#006: The American Dream: First-Time Home Buying with Daniel Lehman

Are you tired of renting? Are you ready to own a home? Do you even know where to begin to look for a home? Do you know how to figure out what you can even afford when it comes to mortgage payments?

Buying a home for the first time is equally exciting and terrifying. When you're unsure of where to go and who to trust, shopping for a home - arguably the biggest expense you'll ever have - is intimidating.

Joining us on the show today is Daniel Lehman, a published financial author, and Vice President of Mortgage Lending for Synergy One Lending in San Diego. He is very active in the Military and Veteran communities, serving as a board member for the San Diego Financial Literacy Center which enhances the financial IQ of San Diego County residents with a focus on youth, military, and veteran families.

A growing icon in the mortgage education space, Daniel teaches workshops spanning San Diego County to educate veterans and agents about the VA home loan benefit. Additionally, he hosts the “Military Mondays” radio show Monday evenings at 7pm PST on channel 1170AM KCBQ which aims to educate, empower and engage the San Diego Military and Veteran communities.

Comments, questions or suggestions for the show? Email us at talkwealthpodcast@gmail.com.

Want to learn more about Daniel Lehman or possibly work with him? Check out his contact information here.

To learn more about DebtWave Credit Counseling, visit our website or connect with us on Facebook, Twitter, Instagram, and LinkedIn.

To learn more about the San Diego Financial Literacy Center, visit our website or connect with us on Facebook and Twitter.

Transcript

Intro: 0:09

Welcome to Talk Wealth to Me a safe-space podcast where we chat about anything and everything related to personal finance.

Felipe: 0:19

The information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting, legal, tax or other professional advice.

Chase: 0:31

Hello and welcome to Talk Wealth to Me, a phenomenal interview this week with Daniel Lehman. He is the head of the Lehman Group at synergy one lending. He is an expert in the field of home loan lending. Uh, first time home buying and the VA loan. Uh, he does many, many different presentations for the SDFLC, has been long a volunteer with the San Diego Financial Literacy center and we got to go and visit and sit down with him in his beautiful office up in Carlsbad and pick his brain about what people need to go through when preparing to buy a home, a longtime renters thinking that they want to jump into the market. Um, scared to jump into the market. The different the many different things that come up when planning to buy the first time. I haven't been, here you go. This is with, well, Daniel Lehman now that we're doing the podcast,[inaudible].

Daniel Lehman: 1:38

You gotta battle that five.

Chase: 1:40

That's okay. I can figure that out. I live not too far. I can go through Rancho Santa Fe to get on that, although that will take a to, I'll just avoid the traffic bumper to bumper. And Daniel, we're here because at the SDFLC, obviously we are educating in the broad scope that is quote unquote financial literacy and probably no, not probably outside of credit scores that people want to know. And that obviously has a huge thing to do with what we're going to talk about today. But the number one thing that we realize that people want more than anything is that pride of home ownership and the idea of the white picket fence, the American dream, every cliche you can think of. And living here in San Diego County, we're a broad stroke, right? You've got homes that are right on the beach, you've got east county, you've got mountains, you've got everything. And the one thing that is pretty typical about southern, uh, southern California, California in general, the coasts, um, is it, it can be an expensive or intimidatingly expensive place to live and you've got these younger couples are, you've got individuals, you've got service members coming here in droves to serve, uh, that are stationed here. Um, you are by far the most, um, popular speaker that we get when it comes to, yeah. Well when it comes to the, the first time home buying, explaining the lending process, explaining home buying in general, uh, you were just at Lincoln military housing last month, um, which was very, very popular and, and you always get a very good reaction out of the crowd. And I thought when we're going to talk about this subject, because it is a subject that people asked for, it's very popular. It's a lot of people's biggest goal is that home ownership.

Daniel Lehman: 3:29

We've got to live somewhere, right? So you can't live in a stock. It's one of those things that it's very flexible if you're going to keep, if you're going to stay in a particular situation, so that in the military population, there's other potential, you know, sh pitfalls of being somewhere for a short period of time and not having as much of a gap of, you know, or as much as the long, long play where you can kind of, uh, um, recover if the market was to adjust. But if you're going to stay in any period, any place for any longer period of time, a home ownership is ideal. Just because you can start, I mean, you can start investing in yourself. You can't live in a stock, you can't live in a bond. You can live in a home. And it has those, those, uh, qualities of, of like one of the four pillars of financial strength. You know, that's just in just about everybody who's done well financially, his portfolio. Right.

Chase: 4:17

Well that's, that's the key tip there too, right? I mean, you kinda hit on it. And as a stock, I mean, as far as investments go, historically, buying a home is probably the greatest return you're going to get.

Daniel Lehman: 4:27

Yeah. And, and you know, there's an element of tax benefit to it. There's an element of appreciation to it. There's an element of, of uh, I mean, and again, I do, I do those seminars like we did it at Lincoln together and uh, initially I'll talk about all the financial elements of it, but when it boils down to for a lot of people is like you mentioned that pride of ownership. People get to paint their own walls, they get to work in their own garage. And that's what, you know, when we're talking about the financial side of the house, it gets missed. But it's so important. It's so important for the foundational like kind of stability of communities too.

