[Music] okay, Quinn's question is up next. Ready for it? It says, I'm on step seven of the Foo. I'm a first-time home buyer. I know I don't have to put more than 5% down on the home, but if I can, how much should I? My lender doesn't charge PMI. Does that change things? And then he added some context, I can do 12% down payment, but that would require selling brokerage investment. So, there's a few things there. I think the overall concept of like, If I can put more than 5% the first time, should I? And then he's got some unique things with the PMI and selling things from the brokerage account. How old is Quinn? Ah, he didn't say. Quinn, if you're out there, let us know, and we'll let them know. Let me kick this one off a little bit, Bo, because there's some variables that Quinn, you, this is, it's back to that personal finances, that there's things that go into it. The 3 to 5 was to

give you access to the house. Um, because the market has been running away from people, interest rates are high, so congratulations that you're actually, you have enough assets that you looks like you're going to be able to go beyond the 3 to 5%. So now we have to say what are you giving up when you make those decisions. And one thing I'll tell you because you said something that triggered a little bit in me. You said there's no PMI with my lender. Usually, I just want you to think about what you just said is because when you deal with anything financial, nothing's free. There's usually a cost. And this is something you have to figure out is that, um, you know, there's probably a premium in the interest rate if they're not having PMI, if you're putting down less than 20%. So you need to ask that question. What would be my interest rate if I did put down more? Because 26, by the way, yeah, so that's incredible, by the way.

huge things here going on for Quinn. So, I want you to sharpen your financial mutant skills. So, when people tell you, Hey, this is going to be, there's no PMI expenses, you ought to say, Well, wait a minute. I know nothing's free, so what am I having to give up? Because everything is an incremental decision. You're at a fork in the road moment. How do we maximize this small decision to build this great big beautiful thing that I'm trying to build for the future? So, sharpening up those things, and PMI is part of that, interest rates part of that, down payment, and then setting yourself up for future self is part of that. They all balance each other nicely 'cause there's many, many paths to success. