Podcast

Ep 71 – Interview With Randy, A New Homeowner, Unemployed With Zero Credit A Year Ago Who Just Closed On His $200,000 Home

HBH 71 | New Homeowner

If you think buying a home is a pipe dream for you and seem YEARS away, then listen to our 25-year-old guest. At 24, Randy was unemployed with no credit. When he asked his bank if he could get a home loan, they told him to call back in a year. Yup, they gave him no instruction…just don’t bother us now and figure it out. Then he went online and called Zillow. Their sage advice? “Uh, no.” So, Randy kept working and one day found the podcast. Two months later, we are doing this interview from his new $200,000 three-bedroom home on a half-acre with a two-car garage and basement. YOU CAN DO THIS.

Interview With Randy, A New Homeowner, Unemployed With Zero Credit A Year Ago Who Just Closed On His $200,000 Home

How To Become A First-Time Home Buyer With No Credit

What’s happening my how to buy a homies? This is an interview with a guy who’s so young, I truly was embarrassed to ask him how old he was. He called me to do this interview from his new $200,000 house. The house that he now owns. In 2021, Randy had no job. He also paid cash for everything that he bought so he had zero credit score.

He got a job and then he called his bank. He said, “I got a job. Can I get a small loan on a truck?” They said, “Yes.” He called them back and asked for a loan on a $60,000 house. His bank said no. He then decided to go online and talk to Zillow to see if they would lend him money for a house. They said no. He heard about my show on another podcast. He reached out to me, and now he closed on a $200,000 house eight months later. There’s nothing else to say. You just read the story. Let’s talk to Randy.

It’s January 2022 and I got a phone call from some dude sitting in his basement because he’s in his house and he’s excited to be in his basement. I don’t know if that means he’s a weirdo but I’m excited for him. It’s because upstairs, he’s remodeling his whole new house. Randy. How are you?

I’m good. How are you?

I’m fantastic. Tell everyone out there, when did you close on the house?

It was not quite a long time ago. We’re getting situated now and got everything set up in the basement. Going upstairs is pretty good.

Give everyone your story. You don’t have to tell everyone your home address. That would be creepy. What area of the country are you in?

I’m in Northern Michigan.

When did you first start thinking about buying a home?

HBH 71 | New Homeowner
New Homeowner: In 30 to 60 days, the credit bureaus are going to find out that you have a mortgage, and you’re to be flooded with people asking you to refinance your car loan.

Mostly in summer 2021 because I had no credit in the spring. I never had a loan.

What did you do to rectify that? Where did you start researching to figure out what you could do for that?

I work on whims. I called the bank that I work with now and I was like, “I want to buy a car.” They were like, “Let’s get you pre-approved.” I got pre-approved for $3,000 and ended up calling and finding the truck of my dreams. It was like, “How does $13,000 sound?” I got this awesome truck and paid for that. I was like, “My credit is going up. This is awesome.”

That can be a hint that our audience can use. If you don’t have any credit, you can possibly call your local bank. They’ll do car loans for you but they’ll also do personal loans. You can start getting credit going with that.

To be honest, my truck loan, the APR is terrible. That was to get my foot in the door. I’m still paying 13%.

Wait in 30 to 60 days, the credit bureaus are going to find out that you have a mortgage and you are to be flooded with people asking you to refinance your car loan.

That’s what I was waiting for. I got a Home Depot card too really fast before the mortgage thing hit my credit because your credit does dip when you get the mortgage. For me, it was like I opened a new loan and it’s down 50 points.

Your credit does dip when you get the mortgage. Click To Tweet

You pay it off for a couple of months and it flies back up.

It took me almost six months to get from no credit to 710. That’s when I got approved for this mortgage.

Remind me, when did you reach out to us? When did we start chatting? Was it at the beginning? Did you start talking to a lender that was helping you with the credit?

I had called my local bank. They are the same people and it was still summertime, August 2021. I asked them, “What do I do?” They’re like, “Wait a year.” That’s pretty much what I got from them. I was like, “What do you mean wait a year? Why can’t I talk about this now?” I’d even gone on Zillow. You click there and that sends you to a realtor. They sent me to their lender and their lender was like, “Yes, no.” They didn’t give me a good reason why.

Did the Zillow lender straight up say, “No, you can’t buy a house, I’ll talk to you later?”

Yes. It was only for a $60,000 house, move-in ready. It was a little house.

Your bank and Zillow tells you no, so then what happened? Did you get crazy, google and find me?

HBH 71 | New Homeowner
New Homeowner: Depending on the market and where you are, sometimes people are in a situation where the realtor’s going to be walking them through stuff for six months or eight months.