Chase: 5:00

It does give you, I mean, I bought my first home almost 10 years ago now, which is crazy to me that it's gone that long. I remember how scared I was going through that process. Take us back outside of, you know, when most people are thinking, as you mentioned, most of the people, they're not thinking about at least first time home buyers younger or whatever scope they live in. They're not necessarily thinking of the home as an investment right off. Right. Because this is kind of an emotional thing

Daniel Lehman: 5:31

I think too that it's their right to not think of it as as a, as primarily an investment. I think that you start to, when you start to think of insurance as an investment as opposed to what it is, which is insurance, you get in trouble when you start thinking about a home as an investment as opposed to what it is primarily as a home. Secondarily, there's an investment kind of related benefits but you don't want to see it in that way because you start making decisions that aren't fundamental. Especially the first time buying standpoint kind of, you know, once you get past the first time buying and you look at like you know more outside of what would be kind of basic financial elements. You know, you start looking at those things like rate of return and you start looking at those costs and you know, and that kind of thing, you treat it a little bit differently. But from, from a primary first time buying standpoint, you want to look at it as primarily a place where you're going to be to live. And that's where you want to budget efficiently and, and look at it. Um, you want to be able to purchase a home. But like you mentioned in terms of affordability, we'll also want to be able to sleep at night in the home, right? So, so it's important to do that planning upfront

Chase: 6:34

and there's so many benefits. So let's just do kind of do a role play thing if you are, and as you do, I'm sure, uh, if we are first time home clients and we're, what do you say to people when they are coming to you or you're talking to them and they're like, Daniel, I, you know, we just, we want to buy a home, but where do we start?

Daniel Lehman: 6:52

I think, I think real estate agents and a lot of lenders make a big mistake because they focus on people who are buying now as oppose. I'll say it like this, um, it may be too early to buy, but it's never too early to plan. And so most of our focuses on planning, whereas most banks in most agents are really focused on people who are already ready to buy. The problem with that is they're relying on the people to get the information on their own and come to that kind of conclusion. So what we try to do is we go through much more of a planning and, and, and we'll, we'll, we'll start by assessing kind of what the goals are and we'll build from there. So you build from the goals, you build a plan, and then when the, whether you're buying now or five years from now, you've got the kind of plan in place to get in the best possible position both financially from how the banks going to look at you. But also from a standpoint of where you want to be from a personal finance standpoint. Because again, the bank makes a big mistake in the sense that they only qualify you based on their quote unquote guidelines of debt to income and all this stuff that you can based on them, but they don't factor in from a personal finance standpoint or give you any kind of an idea of where you feel like that from a budget standpoint is going to fit into your personal finance situation. So the idea is, and what I would tell your listeners, as always, make sure you're having both conversations, figure out what you qualify for, but that could be a lot more than you want to spend. So also figuring out what your price point is and, and where you want to end up in terms of, uh, of a payment range so that you can efficiently budget and look at the right House. Cause you don't want to go out and fall in love with the place and then find out that it's$1,000 over your budget of$500 over your budget or whatever the situation is.

Chase: 8:29

So we hear about prequalified all the time. We got to get, you should get prequalified you, you went, you kind of just kind of dove right over that right there. So what does that mean?

Daniel Lehman: 8:40

So again, I see it, it means different things for different banks, right? And people are led through different processes. So I have an opinion of how it should go and that's what we're here to find out, how it, how it tip. And so I'll contrast it with this. How it typically goes is being, there's a couple levels prequalified what is, is what you kind of got to be careful of is someone will take your social security number, they'll run your credit, and then you'll verbally give them your contact. Or your income information? They'll say, hey, you qualify for, you're prequalified for 400,000 but if you don't know what your CPA is doing with your income, if you don't know what your actual income is and you're giving them in, it's, it's garbage in, garbage out. So it could be incorrect. So you always want to do what's called a preapproval, which is based on actual documentation. So that's the first thing. But even among banks and lenders that do preapprovals, a lot of them don't have any element of education in that process. So even if they do get all your documentation and everything else, they still might take that behind closed doors and just spit out a number that means nothing to you, right? Here's your preapproval certificate. We've checked everything. You qualify up to$600,000 congratulations. And it's just like, what does that mean? You know, that that means nothing to me. So what you want to do from our standpoint is our consults are very education heavy. So we like to establish goals initially, kind of what are the target payments, how much cash you have to bring in if it were necessary. Um, and, and, and do you have a price point that you're kind of looking and have you seen a house that you like in a range that you think would work for you? Right? So sometimes we'll have people come in and say, Hey, I found this house that I love for$600,000 and I don't want to spend more than$1,500 a month. And it's like, okay, you know, we've gotta address some of those and, and I never knock those down in the beginning of the conversation. I want to like work through and show people what it actually mean.

Chase: 10:30

Become very good at not smirking when[inaudible]

Daniel Lehman: 10:33

I mean it's like you know, it is what it is. Right? But it's like, but then that opens, it opens up an opportunity for me to say, look, you know, I couldn't buy my house in Carlsbad without first buying my house in San Marcos. And it's still useful, you know, to get something small and working cause you're getting your foot in the door and you can kind of use that as leverage for the next purchase. So you may not go to the first purchase and it's valuable information. So we worked through the different types of loans we worked through the preapproval with people you know, and show them how, cause it's just an equation. If people understood what the equation was, it would be so easy. And why banks don't go over it, I don't know. It's basically your house payment that you want, plus your monthly debt from your credit report has to be under a certain percentage of your gross income. It's like once you know that and you know how to kind of manipulate that, you can figure out exactly what you qualify for. So we just are more like more inclined to bring people through that so they get it and they can be part of the solution if there is a problem or they can understand kind of how it works. And that's how we do our preapprovals is really education focused. And then the only other thing that I'll add is we'll go into what their specific payment ranges are for particular purchase prices. So we'll say, okay, that's the bank conversation. The next conversation is at 400 grand, your payment is x at 425 your payment is y. And so for every 25,000 in difference you should figure$150$160 per month up or down. So it gives them like a good bracket to kind of understand and when they see property, really understand what it's going to take. And then ultimately how much down payment that require, how much closing cost and who pays it. We just, we take it through from start to finish and it's a lot of the elephant to bite off, you know, but it's not all of it. Right. It's enough to get them to the next point. So that's what we try to do.

Felipe: 12:20

I like something you mentioned earlier that that you, you concentrate some times on the plan. So sometimes, and we tell people all the time when we present with these bigger financial goals that are out there, the earlier you start, the easier 100% so, you know, you mentioned it might be too early to buy, but not too early to plan. Right. And I think that's great information because if you don't know what you're, you know, steps are to accomplish your goal, then how are you gonna go about completing them?

Daniel Lehman: 12:52

I'm working against an industry standard, which is basically like when you're ready apply. So most banks see their role. Most lenders see their role as getting you alone, quote unquote, right? Our loans that we do are just a byproduct of the plan. So we see our job as the plan, not necessarily the loan. The loan only comes as a byproduct of the plan, whether that's immediately or down the road, you know? Whereas like if you go into the bank, it's really like they just want you to come in once you're ready to apply. And I think that's unfortunate. So you're taking this from almost like a life coach kind of scenario or a financial planner, somebody that is kind of walking them through the longterm plan, not the, you know, we need to buy this now because my portfolio, my book needs a business needs to be met. Well, if you think about it too, we have to see a lot just in the qualifying process, we see income, we see assets, we see credit. So through that process, when I'm sitting with people, obviously it opens up an opportunity where, okay, you know, I see that, you know, for example, like VA loans aren't very credit sensitive, but if there's something on the credit that we can work on to improve their credit, just through that con, you know, consult processes. Not really my, my job per say, it's nothing that we get paid for, but it doesn't matter if we're sitting there and we can improve the process, improve the plan overall or improve the, the, the client's financial situation overall. And a lot of times, especially with our military clients, it's like we get more personal questions about stuff like, should I be doing this? Should I? And so, so from that standpoint, it's really enjoyable to kind of like have this conversations with people and not really tell people what to do, but give them the clear decision points where they can say, okay, A or B, you know, it's like, okay, here, here are your options. Sometimes they're hard to, sometimes it's like, look, sometimes we have people in really bad shape and it's like you could ignore it or we can tackle it. You know, it's like, it's like it is what it is, you know, I don't like to, you know, you don't want to be scared to tell people that they're in really bad shape and that they need to fix it. So I'm so there's an element of budgeting to it. There's an element that's where SDFLC comes into, you know, it's like, and we really have a great relationship with you guys cause cause you guys are doing really, really important work that nobody else does.

Chase: 14:57

We run into that all the time. I mean they always want to buy the house now they want to buy the car now they want to buy this and we look at them and you have to say that's great except that you weren't, you're not there yet and these are, these are, we don't again you, you said it exactly the way we said it. We never tell people what to do, but we will give them the, the, the points to make decisions on and, and how to come up with that plan in, in the house. The property always tends to be that ultimate goal. So take us through, um, the preapproval, you talk about income, but where it does, cause the old credit score comes into play. Everybody thinks they know what that is and everybody thinks they know, oh, I know what my score is. And inevitably most of the time a lot of people get surprised by it.

Daniel Lehman: 15:45

So it's funny because the people think that Equifax, Experian and Trans so, so credit basically is a means by which the bank looks at your past performance and tries to determine future outcome. That's what it is, right? That's why it's hard to buy anything if you don't have credit at all. It's like, well, I don't have bad credit where you haven't shown, you know, it's like, it's like if I, if you, if you lend me 100 bucks and I don't pay you back, you've basically got this idea of a credit score in your head about, about me or terrible paying things back. Exactly. So it's just the way that, that it's that it's a third party verification of that. Right. So, so what happens to us a lot is people are very familiar with like the Credit Karma's in the, in the free credit reports and stuff like that, which is great. Um, so tell the story though. Well, what'll happen is they'll pull their credit or even Equifax makes it seem like it's Equifax, Experian, Equifax, and transunion are the three credit bureaus, but they don't determine the score. All they do is they hold data, they hold just the data of whether you pay on time or not, and then factual. And then credit companies will access that data and they're the ones that run it through an algorithm producing score. So a lot of times what'll happen is I'll ask people, I'll say, hey, so have you checked, you know, on on free credit report or dot.com or something like that. Or they'll come in and we will have pulled their credit score and they're like, Hey, my credit dropped 20 points when you pulled it. I'm like, well, okay, where did you check your credit? And they're like, free credit report. And I'm like, well, no, the problem is that their algorithm is just a lot more lenient because they're not lending you anything we're lending you, a couple of hundred grand, you know, the algorithm for an auto loan or a or a or a mortgage loan and stuff is just going to be a little bit different. So depending on where you pull your credit, it's going to be, it's going to be a potentially a different outcome. So we have to deal with that quite a bit. So that the misconception, I mean, when you pull your credit multiple times, your credit falls slightly, right? But generally if it's for things like auto and car, uh, auto and house, it's very temporary and comes right back. And it's not a big issue on you need to do it anyways. If you're pulling a bunch of consumer stuff, you start to have a potential issue. But um, but it's not dropping 20 points dropped. And I'm like that.

Chase: 17:52

No, that's where banks a lot of times can scare people, but I don't do this or do this or you should have a little bit of a consumer debt on a credit card because it's, I mean it's, so the minutiae of how much it's going to affect your score is crazy. Now does that mean, we always joke that if you're going into escrow you should not be going out and buying anything with plastic, um, at that time. That cause that can, that can affect, yeah.

Daniel Lehman: 18:19

I on the other end of that too, I would say don't pay anything off either. Right. Going into a console. Right. Cause like sometimes we'll have people come in and say, hey, you know, I paid off my truck cause I knew I was coming to see you. And it's like depending on where they're the rest of their financial picture wise, they could have potentially used that liquidity for something better where so so again, it, it hurts cashflow. It hurts them. Yeah. It hurts the market because it, it hurts consumers when it's so non planning based. Right. Because because what they should be doing is just coming in, establishing a baseline and building a plan with all that stuff included. So what you're saying is they should be coming in and talking to you basically without doing anything that they wouldn't do on a regular basis. Right. And I, and it may because I live that way. Well and it may be just verifying that what they were going to do is the right thing to do. But I would say, okay, you owe 10 grand on your truck. You can pay that off through escrow as a means by which you're closing. You know, meaning if you have to pay a truck off to qualify, do it only if you get the house, you make it part of the transaction. But a lot of times they'll come in and say, okay, I owe 10,000 on my truck, I'm going to pay it off. I'm like, well hang tight because if you get into a kind of negotiation on a property where you got to kind of come in with a little more cash or something to at least you've got that flexibility. Once you pay the truck off, it's like it's done. So all that stuff just has to work together and the confines of a plan and again, plan, plan, plan, plan.

