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Hi, I'm Ella Gurfinkel, your host of the AskElla Show and senior loan officer at Fairway Independent Mortgage. On my podcast, I cut through the noise to bring you honest conversations about real estate, mortgages, and financial planning.
I interview industry experts to tackle everything from homebuying basics to complex topics like reverse mortgages, trusts, and market trends. With decades of experience, I'm passionate about dispelling myths and providing clear, actionable advice.
Whether you're buying your first home, refinancing, or planning for retirement, I'm here to help you make informed decisions. Join me for straightforward talk about real estate and beyond!
how little the normal everyday people actually know in the realm of financial literacy. There's a big lack of financial literacy with regular clients. What are the biggest mistakes that we see our clients commit to? Basically, I need to put 20% down. Oh my god, they're so focused on that 20% that they can see the forest with the trees and it just drives me nuts. Paying off credit cards, paying off collections all in one go isn't always necessarily the best way to optimize your credit score. If you really want a lower rate, 20% down is not it. Correct. It's literally 90% of first-time home buyers have no idea. Wow. I could be making money off of my savings. Wow. Why do all these rich people have mortgages? It's like robbing Peter to pay Paul. What exactly? And this is part of like financial illiteracy with so many people. That just freaking blows my mind. Correct. financial institution will pay you to park your savings there. The money you earn, isn't it worth it?
Welcome everyone to another installment of the Ask a Podcast. And I've got the one and only, the amazing and indomitable Daisy Garza with me today. We happen to work in the same office. And here is what happened and why we're talking here today is we were at Friendsgiving with a bunch of girls from the office and outside and we got to talking about the financial literacy, the financial education and how little the normal everyday people actually know in the realm of financial literacy. We are both in the mortgage space, but it doesn't mean that what we do is limited to mortgages only. We try to educate our clients. That's where our passion is. The two of us that is, is educating our clients to the best of our ability in all things fiscal literacy and not just again confine it to this is your rate, this is your mortgage. And without much ado, Daisy, tell me a little well me and everybody else tell us a little bit about yourself first and then we'll launch. Of course. Hi everybody. Uh I'm Daisy. I've been doing mortgages for 12 years and I started with a financial planning background. So, the mortgages that I was doing was for clients that had an entire team of people behind them. They had CPAs, financial advisors, uh, tax preparers. It it just it was an entire team of people working for the client and telling them, "Now's the time to take out a mortgage. We need to refinance you. now is the time to buy or sell your stock. And so I learned a lot during that time. And I realized that there's a big lack of financial literacy with regular clients. And so that's kind of when I pivoted and I said, "Okay, I have so much educ so much to teach others. There's so much education that I need to make this transition." And this is where Ella and I really connected because we both have the same approach to mortgages for our clients where we use mortgage as a financial planning tool. You're not just working with us to get a, you know, 5% down mortgage at whatever the rate is. We'll tell you, hey, have you considered this? Uh, have you looked into these types of accounts? It helps that we're not with a bank, so we're not pushing you into an account that we're selling or anything like that. It really is, hey, here's what we've learned in our years of experience working with financial advisors. Here's a couple tips that you may or may not need or take advantage of. That is awesome. I mean, that's like I said, it's a passion. It's it's not just slinging mortgages like some people say. And with that, I know you and I have talked before. What are the common mistakes that we see clients make when thinking about a mortgage? We'll we'll start with that because there are so many mistakes and errors and myths out there on the financial literacy side that it's like we're just barely going to scratch the surface. Yes. But what are the biggest mistakes that we see our clients commit to basically that we try to help them understand and not make? Uh the biggest ones would be I need to put 20% down. Oh my god. I need to save. I got to put 20% down payment. Yes. And there's so many tools available right now that I a lot of clients don't realize. Um so for example, I ask people, well, what's what's your I always ask them, what's the purpose behind the amount of down payment you're looking to do? Oh my gosh. I same. I literally ask them, why why do you need to put 20% down? Yes. And then once you get their answer, it's always, oh, I'm trying to keep the payment to this X amount or I want to get rid of mortgage insurance. I want to get rid of mortgage insurance. And there's so much behind the scenes that you can actually you can structure your mortgage to not have mortgage insurance. You can structure your payment in the get to the payment that you're looking for without needing to put 20% down payment. And I mean, case in point, and I'm sure you've seen this enough, and you've suggested this enough to clients, uh, somebody wants to put 20% down, but they've got a crap ton of debts, car payments, credit cards, etc. Well, they're better off putting 10% down or even 5% down, but wiping out a lot of that debt. So, in the end, it's a lower actually overall financial obligation combined. Yes. But they're so focused on that 20% that they can't see the forest for the trees and it just drives me nuts. Exactly. And also something that a lot of clients don't know about is a mortgage recast. So I always tell my clients, you know what, why don't we start putting 10% 5% 15% down. You enter the home, give it a couple months, and depending on, hey, I like this payment or I want to lower it even further. You have the option of doing what's called a recast, which isn't