[Music] Ready for Wade's question. Yes, ma'am. Wade says for upgrading from a starter home, you guys suggest 20% down. Can that come from equity? I've been told that contingent contracts are hard to get accepted. Reaching 20% without equity is going to be rough. What do you think? I think that you're right on that second part. A lot of folks when you're trying to upgrade when you're moving into your second home, it's really difficult to save 25% for the future service your current mortgage and still build up cash for a 20% down payment. So most folks, and this is not based on analytical study, this is based on anecdotal evidence. Most folks when they go to upgrade, they have to use the equity from their prior home to be able to put money into the second home to be able to afford it. The question becomes timing because you did say something Wade, contracts can be written in such a way. I'm going to buy

this house contingent upon me selling my other one. That's called a contingency contract. Well, we have come through such a hot housing market that perhaps as a buyer, having a contingency made you less attractive. Does that mean that you should go do something risky like go ahead and commit to buying the house without a contingency? I don't think so. I think that's going to put you in a bad spot. What I would say is you just got to figure out what works and how you can negotiate this real estate transaction that maybe you're not the most attractive cash buyer, but you can't fudge it and pretend like you are, or else you're going to get yourself in a bad spot that you don't want to be in. Wait. I'll just tell you, look, we just came through a housing market that was very unique. It wasn't just the fact that contingent contingency contracts went away. It was also that due diligence and appraisal requirements went away. People lost their absolute mind during that market. I mean to buy a sight.

unseen without due diligence without care about appraisal just shows how we we kind of lost the plot to a degree. I have fortunately I don't think that that's necessarily the case now you might live in a a market where it's harder but I still know that um from from what I've seen and even some of those hot markets due diligence is fully back now. Now you can actually run an inspection period you can actually bring in the home inspectors you can actually require appraisal requirements um and I think contingency contracts are back to a degree too so don't let somebody try to because look real estate agents love to not have the contingency in there because that's a lot less work and that's not picking on I love real estate agents but I'm just saying that it's it obviously makes it a lot less complicated if you're willing to just um go out there and and sign a full contract without all that stuff built into it but I'm just telling you from a financial standpoint cuz houses are some

of the biggest debt and assets that you're going to be dealing with. So we just want to make sure you're in a safe place um and don't get yourself in trouble. But here's what's beautiful about housing transactions: they can all be customized. So let's say that you are in that like super hot housing market where contingencies aren't a thing. Maybe what you can do is you go ahead and sell your home. And depending on how small or large your footprint is, you rent something short-term while you try to find the house that you're going to buy and move into. Or maybe you could even sell your home and rent it back from the purchaser. All of these things are viable options that might be able to solve that contingency problem. You just don't want to get yourself in the situation where you commit to buy a home before you know that you've sold the other home. And all of a sudden you got two houses, two mortgages, and two uh-oh you got to figure out really really

Can the 20% Down Payment Include Equity from Our First Home?

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