Chase: 19:43

So that credit score, getting back to that and the credit bureaus, when you're pulling credit, what is it that you would, the lenders, and I know that every organization's different, they're going to have their own little secret sauce so to speak. But what is it typically that you're looking at?

Daniel Lehman: 19:59

Well, it's less organization specific. It's more loan programs specific cause most lenders are just going to the loan programs and there's only three main core loan programs is, and there's a bunch of offshoots of these, but you've got VA, you got FHA, you got conventional, those are the three core. You got Jumble, you've got all these offshoots. But like those are the three core ones. And it's important to know that loans are kind of like steak, right? It's like just the commodity. The steak is the steak. The chef either burns it or they cook it good. So we're more of a chef than the steak itself. So we don't have different guidelines. We're all kind of going to the same guidelines, but it's like how you treat the guidelines. It's how you plan within those guidelines. So FHA and VA aren't very, aren't very credit sensitive at all. Um, conventional is more credit sensitive. So as your score goes down, you'll get the Fha and VA, Our government programs, they're not only for first time buyers, but there, there are government programs and they're utilized a lot by first time buyers. Um, VA generally is better than conventional. Conventionals generally better than FHA.

Chase: 21:01

And let's distinguished the difference between VA obviously cause there's only veterans. You're right, it's only a group. Yup. That can use that

Daniel Lehman: 21:07

veterans or active military, 90 days active duty and you just have to be eligible for it. So that's a whole other whole other podcast. But um, conventionals kind of your generic, that's what people, you know, generally we'll use[inaudible] typically think of as 20% down. Typically think of that. It's not accurate. You can go as low as three, 5% down. But it's true that people do think of it as 20% down and then Fha is thought of as a first time buyer program. It's really not. It's really evolved in the last 15, 10 if it evolved a lot. But I couldn't even tell you like they're constantly evolving. Um, but generally speaking, if you can go VA cause you're a veteran or active duty, you should 95% of the time if you can't, depends on your credit and depends on your income and a couple of different things. You're between FHA and conventional. But, um, but back to credit on that, um, conventional is really credit sensitive in relation to the score. So the first thing that we'll look at when we're looking at at a credit, a credit report is we'll look at the score itself. So the scores run from 400 to eight hundreds, right? I've never seen one really.

Chase: 22:12

And Are you buying, are you, are you guys looking at a spa, a mortgage specific type of score?

Daniel Lehman: 22:18

We've looked at a FICO score sites, a try merge. We, Experian, Equifax and transunion. They'll do a fico score, which is a basically a numerical representation of the history of what they've done or report. It runs from the four hundreds to the eight hundreds. I don't even know that they even determine what the cap or the floor is on it. I've never seen 850 top, but that I never seen anything even

Chase: 22:40

that's a fico eight. And that's what your consumer one would be, is the, is there a lending fico score that you guys would pull?

Daniel Lehman: 22:47

I think it's all very, very similar. I think it's just, it's very, very similar. And so we would take the middle score. So it's not an average of the scores. It's basically the middle score is that determining score, like the ice skating championships, right. You know, you drop the top score, you[inaudible] only got three z take the minimum. Yeah, exactly. Right. So sometimes you'll have like 600-750-752 and you're like, yes. And sometimes you'll have 600-601-750 I mean they can be like why do they vary? Because some collection companies, they'll only report to one in or something. So sometimes there's some planning that we have to do. But the first element of it is the score itself. And that's really a determinant of risk. So with conventional your rate can go up. If it's down with Fha, VA, it's not as bad, but that's the risk kind of score element to it. The other thing that we look at on that for the amount that you'll pay for the loan, that's the interest rate. Interest rates going to go up, your payment's going to go up basically. And that's just a risk factor kind of thing.

Chase: 23:42

And so that's why if you were to talk to a first time home buyer, would you be looking at some of those other types of loans versus the the generals zone?

Daniel Lehman: 23:52

Yeah, generally speaking FHA. So VA is always the best way to go, period. But you have to be, not always, but service story veterans. Exactly. If VA is the veteran's administration loans, so that, so if you don't do that, you're between Fha and conventional. Generally speaking, if you have good credit and some element of a down payment, even if it's not 20% you want to try to go conventional. If your credit is in the six hundreds your score starts getting hurt so badly with conventional that it starts to swing to FHA or there's some FHA little loophole stuff you can do that you can't do with conventional. But Fha, we always see as a stepping stone to conventional and it's a stepping stone that you don't want to need, that you don't want to use unless you need it. So it's an expensive steppingstone to conventional, but it's still better than renting longterm.

Chase: 24:42

So do you want to explain why that is?

Daniel Lehman: 24:44

There's mortgage insurance that's permanent. There is some higher costs. There's some upfront fees. There's some stuff that you have to deal with with Fha that you don't have to with conventional conventional, even if you don't put 20% down, you can do it with, with some mortgage insurance also, but it's temporary. You can remove it so you're not required to refinance later. I never liked to plan requiring that somehow later on down the road you have to refinance to get into a better situation because you just don't know how the market's gonna gonna you know,

Chase: 25:14

kind of what got us into trouble towards 2008 right.

Daniel Lehman: 25:17

That was an extreme example.

Chase: 25:17

So many lenders were like, Hey, you can have this loan for eight just refi we, that's right.

Daniel Lehman: 25:23

Yeah. It's all good. You know? And then prices fell, you know, it just wasn't a good situation. So yeah, that's not good advice from my standpoint.