a refinance. You're not paying refinance fees or anything like that. It's a super simple process. And if you decide to put additional down payment, you can at that time, regardless of whether your loan has closed, and the cost is negligible. It's like between 3 to 500 bucks. So instead of a full on refi for thousands, y here, you're only paying a few hundred. Yeah. And it reamortizes your balance as if you had done it on the day of closing. And so it'll lower your payment. It won't change your rate or anything. It'll just lower your payment. and now you have a smaller balance. So that's a huge tool that a lot of people don't know and or take advantage of. And so whenever my clients say, "Hey, I'm, you know, I need to put 20% down." It's like, "Okay, let's take a look. How can we get rid of mortgage insurance by using seller credit?" Which right now is a really big thing, right? Single premium am I? Exactly. Single premium financed to my Yes. Yep. There's so many ways. Buying down the rate. Yes. Right. So, and this is what you get when you're talking to a true professional with the passion for what we do as opposed to talking to a banker. Correct. Who literally has a box, has a production goal they have to meet and really frankly doesn't give a [ __ ] no about your financial success because they have to sell the financial product the bank offers where we don't. We actually have your financial success at the heart of what we do on the daily basis. It's not the commissions, it's your financial success. Correct. And that that's how Bella perfectly said it. The biggest difference is you can go to a loan officer and say, "I'm looking to put 20% down." And they will check that box and give you your 20% down option. Whereas we dive into your finances and we give you different options after looking at the structure and saying, "Hey, we'll we'll present you the option that you requested, but then also show you other ideas and say, have you considered doing this? Have you thought about doing this? this might make better sense. And so at the end of the day, we present you with multiple options where depending on where you are with your finances and in life, there might be an option that we presented that would make better sense. And the way we like looking at it is a lot of people will pay financial advisors. They'll pay a monthly fee for someone to review their finances. And I always tell my clients, hey, let's just get started because you get that review for free with us. You You don't You're not paying for a credit report fee. You're not locked into anything. It really is a no commitment review. It's a free conversation. Exactly. Yes. Why not have it? Yeah. And you can't get that anywhere else. Mic drop right there. Exactly. The other side of and that's what very few people understand still on the subject of 20% down is that the rate is actually higher. Correct. Marginally, but higher. Yes. At 20% down. And to the most people it will sound counterlogical, right? They're putting more money down. Mhm. But it's the reality because that's the first point of, as I call it, first point of no return where the mortgage is not insured by mortgage insurance. Correct. So if you really want to lower rate, 20% down is not it. Correct. Yeah. And that's the whole point of mortgage insurance, right? Because mortgage insurance is protecting the lender and therefore the rate is lower, right? Yeah. Another thing we should brush up on is credit. A lot of people will pay credit items. Let's say they're thinking of applying for a mortgage. They'll be like, "Oh my gosh, before I apply, I need to pay off all my credit cards to make sure that I have the optimal credit score." Hold it, hold it, hold it. I have one better. My favorite not is when clients tell call me and say, "Okay, I've been getting ready. I've paid all my debt." And by all my debt, they don't mean credit cards. They mean collections. Yes. That's even worse. Yes. Agreed. Because there's so many things, like I said, as a consumer, you just don't know what you don't know. Yes. Exactly. Your job is not to be in with the credit reports, to have the knowledge of the way credit works. And that's okay. That's why you come to us, the professionals, so that we can review and tell you all these tips and tricks that we know from behind the scenes. And so paying off credit cards, paying off collections all in one go isn't always necessarily the best way to optimize your credit score. Um, most of these collections, a lot of people don't even realize that in order to really remove them from their credit report, they have to do a pay and delete and you can't always get that. Correct. So then there's no point in paying your collection. If you cannot get the collection deleted off your credit report, there is no point in paying it. Because what happens actually, and this is again counter logic to again normal people, but we know it because we've been stewing in it for ages, is that whenever you pay collection, you're actually renewing the reporting, renewing the activity on a negative account. So if you left the collection alone and technically it's supposed to drop off at seven years, when you make a payment on it, guess what? that seven years just went out the window because now the clock starts ticking from the date that you paid it, not from when it originated. So, you just kind of shot yourself in the foot. Exactly. And and another thing too with the age of credit items, people will pay off and close their oldest account, which is the worst they can do. So, if you have an account that's 10 years old and you've paid it to zero and you're not using it, a lot of credit companies will actually close out the account for inactivity, that is the worst thing you can do because now your oldest, your 10-year credit account no longer exists and crediting you. Yes. Credit is based off you using it and your history. And so, yeah, that's a another huge misconception that we talk about all the time that we're like, we need to get these tips out to our client. We absolutely do. And it's like, I feel like I'm beating the same damn drum all of the freaking time because it's been such a topic of my talks, my videos for so long. It's like, don't do it. Don't touch your credit before you actually apply. Let us tell you what to do. let us tell you exactly how much to pay down on what accounts