No. I listened to podcasts all the time. I heard The HoneyDew podcast. Ryan had said, “How to Buy a Home.” The first time I looked it up, I didn’t even find you. I’m finding these BiggerPockets guys. They’ve got a lot to say.

They’re good guys. They just cover everything. They’re more for investing.

It isn’t bad.

It’s a great thing. I recommend them to people all the time but I tell people, “Get your own house first and figure that out. You can then go and rule the world.”

That’s what I was thinking too. I was like, “Why am I listening to this? This is a little too far into it.” I did finally find you. You say it all the time, “You can do this.” I’m like, “I think I can. I don’t think this is too outlandish.”

Walk us through it because you and I went through this. You reached out and then the next step is we set you up with somebody.

You hooked me up with Eric. He’s a good guy. It seemed a little pushy. That’s the only thing that I wasn’t sure about but it’s probably the market too. I’ve thought about all of it. I don’t know if it was pushy or not or the market.

Finding a mortgage broker is really key to home buying. Click To Tweet

The hard part is what we’re trying to do as realtors. I did some new episodes and it dropped. What people are going to learn is once there’s a trust level established, I’m telling anybody who’s calling me and it’s early 2022, “Prices are going up this year so go.” Your house is going to be worth probably 5% more. Here we are. You’re closing around December-ish of 2021. By July 2022, your house will be worth 5% more, minimum. That’s why you get the idea that someone is saying, “You’re here. You can do this. Do it.”

It is pretty freaking scary. Especially sitting at the closing table signing your life away like that. It’s pretty nuts. You’re like, “This is an amazing investment but there are also going to be some issues at one point.”

It’s a lovely can of worms as we like to say. Is there anything out there for the people who are thinking about buying a home? Was there anything that you ran into where you thought, “I had no idea this was part of buying a house,” or any surprises? Did the podcast help you so there weren’t many surprises? What are the things you could tell people?

Getting ahold of you has helped me out because of the lender. Finding a mortgage broker is key to the whole thing. I didn’t think the realtor mattered as much as the mortgage broker. That’s what I thought. I felt like I could have gone with pretty much any realtor and they would have done the same thing. The mortgage broker was the guy that was like, “I got you this much.” Even when it came down to negotiating, the house was $199,000 and then I wanted them to bring more to closing. They were like, “We’ll bring $500,000 to closing but raise the house value or the sale price up to $204,000.” That sounds good to me. That’s fine but I also have to get ahold of my lender. He’s like, “Of course.” That was cool.

It is an interesting thing because it depends on the market and where you are. Sometimes people are in a situation where the realtor is going to be walking them through stuff for 6 or 8 months. In this scenario, when the market is running away from you, your best bet is to find a realtor. Now, the realtor gets me to a money guy. You and the money guy work as fast as you can because the clock was ticking for you.

When you found the place and it worked out, you and the money guy run everything, and then the realtors are the traffic cop finishing the deal for you. Were there any specific things from the podcast that got you going in any specific topics? Were you just listening to random stuff as you went through? Is there anything that you think, “If you’re new to the podcast, make sure you listen to the stuff about this because that cleared it up for me?”

Ask your parents for money.

HBH 71 | New Homeowner
New Homeowner: If you have a credit card right now and you look at it, it’s going to tell you that if you only pay the minimum, it will take years to pay it off. The government made people do that.

You hesitated but that’s my favorite thing. That’s going to be my Thanksgiving episode every year, “Ask your parents for money.” How did that help you?

My mom told me about my “college fund.” When I went to buy my truck, she’s like, “You can use this money.” I was like, “I’m not going to use it now. I’ll need it in the future.” That was what I was thinking. I didn’t even think too much about it and then I was like, “Mom, what about that money?” That helped out. I would have been scraping by but I probably would have been able to do it. Now, I tore all the carpet up there. I’m going to put on wood floors.

One of the things that people don’t realize is that whether it’s for college or building an inheritance, you have a family that has some money that is set aside for you. I mentioned it in the Dave Ramsey episode that I did. There’s a generational gap that’s happening. The easier that we can explain to parents like, “Renting makes no sense now because it’s way more than it was back in your day. If you’re planning to help me someday, let’s figure out how to do it now.” The closing table for you was a stressful experience. When did you finally ease into it and go, “I live in a house?” Have you sat in the middle of the living room, looked around and go, “I own this place?”

That has happened. The closing table wasn’t too stressful. It was just a lot. The lady was explaining everything to me. She had it down to a fine-tooth comb. She knew every little part.