Chase: 25:29

So that's a good mode is going in. You want to know longterm over the 30 years barring any major catastrophes, you're going to be able to afford that house for the long term

Daniel Lehman: 25:37

100 percent and we 99.9999% of the loans we do a 30 year fixed just because the delta between a 30 year fixed in like a five year fix is so small that it really doesn't make sure and make sense unless you're absolutely positive you're going to sell and then you're not absolutely positive, you know, so we don't do a lot of adjustable stuff just goes, it doesn't really, that's more uh, in the jumbo realm, in the Super Jumbo, big huge property kind of stuff. That's not really our focus.

Felipe: 26:04

So basically you're removing as many variables as possible.

Daniel Lehman: 26:07

You tried to, and again it's like a risk reward thing. It's like a, okay, you could, you could do an adjustable and save a little bit over this period of time and then the market blows up on you and you're stuck and you wipe out your year's savings immediately in our insurance is really bad spot. Ultimately, again, most of this stuff is primary residence. It's where people are living. You don't want to mess around with that stuff.

Chase: 26:29

So you, you kind of opened up the big gorilla. Um, and mortgage insurance. What exactly people hear about that? I had to pay it at one point, don't anymore. Yep. What, what is that?

Daniel Lehman: 26:39

Mortgage insurance is seen as like a bad word. It's like seen as a dirty word, but it's really not. It's just a tool. So there's a couple of different versions of mortgage insurance, but I'll run you through kind of the conventional version. So if you can't go VA and you've got good credit, right? You want to go conventional, but you don't have 20% down down payment. What all uh, banks require is 20% safety. That's what that 20% requirement is. They wanting their risk is limiting their risk because they, oh, they have limited, um, uh, what's it called? The exposure, right? Because they could sell it and make the money back. So they get that in one of two ways. Number one, you could put that 20% down and they'll lend you the money, no problem. The other option is if you don't have 20% down, so you have 5% down, he put your 5% down and then you take out an insurance policy for the remaining amount. And if you need that insurance policy is an insurance is an insurance policy where you pay the premium and it benefits the lender if you don't pay. So it buffers that other, it actually gets them to 25% safety. So it, so it buffers them that at least that 25% or that 20% so in the conventional world, people are always like, ah, I want to save 20% so that I avoid this mortgage insurance. It's like, okay, in theory that's fine, but look, let's look at the other. The other element to that, how long is it going to take you to save up that 20% where the interest rate is when you get there, whereas the price of the property when you get there, so you're going to save up that 20% to avoid mortgage insurance. To avoid, that extra cost, which I mean 180, 8,100 bucks, 200 bucks maybe, you know, depending on the size. Uh, and it's temporary. So once you get to that 20% threshold, with some exceptions, you can remove it. Um, and then you're left with uh, uh, the, the loan that you would've got with the 20% down, right, with no mortgage insurance. But a lot of times people want to avoid the mortgage insurance cause they don't like the cost. And what ends up happening is over that period of time, rates go up so high and they're paying$50,000 more for the same house. We're just, I mean I think people overthink it. You like a house, you want to live there, move into it, get your foot in the door, you'll benefit from that 50,000 in appreciation. You'll remove the mortgage insurance and your, and you're set.

Chase: 28:56

If I would have waited, if my wife and I would have waited, not done the mortgage insurance, my house would have almost doubled what I would've been ready to do it.

Daniel Lehman: 29:03

Yeah. You, I'm only, same thing with Fha. If they're like, well, I don't want to pay the additional costs with Fha. That's why I say in general, 95% of the time VA veteran's loan is better than conventional. Conventional. The generally better than FHA. Fha still better than renting longterm if you're going to stay there. Because another thing that we talk about is if you take your rent and multiply it by 12 what you're paying or the over the year in two years in three years. And a lot of people listen to this to kind of think back five years and all the rent they've paid and just be like, you know, it's crazy. And that's why there's such a massive difference in terms of net worth between renters nationwide and homeowners nationwide. It's massive.

Chase: 29:40

Not to mention the security of the 30 year fixed and that payment that you're going to take on is your payment for a long, long period of time.

Felipe: 29:49

Your rent going up, mortgages, not like everyone else's rent going up, your mortgage stays the same.

Daniel Lehman: 29:56

It actually is a, is a, is a shield to inflation because if everybody knows it's renting is, you know, and you're not going to get kicked out, you can paint your own thing, you can add sweat equity into it, um, into the property and add value to the property. And let's say the property never appreciates it all. You make that payment for 30 years and it's paid off and you've got this asset of a couple hundred thousand dollars, even if it never ever goes up, you know, it's, it's being paid off. So you know, you talk about like budgeting and, and you know, I always think of the budget is like a personal profit and loss just because I'm kind of one foot in the business world, one foot in the personal world I don't like, I mean budgeting is like your profit and loss. You also have a balance sheet, right? So if you're making a payment, even if it's higher than your rent, you've got some tax benefits there. That's a little more complex. But a big portion of, of your payment is getting paid down on the mortgage. So you're adding five,$600 basically as a forced savings every month as you're paying that thing down. I see that as like an increase in net worth for sure. I mean, it's just, it's a, it's a massive, massive benefit

Chase: 30:59

for sure. I think that that's the one big hurdle that a lot of people with first time home buyers when they go through is one, they haven't been through it before. It's kind of like the anxiety that you have the first time you're going to become a parent. You know? And I look at it like that where you're, you're like, oh my gosh, are going to have this. You know, it's the same thing you hear over and over again, well, I'm going to get married when I'm financially ready or I'm going to buy our first time house when I have this much money. Well, we're going to have kids when we, and, and you're never going to get to that because you're never going to get to a point where you feel like, okay, I've made it. I'm at a place where I'm going to be in that first kid that you have what you have. You're stressed about every little fever, you're stressed about. Every time the kid sweats, you're stressed. That does their, you know, poop look, right. I mean you, and then the second kid comes around and you're like, Eh, they're fine, right? There'll be okay, there sturdy.

