going to be and the lower your risk is going to be regardless of how you invest that. So that's the focus.

Get your savings rate and financial house in order. Get your credit improved and save at a rapid rate so that you can buy this place sooner rather than later if you're going to buy. I would even suggest getting a second job or starting a side hustle of some sort to be able to generate even more income. But, you know, look at your spending. It always goes back to track your spending and spend less than you earn. Track your spending and see where you can cut out. You don't have to cut it out forever, but maybe you don't go to the gym for six months and you just ride your bike outside or you go running outside.

Or, you know, maybe you stop going out to eat. Maybe, you know, whatever it is that doesn't make that much difference to you, cut that out and go bare bones for six months and, you know, hyper save. Maybe you'll discover like Liz Frugal Woods that it doesn't mean anything. Or maybe you discover that I really need this back in my life and you find different ways to get that back into your life. What was she? Episode five, I think we interviewed Liz.

And she shared how she was going to, that was episode 10 of the Money Podcast. She shared how she was going to yoga and it cost $20 a class. I think that was a long time ago. Sorry, Liz, if I'm mangling your story. But she discovered that she canceled it and then she wanted it back, but she was able to work for a half an hour before the class started and then get the class for free. She's like, I could do that. That's way better than spending $20 at class.

She still got what she wanted, but now she's saving that money. So just, you know, look for creative ways to cut your expenses, even just in a temporary capacity in order to save for this down payment. I mean, once you have the house, you can go back to doing whatever it is you were doing before. Yeah. This is why we spend 85 of our 88 episodes on the fundamentals of personal finance and two, on this major transaction point. It's because this is really the output of those good habits that we're talking that we're talking about, right? This is maybe what you're saving up to or the next piece of the puzzle here. This, get this.

fundamentals in place. Income, save, invest, then do this in an intelligent way, buy your house, understand what's going on, and make a good decision here that will leave you optionality and put you in good position. For some more inspiration, you should listen to episode 35 of the money podcast where we interviewed Craig Curlop, who was, he bought a duplex, he lived in one half and rented out the other half, he Airbnb, the one bedroom in the half that he lived in and slept on his sofa, he rented out his car on Turrow. He, somebody who rented it totaled his car on Turrow. And then he got more money than he paid for it from Turrow after it was totaled.

And he made all this money in between. And what else did he do? Credit card hacking. He just kind of does a lot. He hacks his spending and optimizes, oh, what does he eat at work or something? Like, he does a lot to minimize how much money is going out of his bank account every month. And what does he now have like four houses or something? He's about to buy his fifth.

We make a little fun of Craig because those are sometimes a little extreme. But the end of the day, he's going to be in a ridiculous position. You know, two or three years of that kind of sacrifice, which is probably overkill and most people are not going to repeat. But, you know, a two or three years of that kind of thought process can really set the stage for everything else you're going to be doing later in life, right? You house hack once or twice and go all out for a little bit. and you're going to be in position to really reap the benefits for the next 50 years.

Yeah, Craig is definitely setting himself up for financial success. He's already financially successful, right? Yeah, and he met a girlfriend through this process too, right? Wasn't his girlfriend, a tenant? Oh, yeah, I think he was dating somebody for a while. Right. Well, so. How to hack your entire life by Craig Curlop.

Okay. Well, anything else we want to talk about? on the housing front today? I don't think so. I think this is a pretty, I mean, there's a lot of things that come up, but I think this is a pretty good bonus episode for that episode 83. Yeah. And again, go back and if you haven't, re-listened to episode 83, because that is the kind of setting the stage for that. That's the framework from a philosophical or high-level thought process about how to go about making this decision. And then today, I think we had a really good discussion on the nuts and bolts of things to consider and the tactical concerns that all come

up when you're actually underway and buying a property. Yes. So now I'm going to bring this up or open this up to listeners again. If there's some specific aspect of money or real estate that you want to talk about, send us an email, Mindy at biggerpockets.com, Scott at biggerpockets.com, money at biggerpockets.com. We will be happy to address these additional concerns. Because like I said, I can't remember the name of this. I wish I could remember the name of this. Like cognitive bias, I don't know, where you know so much about something, you kind of forget the basics.

And, you know, I love to talk about this. I would love to answer more questions about this. This could be like a monthly feature. Hey, more about investing. More about just buying your first property. Gosh, Scott, we should write a book about this. We should. No, no, stay tuned.

We will be talking. We actually are writing a book about the. subject of buying your first home, and you'll get our very strong opinions on this sometime next year, I think October next year. Yeah, I can't remember when it comes out, but yes, 2020 for sure. All right. Okay. Scott, should we get out of here? Let's do it. From episode 87 of the Bigger Pockets Money podcast, I am Indy Jensen and he is Scott Trench, and we are saying, see you soon, Raccoon.