Only Stupid Homebuyers make this Mistake [Don't Do This!] - WSJ's Home Buying Bad Advice.

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00:00 WSJ on Points.
01:37 Understanding The Game.
05:00 Negative Points.
Should I pay points on my mortgage? Should you take negative points on your mortgage?
📝Disclaimer:
This video is not personalized advice for the viewer.

[@kylehug4570]

Everyone always tells me I'm so negative, so this is perfect for me.

[@jeremyflatter6105]

As a loan officer I educate borrowers on this everyday. Helps even more here in Indiana where closing cost are a lot less.

[@davetherave3223]

Needed this video 2 months ago. Didn't pay the points but didn't take the negative points either. Makes a lot of sense to do so.

[@moisesechenique4457]

same my lender wanted me to buy points but decided against it in November, now im happy to hear rates are dropping so im looking forward to the end of this year fingers crossed.

[@johnmea5140]

I did negative points on my last home purchase and refinanced after 1 year. I also tried explaining to people how I made money doing this and they looked at me like I was crazy. Oh well, lol.

[@GRANDPRIXDUVAL]

as a formor mortgage loan officer i can tell you most people cant take negative points because that results in a higher mortgage payment and 9/10 people push the debt to income ratio to the max 43% resulting in them not having the wiggle room for an higher payment. But yes in times of needing to make a loan work or cover fees we will often raise the rate .25-.75 to get the credits to make the loan close when a borrower is short on cash for the down payment.

[@ladha99]

I think what you’re not explaining is the upfront interest that are paid with the mortgage… if you had shown atleast 5-10 years payment based on originals and interest paid in the first few years with both positive and negative points and show the amortization chart…

[@suzannesaturday9616]

Helpful info! Thank u Kevin!

[@MattTheMortgageGuy]

Your arguments are solid , and break even analysis something to definitely consider…..but based on current rates and the fact that lenders KNOW rates are going down higher rates don’t have near as much REBATE as your assumption. I just priced a loan with my favorite lender (UWM) - with PAR rate (no cost) at 7% you’d get about 1.1 points in rebate going to 8%… Have me on your show Kevin, let’s talk mortgage!

[@EndCorporateWelfare]

Thanks for this information Kevin! I will be using this information and giving you credit for informing me of it 💪😎

[@dominikreitberger1888]

Great info. Thanks.

[@MrJeanVier]

Thanks for talking about it Kevin 🙏

[@Love4puppies]

Thanks! Definitely informative and never considered - points.

[@TakeBackTheMoralOrder]

I don't think Kevin included the difference in principal paid, only the payment.

[@AC-mb2kp]

I agree. Something is not right about this video. If you take a $400,000 30 year mortgage and calculate the interest paid in just 3 years at 6% and 8% the difference in interested paid over that time equals $24,000. Additionally, the balance that would be refinanced will be $4,700 higher on the 8% mortgage than the 6% mortgage. If for some reason you are stuck in this loan for any longer than 3 years the cost of taking the $16,000 quickly snowballs out of control.

[@Thedreadedstone]

Awesome thoughts Kevin. Thanks! I have bought down points about five times but was never educated on the reverse option. Every time I bought down was when rates were low and I planned to Long hold. In this climate I could see shopping/requesting a 10% rate lol.

[@Green2Clean]

I’m closing on a house now. The lender said the 0 point rate is 8.4% and the 1 point rate is 6.125.

[@user-xu9zh1ui1t]

Excellent vid an intel thank you Kevin!!

[@wakeboarder86]

This is great advice. I just won a deal from a competitor who was .5% less in rate, but we were giving credit back. This was on an investment property. He plans to refi in 2 years, so he only came out of pocket for his DP. on a 615k purchase, his payment difference between the rates was about 120$ a month, which with the credit he got means he would have to hold it for 70 months to recoup that money that was credit to him. It is also why a lot of people are using loans that offer 6% seller concessions, especially investors right now. Seller credits or lender credits usually win, but most LOs can only win deals buy claiming lower rate is better.

[@raycerobinson]

I have been lending for almost 20 years, this is great advice, EXCEPT the main issue right now is most lenders understand that rates are likely going to be much lower over the next 12-24 months which means when someone refinances out of the loan, this would cost lenders a ton of money. Because of this lenders are capping the negative points available. I have some lenders in Florida, that will allow negative points but it is definitely much more limited than it has been, with that being said, if the loan is set up correctly you can follow this strategy and definitely set yourself up to be in a better position to refinance when rates are lower. Thanks for the video Kevin, I love that this channel educates people in all aspects of investing and understanding how to manipulate the leverage used to buy real estate is a key part to success.

[@stevelarsen4596]

Good job Kevin….😊 GO TEAM

[@jackylu7878]

Wow, thank you for sharing this great strategy. Your guidance has made a positive impact on my next house purchasing.

[@RedDragonX32]

thanks kevin, i never knew about negative interest points.

[@TheEblenRealestateTeam]

Great way of looking at this

[@bernieayala]

This awesome thank you

[@karenkramer3760]

Great information Kevin.

[@sergiojasierzurbanoperez4555]

Great video!!

[@jackplaysdarts]

Had no idea you could go negative... this will be helpful as I'm looking for my first property! This sounds great as I am certainly looking to refinance 2-4 years later, once rates are lower and I have over 20% equity.

[@beancounter9041]

I never knew about the negative points unless it was a refinance. Great to know! Thanks!

[@marthaarranaga4526]

Appreciate 😊

[@drwayne_carter9115]

BUT most banks will not allow you to refinance unless you have 20% equity built up in the house. So you will be stuck with the higher negative point interest rate until 20% of the house is paid off which could mean you can't take advantage of the lower rates in the coming months/years.

[@_Em0jiPraza_]

Great Video Kevin!

[@Abwin87]

I did not know this! Going negative. What I don’t understand is I got a lender credit, I used a competitive bank who offered a better rate and my lender came back with a lower rate and cash back.

[@austinmiranda8028]

The lender you went with likely is going to sell your loan to a different company. We'll call them company x. Company x is willing to pay your lender $5,000 if they sell them a loan with a 7% rate. Say the competitive bank you mentioned offered you a 6.75% rate. Your lender doesn't want to lose your business so he'll offer you a 6.5% rate. But now company x is only willing to pay them $2,500 for the loan. (it's worth less now because the company will get less interest from you over the life of the loan) So your lender is still making money but just less. Important to note that while you will be paying closings costs, none of these closing costs is the lenders commission. That is paid by the bank that your lender sells your loan to.

[@Rishigulati6]

Fire video !!!!

[@mm7736]

Damn good advise 🤘🏻

[@heyRex]

good information

[@user-ip6zt8je9v]

Isn't the point of the mortgage is to try and pay it off as fast as possible? I guess if you like pro-longed loans this is one way to do it...

[@ChivoXL909]

The downside I see with the negative points is if home prices come down and you end up underwater, you won't be able to refinance and be stuck with that higher interest loan till you build equity.

[@moisesechenique4457]

what lender do you recommend in ventura county?

[@marcobiagioni]

Thanks Kevin ❤

[@amynguy]

you should include the refinancing cost

[@KyserMont]

Wow i never knew you could get negative points. This could be very beneficial for VA loans where you can do a streamline refinance after 7 months of payments…plus no appraisal needed

[@taylorstclair3043]

Common sense math. If people don’t know how to determine if it makes sense or not then renting is probably best Just saying

[@mrwoodandmrtin]

What's that thing you are holding up? Never seen one before. Is it some sort of flexible flatscreen tablet?

[@MichaelSuperbacker]

Who you calling stupid!?

[@thegreenxeno9430]

Wow, THE MichaelSuperbacker? You got that umbrella yet?

[@tylerlabelle1749]

You forgot to add if you only put 3.5% down and even if prices stay flat you won't be able to refi.

[@yanxon]

Do you consider that the loan will charge you more at the beginning of the loan in calculating the interest?

[@honorpatience1301]

How much are the refi fees? I think we pay extra closing and appraisal

[@PremierMov]

Since buying points helps lower the monthly payment. can it help you quality for a bit higher purchase price

[@johnmea5140]

Yes, I did what they called a 2-1 buydown on my first home, so I could qualify. Back then rates were 8.25%, so my first year was 6.25, second year 7.25, and the years 3+ were 8.25% at which point rates were going down and I refinanced.

[@barfly246]

I am closing on a home next week. I locked in 6% for $1500, I am also getting the RE commission.. side note, 8% isn't paying 4 points back

[@gatesfrazier4015]

Can you get negative points, save the $16,000 and then just refi again with a different lender at the standard 0 point rate?

[@TheIrvingsylva]

ANYTIME someone tries to convince you that it’s a “good deal” it’s NOT

[@SamSam-ke9zy]

How come Credit score is never said as 1 of the 3, TransUnion/Equidax/Experian. I have 3 different scores that vary significantly and it frustrates me hearing that because I always wondering "well which one?". When I ask I get a smug look and it seems they just want which ever one they want.

[@R900DZ]

I think they just didn’t have time/space to cover what you just covered within the article. They had to make it fit in a certain area/word count and your point just wasn’t high enough in their priority list to cover. Great insight, thanks

[@gustavoflores7472]

Eh. You kind of have to take each opportunity individually. In Florida I’m closing on a prebuilt with the builder giving money if you use the preferred lender. I was able to get 5.99% using mostly the builder’s money to buy down from 7.5%. It cost me $5k. Chances are the rates aren’t going down until much later in the year so I’d be paying a higher rate in the hopes of saving the same money I would’ve saved now AND in some cases the refinancing also requires closing costs and you’re paying mostly interest at the front so it’s kind of is a wash in my situation. But for me what was most important was getting this home’s monthly mortgage down within the local area’s rents so that when we leave in 2 years it’s not hard to rent. Not sure I really understand the negative points. But it does sound interesting. Will look into it. Thanks Kevin.

[@tylertoten6818]

I bought 1 pt down to 4 percent and then refinaced 5 years later and it worked out great now i got a 15 yr loan with 2.25 and 12yrs left

[@greid9349]

The situation then is different than it is now..... Interest rates weren't 7% and the fed wasn't undoubtedly about to start slashing off points when you took out your loan.

[@maxd718]

Also make sure you don't have a pre payment penalty with the negative points

[@kristine7304]

I thought rate buy downs were temporary. Like 1, 2, or 3 years and then the interest rate goes back up to whatever it was at the time the loan originated. Are rate buytimes for the life of the loan?

[@weekendhomeprojects]

Came here cause the thumbnail was da bomb!

[@carsonc1272]

Hey Kevin, I would never go for an ARM. But right now I'm having a hard time saying never. Could you go over the case for getting an ARM right now? And also the case for not getting an ARM...

[@kirk1488]

Same.

[@alanmulder7799]

I bought homes in 1990 and 1998 and would not opt to go with an Arm ever, things can change very fast and your loan goes up.

[@TheIrvingsylva]

Why would rates “Plummet” while prices on EVERYTHING is at their highest?

[@Sarah-xr6et]

I disagree.. points are 100% tax deductible. 2nd, u dont speak of the refinance cost each time u refinance.

[@gdelete8098]

As much as this is awesome, lenders are expecting rates to drop as well so I think you are going to have a hard time finding ones that will do negative points today. Another point not discussed is this could be another way that buyer's can pay their "buyer agency representation agreements" when needed.

[@mycaddigo]

Would never take Negative points ..

[@PoisNpiLLz]

Love it

[@victorbarton3039]

why wouldn’t you just do a seller credit and tack on the difference to the buy price?

[@andrewwizard1577]

Did he consider refinance costs in the calculations?

[@SupremeMotorsUSA]

Rates are not plummeting. Maybe a little. But not 3 or even 4%. Thats dreamland. That will re enter the big corporations to the market.

[@johnkrieger6208]

I got a 2.375% 30 yr mortgage in 2020. No points. I wish I added points to lower it even further.

[@gsantee]

Lender was able to offer me a lower interest rate if I had a 22% instead of 20% down payment. Weird right?

[@getnettekalign7476]

Good point - but I think it is not 32K it rather is 16K

[@Desertflora]

What isn’t mentioned in this video that needs to be considered is the closing cost on refinancing? I understand this closing rate varies region to region and market to market. (A quick reference search says 2-5% of loan total.) So if you are in a higher market place, say 4%. Your fees would be $16,000 to refi at the lower rate. Lower rate areas would have an $8,000 refi fee This consideration drastically reduces your timeline to refinance for a benefit.

[@Desertflora]

Another consideration not mentioned is the difference in interest paid v principal on the 8% loan v 6% loan year over year. In just 3 years you’re looking at an over $5k difference that should be considered.

[@stevenroshni1228]

why haven't I heard of this negative points before?

[@AC-mb2kp]

Taking a negative rate and thinking you are making money is the worst advice I have ever heard!

[@coreygillum12]

Id like to hear Dave Ramsey s take in this

[@jeffreylonghr]

Here is how you get a low rate for a home.....Assume a VA, FHA loan that has a 2% rate you have to quailify for it...... or Seller finance a home that has 100% equity for 3% you dont have to qualify for it.....or Subject to deal you take over there note for a low rate maybe grab the 4% or under and again you dont have to qualify for that. ;> Welcome! MIND BLOWN!!! lol

[@michaeluribe6464]

As a former lender: if your bank/loan officer can’t explain this to you find another loans officer/ bank

[@freddygenao6035]

What if we use those 16k for a bigger down payment and pay a little extra every month?

[@TiagoRamosVideos]

👌

[@1980dennisefranco]

The problem with your logic is most people can't afford the monthly payments at the beginning of the loan Also Powell just said we are not lowering rates

[@eachbid]

Wow smart 🎉

[@laneb5761]

I did a rate buy down a little over a year ago and I only paid about $3000 bucks for an additional 200 bucks off a month locking in at 5% Not sure how someone is paying 16,000 for a rate buy down but my house is only 250,000 not 400,000.. idk 🤷‍♂️ but thats why I watch Meet Kevin. Math hurts...

[@SonnyCrackBeats]

This is eeeeeeeeeeeextremely risky advice.. You better have balls of steel.. There is zero job security to be running a risk like this..

[@AC-mb2kp]

Another reason why you would never take negative points is it will decrease your purchasing power. 1% will equal about $50,000 in purchasing power. The 6% to 8% shown here equates to about $100,000 in purchasing power.

[@fuzzywuzzy3841]

I have a 10/6 arm, 4.5% rate during the 6.5% average rates. Hoping to get back to my first home rate of 2.5%. ooo what i can do with that 2% savings lol Finally be able to afford food hahaha

[@TangibleExistence]

Yeah…spend $6k on a half point reduction today… recoup about $1000 in savings before your refinance (more costs) later this year for a lower rate once the 4 drops are met by the Fed. 🤔🙄

[@TheSimArchitect]

Why would they allow such contract without a fine to make up for the loss of expected revenue? I assume that paying your contract early might also mean you have to give at least some of that money back. Otherwise you found a loophole 😊

[@johnmea5140]

Most banks sell the loan within the first year.

[@jgg204]

You are better off just negotiating and asking them for a lower rate without paying anything in points lol

[@punjab1captain]

The 32,000 doesn’t make sense because the 2nd time around you probably wont go negative points because interest rates are obviously already low. Also refinancing sucks in the sense that all you paid for the first 5 years was mainly interest anyways so refinancing resets that. Its dumb how first payments are almost all interest.

[@cryptomatic4520]

This dollar pinzi is running in all cilynders

[@carloslopezmortgageshow]

Just FYI when you have an FHA loan to streamline refi there is no income qualification a not appraisal and even with 580 fico you can do it . And not sure about the cheapest lender are the worst??? I think is the other way around a lot of times, just checked the reviews. I’m a small business owner Mortgage broker our rates are -0.5 better than most lenders and you can see our local reputation 80 5 stars reviews real customer, my own business 3+ years doing loans 20 yrs our team is awesome and we care and we are here in the long run relationships

[@danielmorales1981]

Negative points if u refinance soon

[@brendenheinitz]

@meetkevin, I believe that you have made a mistake. If you choose 8%, you "must" refinance within 5 years and not 10 years. You added the initial payment of 16k and -16k (6% and 8%), but you only looked at the difference in monthly payment between 7% and 8%. The monthly difference in payment between 6% and 8% will be $548 and not only $274

[@travistarr9433]

Buy VT

[@ltdlawnservice4586]

Yeah good luck with that… remember the 5-7 rate cuts expected this year how about not or maybe 1. Millionaires telling you how to gamble

[@fcsuper]

0:27 star of video

[@ninja_ape]

Gambling on house loan?

[@alanmulder7799]

Everything’s a gamble

[@blipblop92]

I feel stupid lol

[@JJ-Sg305]

Man this guy is making shit up. But I understand he gotta keep pumping out the videos. I’m a LO. Many Lenders won’t allow you to go much higher than at par rate. You can’t just tell lender, hey give me 2% higher rate and give me $20k back.

[@jaycon6919]

Terrible investment. I did the calculation for our house. Totally not worth it with the decline of interest.

[@jaycon6919]

I bought late 2023

[@mccaslin]

Surprised he doesn't have a new vid about the fed meeting earlier today>

[@kouroshb26]

I don't think your math makes sense for 10 years The problem is that in the -4 points scenario you are saving each month, thus you need to account that in your in your comparison. It is more like 5 years. If you can refinance in 5 years than it is worth it