Daniel Lehman: 31:49

And sometimes some things that happened with my third child. If it would have happened with my first, I would've been like bringing the life flight helicopter and stuff.

Chase: 31:56

You know? It's, it's crazy. That is true. And that's why to me now I look at the home buying process and go, man, this is just, it's so worth the trip down the lane when you can work with somebody like yourself who has that goal that, that, that element of helping somebody with the goal process and, and then putting details to it and having them get to that point instead of just saying, hey, let's go. Just, you know, you should buy now.

Daniel Lehman: 32:22

Well, most people that come out of our, our consults, I was telling him, I'm like, you're going to come out knowing more than most lenders do. Cause most lender, I don't know about most lenders, but a lot of lenders just take paperwork, send it in, and it shoots back out and that's it. It's like what I want people to understand is kind of how things work. Because not only, I mean look what people forget is there's this preapproval, right? There's this preapproval process, but then you actually have to go through the process and there's like a, we call it, for lack of a better example, a 30 day process of like updated documentation and all this stuff. So what we try to do, as you know, and what people don't understand is if you, if you qualify, it's pass or fail. It's not more income equals lower rate, it's pass fail. So if we can strip out all the stuff that could be really complex and just get you to the point where you qualify, even if you're barely qualifying, your rate is the same as if you're qualifying with flying colors. So sometimes we get five different income sources or maybe the spouse's income is very confusing, or very crazy. We can strip all that stuff out and just send in what's absolutely necessary. And then it just cleans that process up a ton. So there's so much utility in getting together and game planning and white boarding it with the client and keeping them involved in the process because they become part of the planning process and all that stuff breeds just massive piece of mind for everyone. You know, I feel more confident that I really clearly understand their goals. They feel more confident that they've been part of the planning process and they're doing the right thing and it just removes these obstructions to, to moving forward.

Chase: 33:52

So what does the realtor play? What game do they play in all this? Obviously when we drive down our neighborhoods, we see the, you know, for sale or, or there's the little picture of them on the, on the, the, the thing that goes into the front yard. I don't want the pop up sign a, if there's open houses, they're there. But what role should they play with you as well as your lender?

Daniel Lehman: 34:17

So a lot of our business comes from realtors. We're 100% referral based from realtors. Right? And I think the misconception, and it's getting more and more and more commoditized with some of the red fins and the Zillows and even the lending side to you. You know, it's like more and more commoditized, but, and I think that stuff does knock out a good percentage of realtors ultimately. But it's the realtors that don't really add a lot of value. The perception from a market standpoint is that the realtor, um, just goes and opens up houses and shows you the houses and the walkout and make a decision. They're like, what do you want to do? You know, in reality, the massive benefit that a realtor can buy you is, is market knowledge. And the ability to negotiate in a negotiation is key. Like if anybody so and, and on both ends, right? What's that on both ends as a buyer and to sell 100%. And that's, that's why also a lot of times we'll have clients that just walk into open houses and they'll meet the listing agent who's responsible for selling the house. And they're like, well, I'll just go with them. And it's like, well, there, that's fine. But I've never really had anybody that came out happy from one of those. They always there, there's never a clear like feeling that they were represented well because fundamentally the job of the listing agent is to get the most possible for the house. So sometimes people think, oh, I can save some money here. When in reality it's like, you know, agents are paid by the seller anyway, so you might as well on the buyer's side get as good or representation as you can. But, uh, but yeah, we work hand in hand with, with realtors. Um, uh, the good ones are very, very, very good at, again, education. They're very good at understanding needs and, and seeing, seeing what's really needed. Um, what is, uh, uh, you know, from a lending standpoint, it's less local. If I was looking for a realtor, I would look for someone who had really strong hyperlocal knowledge. I think that's really important, but also the negotiation element is really key. If anybody ever, if any agent ever asks a buyer, hey, so um, they, they're, they're asking five 25, what do you want to do? It's like, oh, you know, be careful that what you want to do is analyze the sales in the area. How long has it been on the market? You know, all that stuff to see where you should come

Chase: 36:25

and they should be able to tell you not only whether you should go in lower offer, but they can also tell you, look honestly from what the other houses in the area are doing, the comps, you're going to be realistically more going to have to go here if you really want the house.

Daniel Lehman: 36:40

Yeah. Or they've got three offers. It's brand new on the market. It's been on three days. If you really want this thing, we've got to go after it. This is where I think we got to come in and I've got a great relationship with the listing agent. I've talked to her, she said if we write the offer we're good. You know, it's like that's like the benefit to a good agent. And there's also like there's a, there's a too good of an agent to that's going to pawn you off on a, on a staff member, you know. So there's this, there's this sweet spot in, these agents are around in different markets where they do enough business to be really good at their job, but they don't do so much that their pawn you off on some new intern agent who's going to just drive you around and not answer any of your question. So there's a definite hot and cold porridge. Perfect. Just right.

Felipe: 37:21

So Daniel, I'm going to throw Felipe under the bus here because Phillipa is got a new family and everything else and I know he's very interested in and starting the process and even if somebody doesn't think that they're there yet, is it ever too early to start this?