It’s like a surgeon talking before surgery, who’s done it a hundred times. They’re like, “We’re going to remove this and we’re going to move this over there.” You’re like, “You’re cutting me open.” They hand you a stack of papers an inch thick. They smile and say, “When you sign this, that means you’re going to be owing us everything for the next 30 years. Please, sign.”

There’s a printout of every payment you make every month and how it does what to everything. I’m like, “Is this all printed out right here for the next 30 years?”

It’s a 30-year amortization to show you the principal and interest because they didn’t use to do that. It’s like credit cards. If you have a credit card and you look at it, it’s going to tell you how many years it takes you to pay it off if you only pay the minimum. The government made people do that. They came along and there are regulations with the loan people. They’re like, “You got to tell them if they only pay their monthly payment and they pay 30 years.” People don’t realize that your $200,000 house over 30 years, if you just make your regular payments, it’s $300,000 to $350,000.

When the market's running away from you, your best bet is to find a realtor. Click To Tweet

It’s either $324,000 or $322,000.

I’m okay with Dave Ramsey going, “If you want to pay off an extra payment a month or try to pay it off in fifteen years.” Sure. If you’re going to stay there forever, that could make sense. The options are out there. After the closing table with all the stress of everything, when was the first time you remember like, “I’m settled?”

After I returned the U-Haul. My girlfriend and I cooked dinner here that night. We set up our bed down here right after the U-Haul is out of here. That was like, “This is it.”

That’s where I wish I could put this on YouTube because you should have seen the smile. He just smiled so big. That’s exciting. What everyone out there needs to understand is it’s January of 2022. Randy had zero credit at the beginning of the summer in 2021. He figured out his credit by talking to his local bank, then talked to me, got in touch with the realtor that got him in touch with a lender because for Randy, the biggest thing was figuring out all this money stuff.

Because that lender cared about the buyer, the dude had zero credit. Six months later, he owns a $200,000 house and a $15,000 truck. That’s living the dream and you’re not stressing out. You told me, you just paid your first month’s rent and it’s not even due for eleven days. Financially, you’re feeling comfortable.

One of the questions your survey asked was like, “How much would you feel comfortable paying?” I was like, “$1,500 would be fine.” My mortgage is $1,145.

There are two things there that stuck out to me. Number one, understanding that the interest rates are so low now for even someone without any credit. Just because you took the time to be curious and the podcast didn’t make you curious, you were curious on your own. You happened to be listening to a comedy podcast that told you to listen to me. You had the right gene already. You were curious.

The other thing is you said the word rent instead of mortgage. What’s awesome is in about six months, you’re never going to say that word again. You’ll always be talking about paying your mortgage and never a rent. That’s awesome. Thank you so much for joining us from the basement and good luck with the rest of your renovations. We appreciate you having me here. Thanks for inspiring all the people out there.

Thanks for having me.

If you’re anything like me, you’re smiling from ear to ear or you’re super pissed off going, “Why didn’t I do that?” It’s good, you’re here. I’m smiling from ear to ear. Mostly because when Randy was talking about his first payment on his new home, he still called it a rent but not anymore. Truly, I am giddy like a kid at Disneyland because Randy was told no multiple times by different people, and then he found a way. There is one big moral from this story. Randy had zero credit, no job in 2021. He then got a job, bought a truck, called a bank for the loan. They told him, “Call us in a year.”

That’s the reason I started this show, because of the banks, the realtors and people out there saying, “You want to do what, really? Call me in a year.” “That’s cool. What the hell do I do for the next year?” No plan, no roadmap, nothing was given. He said, “I’m going to go to that big fancy website that’s helping so many people.” It’s helping people who know what the hell they’re doing. He called Zillow.

When Randy was describing it to me, he couldn’t even figure out how to say what they said because he realized they didn’t say anything. They just told him, “No.” He then found the show, reach out to me, got a unicorn team that hooked up his finances. Now, he called me from a 3-bedroom home on a 1/2 acre, with a 2-car garage and a basement that’s so dope that he can live in it. No problem. There are plenty of rooms. It’s a nice basement because he can live in it and not freeze his face off because it’s cold in Michigan. He’s living there while he remodels the home upstairs because he’s a handy dude.

His bank and Zillow didn’t want to help him until Randy did all the work and figured everything out on his own. No guidance, just, “Go for it, dude.” They are not going to walk someone through how to get approved on a loan. I say that understanding that $60,000 is a lot of money, but when it comes to the big banking world, a $60,000 loan is nothing to them. They only make a fraction of a fraction of that. That’s not enough money for them. They didn’t take the time to do the work with him, to help him get all his ducks in a row, and to help him see if this was even possible. Not now but maybe down the line. They didn’t even want to do that because, in the long run, the return on investment wasn’t enough for them.