because we have the professional tools. They don't. And we have the way a way of telling you specifically, hey, this will take 3 months, 6 months, 9 months. We will give you an exact timeline as opposed to a client just guessing and thinking, "Oh, if I just pay these five off, who knows how long it'll take, but I know something's going to happen." We're able to actually put that on paper and show you exactly a plan that says, you know, 30 days, 45, 3 months, whatever it may be. I mean, case in point, I have a client right now I'm working with in Florida who was going to just, you know, say, I'm going to pay all of my cards off. I'm like, no, dude. And we did need to raise the credit score a little bit. Like, let's model it. We modeled it to the tea how much three of the accounts had to be paid down to to reach the score that we needed. Yeah. as opposed to just paying them off. Paying them off actually didn't move the needle, leaving the balances on did. So that's where again that's the true professionals. The whole point is you want to work with true professionals and also those that have a passion about it, the passion to help you as opposed to check next. Mhm. Take a number. And you'll see the difference between someone who's passionate about mortgage is and helping clients versus someone that isn't. You'll know as a consumer, you know, you talk to a loan officer who just checks a box and that's that's what the type of service that you you'll get. The personality of a wet noodle. Exactly. Versus someone who's really passionate and cares about your financial success. And if they're providing you with options, know that it's someone that cares to help you make the right decision. So, that's kind of what we're about. So those are the biggest probably mistakes that we see. But we also see a lot of financial mismanagement unfortunately. And our position is and that's what I tell my clients all the time and I'm sure you do the same is I don't judge. Yeah. My job is not to judge. We all have made mistakes. I'm not perfect either. I've made my share of some pretty financial mistakes over the years. I was young once. Yes, but our job is to push you in the right direction, help you put a plan together to get you into a better spot. Um, help you understand the mechanics behind behind the the screens. Yes. And part of it is just having a very honest and open conversation about money. I agree with Ella in that I always tell my clients this as well. We don't judge. We don't care. We have seen it all and we see it so frequently. We review credit and finances multiple times on a daily basis that I tell my clients, we look at it so much. I truly don't care what you're spending your money on. I'm not combing through it judging you. And you can't really shock us anymore. When we say we've seen it all, we've seen it all. Yes. So that doesn't matter to us. We're just looking at it from a like an e what what is that saying? an eagle perspective, a viewpoint where you're eag Yeah. Eagle's viewpoint where we're just looking at the the full picture and it's okay. Here's where we are. Here's the problem, right? Here's what our solution is going to be. How do we get there? That's what we focus on. How we're going to get from point A to point B regardless of whatever happened to get you to this point. As I say, usually I understand you may be embarrassed. I understand that you feel bad about what happened. I get it. Mhm. But look at it this way. What we're doing right now, we're driving on the freeway at a pretty high speed. Can you do that looking in the rearview mirror? Exactly. Probably not. So, we're focusing on the forward. We're focusing on the windshield. Yes, you do need to glance in the rearview mirror every so often to see if there's nobody behind you, like the police, for example. But on a serious note, looking back in the rearview mirror is learning from your mistakes. looking forward through the windshield is moving forward on a path and that's what we are here for is provide the navigation for the path. Correct. And so one of those tools that gosh I harp about it. I every client that I've had knows this because I always touch on this. Something that people are not taking advantage of are high yield interest savings accounts. Those are accounts where the bank or the financial institution will pay you to park your savings there. No one knows about this because regular banks like Wells Fargo, Chase, Bank of America, they don't make money with a regular savings account, right? So, you'll leave your money with them and they pay you 0.01%. And my personal pet peeve, and I think yours too, is that when you're banking with a big box bank or try to save your money there, you're effectively paying them to use your money. Correct. They're not paying you. You are paying them to use your money to bolster their balance sheets. Exactly. Yes. As opposed to the local credit unions, the small community banks that actually are membership based, usually the credit unions specifically. So you don't pay for the privilege, correct, of a big box bank name on your bank statement, but you don't pay monthly fees for the accounts, correct? The wire fees are cheaper. The cash or ship are free or next to free. You can actually talk to a person, right? You can walk into a branch. Yeah. And they will know you. I mean, there were, you know, my husband would walk into our credit union branch and be greeted with, "Mr. Michael, good morning. Mhm. Yeah, makes a big difference. And like Ellis said, so the if you open a regular savings account with a traditional bank, they'll pay 0.01% if that most of the time it's a little bit less. A high yield interest savings account, which a lot of credit unions right now are paying more. So they'll pay anywhere from 4 to 6% for you to have your savings there. Um I That is significant. Huge. That is absolutely freaking huge. That is someone. So depending on how much money you have saved and a lot of people have money squirreled away that they wouldn't even they don't even know how much interest they can be making. But that would pay a tank of gas. Look at the gas prices right now that you know that could pay a monthly tank of gas, groceries. It can pay for once you're ready to buy an inspection. It can cover loads of things that people don't even realize. Wow, I could be making money off of my savings. That's where, you know, Darren Hardy says, "Small hinges swing big doors." Yeah. Exactly. This is one of those small hinges that people don't even think about it. They just look at the big door. Yes. And get discouraged. Yeah. And that's something too that we, you know, I review with my clients as well, especially the ones that are looking at putting large down payments. I will do the math and say, "Hey, did you know that if you opened up a high yield interest savings account, the interest that could be you could be making on let's say this 10%, if you move it in here, you would be making more in interest than you would be in the savings on the monthly payment." And that actually segus into another great conversation, and that's about people not understanding that the mortgage interest is not bad. It's actually a tax deduction and a huge one at that. Correct. And it's the way rich people leveraged their finances is something that needs to be looked at and mimicked to a point because I'll never forget when I was young and impressionable and I joined wealth management mortgages, my first question was, "Wow, why do all these rich people have mortgages? If they have the money to pay for it, why do they have mortgages?" Because their money is making them more money and they get a tax deduction. Exactly. because your money could be making you more money. And a mortgage allows you to get a tax deduction that you can't get with with other things. And so that's something that I talk to my clients about, especially with the rates and where they are, um, is explaining those tax deductions the way, you know, obviously you you need to work with and talk to a CPA, but there's so many benefits to having a mortgage and a higher rate that not a lot of people are aware of. I mean, let's take, I don't know, $450,000 mortgage just as a kind of average, right? The at the current interest somewhere around 6%. Right? The interest deduction for the first few years because that's where the the majority of interest or the majority of the payment goes towards the interest. That's 20 plus grand right there. 24 26 kind of depends on the exact loan amount. That is a tax deduction. Correct. property taxes now with the new salt deduction having increased is another huge deduction in most states. I mean in Arizona the property taxes are pretty small. In the majority of states the property taxes are so damn high. Yes. Like my home in Oregon almost $8,000 on a regular home for God's sake. I was just looking in Washington. Uh my sister lives out there. Same about taxes. Eight grand. Exactly. Mine are pushing eight at this point too. So you add the 24, let's say 25,000 plus 8,000 for property taxes. And now again, if you're under a certain income limit, mortgage insurance is tax deductible, too. So you get a huge chunk. Mhm. To take off the top via itemized deduction, correct? Versus standard deduction, which for this year, if I'm not mistaken, is 26K. Right. Right. And next year goes to 29. But it's still higher than Yes. So if your itemized is higher than the standard, you'd be a fool to not take it. Exactly. Because that's money saved. So whatever your tax bracket is, if your tax bracket is 25%. So that difference of maybe 10 grand between the itemized and the standard, that's 2500 bucks back to you. Correct. Or a reduction in the taxes you owe. So that's another change, right? Yes. A huge unknown that a lot of people don't, you know, they don't realize. or you you talk to someone that's renting and they say, "Oh, well, I'm renting because it's cheaper. It's cheaper." Right. It's more convenient. Correct. And and then you talk you ask them, "Well, what's that's when you start asking these questions. Well, what's your income? What what tax bracket are you in?" Again, a true knowledgeable loan officer will care to ask these questions because they want to make sure to offer you that advice, those opinions that you might not know about. The aha moment uh with I'd say probably 90% of my first-time home buyers when I tell them about the tax deduction uh for interest and everything else is incredible. Yeah. It's literally 90% of first-time home buyers have no idea. Yeah. Oh, I had a client just now who purchased the home that she'd been renting for 12 years. Yes. I told her I told her about the tax deduction and she said, "Oh my god, I've missed out on this for the last 12 years." And in those 12 years, she's paid half of her landlord's mortgage. Correct. Exactly. If not more. Yes. And that's another And gave him a tax deduction. Exactly. And that segus into another topic, which is um the equity that you build in your home. Right. So, every month that you make a mortgage payment, it is going towards uh I call it a an unknown secret savings account, which is the equity you have in your home. I call it the force savings. Yes. Yeah. force savings. That's a better word. Because a home forces you to save that money. It is not gone. It's not like rent, right? Rent, you pay that once and you never see it again. I love it when people say, especially when the interest rates hiked like over eight. Well, I'm I'm paying rent. Um I'm not buying a house paying 8% interest. Uh your interest right now is 100%. Correct. Cuz you're paying rent. Exactly. So guess what? You're wrong. Yeah. and and buying a house, you're hedging against rent inflation. You have against inflation, period. Correct. You have no control over inflation. You've seen we have no control over what grocery, gas, what any anything climbs up to, we have no control over. But we can control our mortgage. And that is something that if you get a mortgage, you're locking that payment in for the 30 years, 15 years, whatever. I refer to it as buying your rent control. for Yes. Yes. You are buying rent control for yourself for yourself and making getting a forced savings account out of it which you can tap into at any point. Right. And it literally does become I know it's a beaten to hell expression. I know it's a cliche but it is the nest egg. It is the source of American wealth. Correct. Because there is not a single rich person out there who doesn't own their real estate. I mean how how else can you put it? I know it's a cliche, but it's a cliche for a reason, right? Because it's generational wealth that's bu built through home ownership. Correct. And for example, like when homes here in Arizona climbed overnight around COVID, someone who had bought a house for 200,000 was now sitting on an equity surplus. You know, the houses went from 200 to a starter home $450. They made $250,000 damn near overnight, right? without having to do anything on top of the payments that they'd been making for the home all those years. And uh what we do get is we get a lot of push back. Well, what if the market crashes again and what if values go down? That then you don't sell. You you sit on it for as long as you can until those values start to climb again. You're not I mean, Daisy, case in point, my house and I don't know if you owned a house in the crash. Mh. Um, my house in Oregon dropped. So, I had it refinanced right before the crash. It appraised for 500K. Our values went down. Not as bad as Arizona did, thank God. But still, our values went down about, and again, part of town where I'm I was at 25% or so. Maybe 30 at most, but I think it was about 25%. Not has it already gone way past it and over, but no matter how much I was hurting in that financial rough time, and I was, the idea of just because my house dropped in value, the idea of dumping the house was absolutely idiotic to me because my payment, yes, it was a struggle to make the payment, not going to lie. I mean, it was an absolute freaking hell for about two years, but my payment was lower than the rents. Mhm. to move and to get rid of the house. I had to pay the movers, the first and last. The first and last I did not have to my name. Mhm. So, it was for me more beneficial to stay. And the case and point is that you already have a payment that you know you're making. Correct. So, why the hell does it matter what my value dropped to? Correct. When I have a guaranteed payment every freaking month, not to crack, that is actually cheaper than paying rent. Why would I like what would it matter if the house dropped in value which and again this goes to someone sorry that was like rent over I I agree with you because and I'm not talking about someone that owns a large real estate portfolio but that was the only property I own. Exactly. If you own a primary home if values drop you you're telling me Yeah. You're telling me you would vacate that to then go rent and pay a similar monthly payment or higher on something that isn't yours. And so I always And then like I said, pay first and last. Exactly. And go through the pain of moving. I mean, seriously, come on. Let's get real here. And that's where I tell my clients, I'm like, "Yes, will it be rough?" I'm sure it will be. However, you just need to get through that time and then the values will bounce right back up. If history's taught us anything is that it's this is a cyclical business and as soon as the values go down, they they after a couple years, they bounce right back up. And that is at the point where you would take advantage. It's once you see those values start climbing up and if you're wanting to upgrade or if you're wanting to move, that's the point that you would make. The only time the values don't quite come back up. Mhm. Is in the case of new construction. It takes a lot longer and I've beating that drum a lot lately, but I've not I've noticed it a lot with clients, especially over the last few years, where if you're buying a resale home, meaning an existing house, your value goes up a lot faster. When you buy new construction, it actually drops. It actually drops because you're overpaying for new construction. Correct. So, it's kind of one of those, you know, touchy subjects to a point or a personal pet peeve. I don't know. Or both. I always tell my clients, right, a lot of new build construction offers you 1.99 interest rates, right? 2.99. Where do you think the money is coming from to pay for these rates? Where do you think it's not made up? They're not giving it out of the kindness of their heart. Oh gosh, they're not philanthropic, right? I know they're baking this into the price. If you look at these new build homes, they've gone from, like I said, 200 to 400, 500,000. that rate, you are prepaying for it in the price of your home and now you're locked into it and correct. Now you're locked into that price because you're buying that home at that price and No, I mean you're locked into the payment. Oh, correct. Because if you're they bought your rate down. Yes. Now you're stuck with that payment but god forbid you have to move. You don't have the talking about the want to. I'm talking about have to. Correct. Then you don't even have the equity to be able to sell. Exactly. Or you may be upside down. Correct. And that's a conversation I have with a lot of my clients that do decide to go new build because and and no offense, a lot of new build lenders, they handle 100 to 200 clients a month. So we're not politically correct here. So them getting into the specifics, they they frankly don't care. They have so many people they don't care. It's literally take a number next. Take a number next. And so I end up having to explain to them when you buy a new build home, guess what else is going up? your property taxes and your insurance because when you purchase a new build home, you are purchasing a piece of land, right? The county has assessed property taxes on a piece of land. Now you have a home built on it. Now you have a community built around you. Val now the the year the in the new year when the county goes back out and assesses these property taxes, you went from a plot of land to now a fourbedroom, three bath house. your property taxes are going to change. And that is something that is not talked about enough. I get a lot of calls from clients who had purchased new builds and now are desperately wanting to refinance because their payment went up $500. And it's like, I don't understand why my payment went up. What do you know? Insurance because now the house is a year old and property taxes because they were originally assessed on a plot of land and now it's a home. And if they did their mortgage with a new build lender, they absolutely got screwed on that because again, and there is there's a class action lawsuit against Dear Horton and I believe another lender. I'm not surprised. Um because people's payments, they were actually qualified and close the mortgages on the land taxes versus the future taxes, which we on our end, we have to estimate. We have to make sure that when those taxes roll and get assessed, you actually qualify for the down payment. We legally have to assess you at we even take a we have to overestimate, right? We take a more conservative approach of what we anticipate your taxes being. And so yes, a lot of new builds are being sued right now because the discrepancy. So for example, if you came to us and asked us for an estimate, the payment estimate that we would give you had the county taxes assessed already. Whereas the new build, they would show you a monthly payment that was $150, $200 less. And so they were or 500 less. It depends on the state. Correct. And they were drawing these clients in by saying, "Oh, no. This lender, look at how much higher this payment is without really explaining it's due to your property taxes. We have no control over that. It's not due to the rate." I mean, honestly, here is a tip. Go to smartasset.com. Well, if you're looking at new construction, it's public access. Smartasset.com. Plug in the state. plug in the county or a zip code and a price and see what it's going to show when you're looking at a new build, let's say on like Red Fin or Zillow, not a fan, but regardless, when you look at it and it shows you what the property taxes are, the property taxes are based on the land assessment, the current one, not taking the new built house on it in consideration, Smart Asset will estimate decently actually. Yeah. As to what the property taxes will be when the home is finished. So, plug in the purchase price and see what's going to happen to the taxes. It's going to be night and day between what Red Fin shows or Zillow or the builder's lender versus Smart Asset, which is what we have to use because we have to make sure that a year from now, you can still afford your payment. You can still afford your payment. Correct. I've literally had clients reach out to me who went with new builder um new build lenders and say my payment went over a,000 up. Mhm. Because now you're making up for the shortage for the prior year. Correct. And you have to pay forward to make sure there is enough in the escro account. So all in all, you're like double the hit basically. Yes. And it's like a gut punch. Yeah. And that's something I I always I've had to explain mortgage payments to new build clients so many times and I, you know, I have them send me a mortgage statement and I'm explaining, hey, a shortage basically means you you your account is overdrawn. Yeah. Think, you know, when your checking account gets overdrawn and you're in a negative balance. That's how I explain it. I'm like, you are negative balance because of your property taxes and insurance climbing down. The lender paid on your behalf. Now you have to pay them back. Correct. Now you have to pay the lender back. And so what they'll do is they'll increase your payment not only to cover the amount that you're overdrawn, but also to ensure that moving forward your account won't get overdrawn again. And so it's a gut punch because instead of just taking, oh, if you're negative, $500, instead of taking the negative500 and doing a onetime payment, they'll increase your payment quite a bit to make sure that that doesn't happen again. By the way, that also happens, unfortunately, and that's something we have absolutely no control over. Whereas on your build, we can estimate, right? But it also happens on flips. Yes. Yep. That's a huge one. Uh case in point, recently happened to one of my clients. Their taxes more than freaking doubled, right? and flips we have no control over because again the county went out and assessed it before anyone had gone in and done all these renovations and we don't know when that assessment was done so that's why we have no control over it so overestimating on flips yes is outside of our purview whereas on new build there is a mechanism for it that we have to put in play correct and we do have to document for the file on new builds how we arrived at the tax calculation yeah yeah we have to include that for underwriting but something per the fix and flips. Like Ella said, we have no control and we don't know when the county goes out and does their assessment. I wish we did. Um there's no calendar that's posted somewhere. There's like no like, oh, Maricopa County is going to be in January 2026. We don't know. You just get a notification that says, "Hey, your home's been assessed. Your taxes are going up or down or whatever." And we don't know when that happens. The best thing we can do is just advise our clients and that if you're buying a flip, be advised. Your taxes might go up. Yep. Exactly. But at least we're upfront about it, right? We don't know what it's going to amount to. We just warn you, right? Yes. As opposed to new build where where you don't get any Yeah. You don't get any warning. You don't get any of this information. No one knows. And I just wish we could get it out to more people to be honest. Because hopefully people share our podcast. Yes. And hell yes. Yeah, please share. Please share. We We're giving a lot of information that's unknown. So, exactly. So, we've pretty much beaten the dead horse of new build and new build financing to a pulp. And with that fun topic behind us, we're actually going to segue into something entirely different. And this is something that's also been personally been bugging me every time it comes up. And this is a subject of I got a 3% mortgage or I got a 2 and a half% mortgage, let's say sub three for that matter, and I'm not trading that for the current 6%. I'm just going to keep paying my debt down on my own while having a ton of equity. Oh my gosh, this is a point of anger and frustration for me. And it's like, yes, because it doesn't make sense. And this is part of like financial illiteracy with so many people. That just freaking blows my mind. Correct. Because they'd rather pay like a couple of thousand bucks a month on [ __ ] debts. Yes. Than give up their 2 and a half or 3% mortgage. Whereas when you show them what the new total payment is and they're saving like out of that 2,000 a month, they're actually saving 1,500 and they're still looking at you like a deer in the head like like I like my two and a half%. They don't understand. Yes. Kill me. We see that all the time where someone will have a $1,500 mortgage payment and then an $1,800 auto loan because their auto loan rate is 16% or their credit card rates are 29% and they're paying $2.99 a month for the monthly payment on a credit card. it. When you add all of that debt up, you're what you can do is you can refinance and yes, you you'll get a higher interest rate on your mortgage, but you have to look at the total debt and the payment. the correct that's where people are misunderstanding and that financial illiteracy comes up a lot because your total payment on your new mortgage will be much less and you're paying a much lower interest rate off the total debt than if you were to have everything split up. Um, and that's where a lot of people actually end up drowning and spiraling because in order to keep while being equity rich at the same time. Correct. In order to keep their two and a half% interest rate, um, they will drown trying to make these credit card and auto loan payments. And a lot of the time they'll let their mortgage be late in order to make the super expensive auto and credit card payments. It's like robbing Peter to pay Paul. What exactly? I always tell my clients, if you're going to be late on something, don't be late on your mortgage. Right. Pay be late on your auto, be late on your credit cards. Actually, auto before credit card. Correct. Although you don't want to go past three late or miss three payments on auto before they repo your car. Correct. But funny thing is that a late on the credit card, a recent late on the credit card will drop your score by 30, 40 points. 40 points. It's whereas a late on the car, which is alone, will be maybe 10. Yeah. that 10 15 points, you'll see the drop. So, kind of take, you know, pick your poison. Right. Right. And before you even get to that point, that's where you would get, you know, reach out to one of us and we'd review your file and say, "Okay, refinancing right now, refinancing your mortgage, yes, you're going to get a higher payment. However, you'd get rid of that auto loan. You'd get rid of these high payments that are, you know, keeping keeping you strapped for cash. It literally again is, you know, the it's not even financial mismanagement. It's literally the financial illiteracy. Correct. Coupled with stubbornness that stems from not understanding. Yeah. That you have to look at the total outgo. And if you averaged all of the interest you're paying on multiple pieces, the cars, the credit cards, the lo the mortgage, that two and a half or three on the mortgage matters not. Correct. Correct. So you're actually paying a lot higher. Yeah. So you're just reducing your effective rate. Now you can take that savings and frankly if you don't like that 6% rate, great. The savings that you realize by doing a debt consolidation refinance, you can put that money right back into your mortgage, shrink the time of repayment, and reduce your effective rate. So hello. Yeah, it's a no-brainer. And something too that a lot of people don't realize is like Ella touched on, um, if you take that additional money that you were paying and pay it towards your mortgage, break up your monthly payment bi-weekly, you're now not only reduced, yeah, the length of the loan, but also the interest rate that you're paying overall. But like you said, it's not mismanagement. It's truly that this is this is this isn't taught. No one learns about this. This is because it doesn't benefit the financial industry. Correct. It does not benefit the financial industry for people to know this. It benefits them to, okay, I have a credit card. I pay the minimum monthly payment at 30%. I'll just keep paying it till I die. Yeah. But look at that credit card. Now, at least last couple years, they've been obligated to show you a full disclosure of how long it's going to take you to pay it off if you only make the minimum payment. So, do you ever pay attention to that? Because if you did, Yeah. you'd be a lot scared of that than you would be of your interest rate going from 2 to 6%. Yeah. And and if you're ever confused, you can print out the latest credit card statement. It should be it'll tell you what your APR is and the amount the total interest that you'll pay if you pay the minimum on the last page of that statement. And so I'll tell my clients like, "Hey, if you have a lot of credit cards, print every statement. Go to the last page. highlight the APR. Yep. And and take a look see see what interest rates you're actually paying on these accounts because a lot of people don't even know. And the two strategies we talk about with clients a lot is how do you attack? Okay, fine. You don't want to touch the mortgage. Fine. Be that way. Literally be that way. We're at least going to show you a different way of actually working your way out of that with paper bag with paying your debts. you were telling me with highlighting the APR, do what? Yes. Highlighting the APR and then attacking the highest interest rate credit card. Um, so you want to, for example, let's say you have three credit cards and the highest one is pushing 32% and the rest are in the 20s. Highlight it. And that the highest interest rate card, you can look at something called um a balance transfer. Right now I I I don't want to give promotion but city has a lot of options where you can do a 0% Google is your friend. Yes. Yes. Please Google. You could do a 0% APR on balance transfers for 12, 18, 24. I've seen something as as crazy long as 36 months. So you can transfer the balance that you have on that 32% interest rate card to one of these city cards. There's a fee associated, but then what you do is you break out. Let's say I, you know, I owe $1,000. And now I have 24 months with 0% interest. I break up $1,000 by those 24 months. That's my minimum monthly payment. And put it on autopilot. Put it on autopilot and it'll get paid off and you're pay. It's not acrewing interest. So your balance stays the same. That is I think the most important is by doing these balance transfers, your balance is not increasing. If you leave it with the current creditor that it's with, your balance will continue changing because it's adding interest every month. And that minimum payment, yes, is literally just that. It's really not going towards principal. It's only pretty much covering interest. Correct. It's only covering the interest. And so every month your balance will increase. And then the way I tackle this, so we have complimentary ways is when I look at the client's credit and I see a lot of debt, especially a lot of little pitily cards with like 40 bucks minimum payment, 60 bucks minimum payment, 80 bucks minimum payment. And sometimes those minimum payments are like on the balance of less than $1,000, which is atrocious. I think um Apple um GS card oh yeah is is one of those where the minimum monthly payment is like insane regardless of balance. It's like $40 or $50 a month minimum and I've seen it a lot higher than that. So instead of spreading your money around multiple cards every month trying to like whittle everything down at the same time, try to attack the lowest balance card and pay it off. So, pay minimum balances to everything else and focus on the minimum balance card. Pay it off and then take that monthly savings that you've realized from getting rid of it and apply it to the next smallest card and the next bonus card and keep rolling them up until you finally are able to tackle the big cards. Of course, maintain the minimum payments on everything, but don't try to spread your money around on multiple cards trying to make the impact because you're making none. You're literally on a financial hamster wheel not moving forward. You're running in circles. Yeah. So, I know it's been a lot of info and it's I think it's the info that everybody needs to know. I mean, there is so much that we didn't touch on because again, there is something that with our passion and our knowledge, we could talk about for like hours if not days. There's there's just so much financial knowledge that we can give a client and we can't put it all on the podcast because it depends on you know what what type of loan you're doing, what type of credit score you have and these are I would call it financial 101. I would say these are a good starting point uh for someone who is either looking at buying a house, looking at upgrading, looking at buying honestly in the next 12 months. This is important information for anyone to know because if you're buying, you're going to find yourself either with a new build or resell that you can take info from. You're going to have to file your taxes that you can take the tax deduction information from. Uh high yield interest savings accounts, never too late to open one. So yeah, balance transfers balance transfer credit cards. That's something right now I think in 2026 is the highest credit card debt that the US has seen. And so I know and again this is 2025 and 2026 so far is we have what upwards of 40% with like 50% plus equity in their homes of mortgage holders. Yeah. And we have roughly what 20% of people with homes that are free and clear. And yet Americans are drowning in debt. Like I'm sorry, how Yes. It doesn't make sense that our debt in America is so high. There's so many Americans drowning in debt and yet this is the highest amount of equity that Americans ever had. So it's it just doesn't add up, right? So that's one of the reasons why we want to get this information out. I know. It's literally the 101 that everybody should know. It's something that literally every freaking high school and college should teach, but they don't. I mean, I I know I'm dating myself, and yes, I'm not a spring chicken, but they actually did teach home back in high school in the 80s and into the 90s, I think. And you learn how to balance your freaking checkbook. And now nobody has checkbooks. And I think the paperless actually makes it worse. It makes it worse. And it's kind of to blame because everything is freaking paperless. You don't see it cuz so many young people, they don't even realize that credit cards are real money that you're spending on the credit card. Yeah. If you sign up for the Apple card, immediately Apple will push a high yield interest savings account. And right now they have the lowest interest rate than a bunch of credit unions. So there's a high yield and there is an Apple high yield. Yeah. Apple high yield is not on par with the market. Apple is owned by I mean Apple cards are issued by Goldman Sachs Bank. Yes. But funny enough, if you were to go to Goldman Sachs directly and open up a high yield interest savings account, they'll pay you a higher interest than if you were to go through Apple Goldman Sachs. In other words, there is value to homework. Correct. So, just because something says high yield, it ain't so necessarily. You have better options. and a little bit of homework. Honestly, a quick Google search will show you which ones are paying higher amounts. And doing local research, too, like Ella and I brushed on, credit unions right now, local credit unions because they want to keep the money locally will pay a higher interest rate. And those are hard to find with a quick Google search. You'll find the major banks, major financial institutions, but walking into a credit union, I think you'd find a way better deal. But you can literally pull a list of credit unions, local credit unions and their websites with a simple Chad GPT search in a matter of less than 5 minutes. And then you can drill down into their websites for their high yield saving accounts. And I'm sorry, if it's going to take you half an hour to an hour to do the homework, the money you earn, isn't it worth it? Right. It's Yeah. You can be making an extra couple hundred dollar a month and you're making now an extra hundred for 30 minutes of work. It's a no-brainer. To me, it isn't. But, and if you can't do the homework, then we can't help you because that's the bare minimum. That is absolute bare minimum. Now, of course, I I'd love you to like, to share, to subscribe, but more importantly, I want you to learn and I want you to ask questions and not be afraid to ask those questions because I don't bite. At least I don't bite first. So, ask away. There is no judgment here. and both Daisy and I will be more than happy to chat with you whether in person or online but answering your questions about more financial literacy or what we have discussed today because there is a lot of amazing information that we covered and Daisy thank you so very much for sharing this recording with me because I learn from you every time I talk to you about the financial literacy I don't ever claim to know everything I think none of us do right so we just keep on learning and we keep on putting it out there and I'll see you in Next one. See everybody.