Daniel Lehman: 37:36

I don't think so. I don't think it's too early to plan for sure. Even if you set out, but I mean it just, just depends on who you're dealing with. Because you walk into the bank right now, they're going to tell you, tell you come back. Most of the time they're going to say, hey, yeah, well when you're ready, they're going to say, give me all your stuff. You're going to show, you know, you're going to show what you have and they're going to say op denied. And it's just like, that doesn't tell me anything. Why, how, what do I do? What do I put in place? So the main things that people that we look at or outside of property, which doesn't become relevant until you have a property, is credit, income, and assets. So they're very specific things you can do with credit, income and assets to just put yourself in a great spot. And from my standpoint, if you're going to stay in an area for a long, longer period, even if it's not your dream home, you want to get into something to get your foot in the door, you know, get your foot in the door. And uh, Eh, again, as long as you can maintain the payments and still feel comfortable, you know, it's important to kind of get in where you can plan early. And then at the first point in which you're comfortable, pull the trigger, get into something and then, and then put goals to get, I'm a, I'm a planner anyways just by nature of business planning. Any other kind of planning, I'm always planning. I'm talking to my wife about what we're going to do in 10 years when my daughters, my youngest is 18, I'm like, how am I going to find meaning in the world? You know, my kids are so much in my meaning, I'm just like, how am I going to do this? You know? So I'm always planning for the next thing. So that's kind of what I tell other people to do is like is just make sure you have a game plan that you're working towards. You know,

Chase: 39:03

that's a whole other podcast, my other podcast, and we'll talk[inaudible] talk about that stuff, living in suburbia and what are we going to do when our kids are gone? Because so much of us are wrapped up into that very thing meaning, so now all of a sudden now we're, we're, we're buying the home to, to scale down and it's a, it's a different thought process. It's true. And if you have nothing to scale down to, you know,

Daniel Lehman: 39:26

this is a whole other podcast, but I just think happiness is overrated. I think meaning is everything you find meaning in what you do and happiness\

Chase: 39:33

that's right there. If you find meaning in what you do and what you're doing, you're going to inherently be happy.

Daniel Lehman: 39:39

Maintain May, well sometimes you want, but that meaning will sustain you through the Times that you're not happy. True happiness won't ever sustain you anyways. That's a very,

Inaudible: 39:47

that's a whole deep, that's a whole different podcast. It would be a very, no, believe me that's weak.

Chase: 39:53

That's what we handle in a different podcast altogether. But Daniel Lehman, thank you again. Uh, if you're interested, Daniel, if somebody else is listening to this podcast and they just want to find out where they stand, what they can do, how do they find you?

Speaker 4: 40:08

So, uh, my website is LehmanGroup.com. It's kind of like, it wasn't available. So LehmanGRP.com is my website and then my office, uh, office lines(760) 655-1409 or d l e hman@s1lending.com

Chase: 40:24

We can't thank you enough for your time. We really appreciate it guys. Thank you.

Felipe: 40:30

I'm going to go home and tell me what you guys are planning to start having a discussion. I'm proud of you. Thanks again.

Katie: 40:40

Great job guys.

Felipe: 40:42

Thanks. It was fun to bring the road and, and actually get to record a elsewhere.

Chase: 40:47

Yeah, it was, it was good. And it, it really showed that our equipment is, is really cool and it's so easy to travel with. And Daniel's offices were absolutely beautiful. First time I'd been there. And I've known Daniel A. Long time. He's worked with us as a volunteer for a really, really long time. And those offices were just fantastic. Yeah.

Katie: 41:08

Can you see the ocean?

Felipe: 41:10

No, not, there's a lot of trees. Yes. Maybe without the trees he might have a chance,

Chase: 41:15

but he's, he is right next to a golf course, which is for me a mecca. We do, we kind of talked about that a little bit. Like why aren't we invited up here for little nine hole golf outings or golf tournament. He's actually right next to Calloway golf and tailor made. And that area of Carlsbad, uh, Daniel's a phenomenal man and he, if we didn't talk about it really, but he was a marine, former marine, a and he is really, really good at working with our men and women and veterans. Uh, and uniform.

Katie: 41:46

It sounds like it.

Chase: 41:47

Yeah. He really knows his stuff when it comes to the Va. He does a lot of VA stuff for us. Uh, and what was really interesting when I got out of that quite a bit was how much Daniel um, can explain and really hold people's hands through the entire experience. And as somebody who has been through that experience of buying a home. And I think, what did I say in the interview? I think it's, I've been nine years, 10 years of my wife and I have on the home and that feels like such a long time ago. But talking with him kind of really brought me back to how really scared and nervous Keri and I were through that process and thank goodness we had a great realtor and a lender who really held our hand through that experience and it helped us a lot.

Katie: 42:34

You know what I learned from what he was saying too in the interview, I didn't realize the role that your realtor played. I truly thought they were just kind of the taking money, taking around, like showing you around, showing you houses like they do on TV. Yeah. I really, I thought that they brought that benefit of maybe they knew what home was maybe for sale but not quite listed or something like get the inside scoop.

Chase: 42:58

Oh, there's so much involved in it. Especially just, especially if they're, as he used the word hyper. Um, they, they are hyper focused in certain areas. They really have their, their ear down, uh, on the road, so to speak, to take care of you through that whole process in that, look, this house over here, this is what we should do. This is if you, depending on where you are, if you really want this home, they're going to be honest with you. They're not going to come in and say, all right, lets you like those shows. Right? If you ever watch, uh, I think it's a HD television, HGTV, HGTV, homegrown television, no, whatever, home and garden, home and garden. Okay, thank you. Aced it all the time. I had no clue what it is. Right? But if you ever watched those properties, I mean they always go, but I'm think we should ask 15% lower. You know, if they know the market and they know that, look, these homes are going at this price, you can't go in and say, I want to go in 15% under and think with, you're going to have even chance at this house cause there's 15 other people or families asking, uh, looking to make offers on this home at the same time.

Felipe: 44:11

Yeah. The, the thing I took away to also from the interview is that, um, his emphasis on planning know not a homeowner yet. I hope to get there, but it's, uh, uh, I didn't realize you can go to them before. I always just thought you walk in and you're like, Hey, I did my math. Um, I'm ready. Let's get this process started and let's buy a house next month. Um, but the, the, the fact that they're willing to work with you and kind of give you more of the insights as to the industry, how it works and what you need to accomplish to get whatever your goal is. Um, I thought that was very, uh, useful information for listeners do. You can go talk to him now even though you don't think you're ready for another year or two

Chase: 44:55

and you may not even know how long it's going to be for you. Right. And that's what they can really help you out with. And it made it funny when he said, plan, obviously that's something we're bigger SDFLC. Yeah. We talk about that all the time. Yeah.