Trust me, the unicorn that did help him do this didn’t get rich helping him do this. I’ve got the math on this. Think about it this way. For his realtor to make $100,000 a year pre-tax. After taxes, that means he’s taken home $75,000 a year. It’s a nice, good upper-middle-class income. He’d have to work with 25 Randys in 1 year. That 25 clients in a year don’t sound like a lot but the average realtor sells 3 to 4 homes a year.

If you’re selling 25 homes a year, that’s what you got to do at that price point to be hitting that $100,000 spot. Meaning in order to work with 25 people, you are working with each of them for 3 to 5 months all year long. Each and every single one of them, you’re preparing them, educating them, getting to work with a unicorn mortgage pro, and then you’ve got to help them find the neighborhoods, set up all the appointments to see the homes.

You got to take them out and show the homes, talk to them about the homes, and figure out which one maybe you want to put an offer. You got to put the offer on, negotiate the deal, do all the inspections, and then work the deal with major deadlines. Twenty-five times a year, you’ve got people in 30-year contracts that have major multiple different extreme timelines. If you miss those, it’s hundreds and thousands of dollars lost for people.

You then got to negotiate the repairs, the closing and close the deal. All while explaining every step of this for 25 different people all year long, each of them taking them 3 to 5 months to get that done. That’s why the banks were like, “No.” It’s even worse. That’s just the realtor for the lender. You’ve got to do that for a hundred people to make $25,000 a year after taxes.

That’s why the bank said, “Call me in a year.” That’s why Zillow was speechless and finally muttered, “No.” There are realtors and lenders that see you as more than a number. I guarantee you, Randy’s unicorn bubble team didn’t get rich off him. I also know that they never did the math. They never thought about it. You’re looking for the folks with the integrity, the ethics and the understanding that if they help you, you’ll tell other people and their businesses will eventually grow.

Don’t listen to your bank. You don’t have to do this on your own and come back in a year after you figured it out. Don’t listen to the online turnstile real estate businesses that whip customers in and out, only putting priority on the people who are going to close in 30 or 60 days. Don’t wonder if you will ever be able to buy a home. When you ask someone you care about, they are going to help you figure out when you can buy your first home, and then show you how.

If you want to play and you want information and a roadmap, there are 70 episodes you can start with. If you can deal with all the dad jokes, you’re going to enjoy some truth bombs and knowledge drops. When you’re feeling good about it, please take some time to review the show so others will find it and know that this story is out there. These things sound impossible and they sound made up but they’re not. Nobody screwed anybody to make this dream happen. It’s just working the good old-fashioned way with real care and integrity for every person, and trying to live the American dream or Canadian.

Do me a favor. It helped me out a lot. Review the show, spread the word, share it from your phone now, text it to a friend. If you have a question for me, it’s DavidSidoni.com or HowToBuyAHome.com, or DM me on the Insta, @DavidSidoni. If you haven’t read episode 53 or even if you have, it’s a great chance to go back and revisit it. That’s with my girl, Madison. It’s her interview.

You want some more positive energy with a real-life example and real-life things that one buyer did to buy a house. It’s not just a bunch of rules, guidelines and fancy real estate hypotheticals that someone says, “I sold a hundred houses in my career and now I do this podcast. I don’t sell houses anymore but let me tell you how it used to be. Let me tell you the rules.”

I don’t want to know the rules. I want to know how you do this now. How did somebody do this? Randy told you, Madison tells you, and I said this about Madison’s interview. I’m going to say this about Randy’s interview now. Your story is next but it doesn’t start until you start it. I’m glad that you’re reading. Education is important. It takes away the fear but continual passive reading gets zero results. It’s the beginning of 2022 and the market is running away from you.

Asking a pro for help and getting the right guidance get you off the bench and into the game. I know that you’ve never played this game before but Ted Lasso never coached soccer before. He rules because he leans on his bubble of knowledgeable pros that he is surrounded with. They aren’t in it for the quick fix. They are there to build the team. That unicorn bubble and that group of people are out there. If you don’t ask, you’re never going to find them. Start now because you can do this.

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This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!

 

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I hope you are getting your questions answered about this crazy process. I know there’s not a lot of clear information out there on the internet, so that’s why I started this podcast. To demystify the whole thing and get you first timers the help you deserve!  Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out.  And if you’re not already a regular listener, please subscribe.  If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts. Let’s change the way the real estate industry treats you first time buyers one buyer at a time – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused.  Viva la Unicorn Revolution!

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