Katie: 45:09

I was boosted to hear that though. The whole financial planning. I can start that now because AJ and I want to buy a home me sooner than later. But we didn't think that we were in the financial position to do it. But then just in initial conversations with people, we're actually in a much better situation than we thought we were.

Chase: 45:28

Absolutely. And they can really digested him. Think about that. They hear those stories all the time. Uh, and on both ends, some people come in and think, I'm ready to buy a home right now. And they go, hmm, pump the brakes a little bit. We got some work to do. And then there's people like yourself where they think, oh, I'm never going to be ready or I'm not ready yet. And you find out later that, wow, I, we can afford this because it's just that idea that your chunk, you're buying something that is so expensive, you think there's no way, but if they break it down for you, you might really find out that your mortgage might be less than what you're paying for rent and then you have the security of the longterm effects of that.

Katie: 46:08

Oh yeah. I would love to get that security of knowing my rent is not going to increase for at least 15 years.

Chase: 46:17

Yeah, you don't, you definitely don't have to worry about that anymore, but you do have to worry about other things if your roof leaks. Yeah, took the words right out of my mouth. The roof is a popular one. What did my kids say? Jinx something around me. A soda or something. It's interesting because you do, you have the rental side of things where things are taken care of if they break from the landlord, but sometimes, well, right. I do. It depends on what, I guess it depends on what the, what the deal was when you signed the contract. But with home ownership, I mean you are basically, you're going to have to fix things that break and home home. Uh, your home insurance isn't going to take care of everything and you'll find out that a lot of things you're just going to want to pay off, pay out instead of having to pay the, the um, deductible so

Katie: 47:12

well in that actually give and take. There was a survey and I don't remember who the survey was conducted by, but they asked millennial homeowners, what's your biggest regret with buying your home? It was the repair expenses were a lot higher than people were estimating the other thing because housing market has been inflated arguably for the last few years or so. A lot of people regretted that they spent so much money on such a small home.

Chase: 47:41

Yeah. And I think that really, is this the scenario that you have to, that's where a realtor can really help you because they can sit there and say, well, what area do you want to live in? What kind of home do you want school districts? Are they important to you? Do you want a family? All those things to think about. Felipe, we were talking about that the other day.

Felipe: 48:03

You were saying like, uh, yeah, maybe you can get an earlier somewhere else, but you know, I have little ones. I have one in, in just about to finish kindergarten. Um, and you know, the school district I people say, well, you can go somewhere and then you can move if you go and you buy somewhere where maybe the school district isn't up to par or is struggling and you spend five years there, that's his entire early learning elementary life. So the elementary school, the school district now has to be taken into account, which could potentially delay the process or uh, you know, cause you to spend more than you would've if school wasn't really a priority. But there's other little intricacies to it, right?

Chase: 48:49

I mean, the things that you can think about too is if you're buying in that area, uh, a lot of people don't ever think about private schools and that then really the honest truth is you can find private schools that are really, really good that are not costing really much more than what you paid in daycare and for what the extra cost would be to live in a school district. That is really wonderful. Are you paying about the same or even maybe more to live in an area that has that free school, which by the way is not free. I'll let you guys know cause we have to put in a lot of money to help finance some of those programs that are public schools have that are not financed. Our kids don't get music, you know, they don't, they don't. We have to, our foundation helps pay for PE teachers. So we are donating three or$400 a year, which is still less, but it's still a lot for our, you know, our free school. So it's, it's still something to think about. And the realtor, a good realtor can really help with that. Really help with that. So don't let that public school system always be that deciding factor in where you want to live. You just have to know am I going to be happy here for the, for the foreseeable future.

Katie: 50:08

Yeah. And that goes kind of back to, we were talking about hobbies earlier, where you live. I mean you want to find a home to where you can still access everything that you enjoy.

Chase: 50:19

It's funny how at this certain stage in my life at 47 years old, I lived in PB after college for a decade and that's Pacific beach for our non San Diego and I loved it, but I would never want to bring a family up there yet. I know many people that have, and it's funny how Keri and I, as we got older or different parts in our relationship moved more north and more inland to more suburban areas that we ultimately, we knew we kind of, we're going to end up and I think that that matriculation can kind of help you kind of divide that device, that plan. But you and I have friends that are just like me. We're in PB, but now they're in mission hills because they didn't want to get away from that city life. They didn't want to be in suburbia and they made that decision to go to that mission hills area, which is very beautiful, Nice San Diego area, but yet a little bit still removed from the beach. So everybody's different. You just have to figure out what it is you want. How far from family do you want to be Felipe? You're close to your family, Sarah's close to her family. Do you want to get that geographically far from them?

Felipe: 51:28

Well, right now with my mom being my a daycare provider for the little one, um, no, I don't want to go too much further than a party at.

Chase: 51:36

Um, so those are the thoughts that you have to take into consideration. And I think people like Daniel who really have their, you know, ear to the ground, they have their thumb on this, on the blueprint for what people need to do to get prepared and then look at it financially holistically and create that plan together. It's going to take so much stress off of you to let that professional help you through that process.

Katie: 52:08

I agree. Rely on a professional team to help you figure out what variables are important to you and what you can afford.

Chase: 52:16

Absolutely. Next week it's that time school's coming to an end. In fact, I am on my way to my kid's picnic for end of the school year picnics. So, uh, I have to get out of here real quick. But summer travel and summer travel on a budget

Felipe: 52:34

travels always fun when you do it right.

Chase: 52:36

Absolutely. And when you, when you write, travel is always fun when it's paid for. Paid for. Yeah, absolutely. Cause that paying that credit card bill after it's all done, who you're paying for two years after your vacation, that's not fine. That is not fun. You're going to despise that vacation afterwards. That's for sure. Next week, summer travel on a budget

Outro: 53:03

[inaudible].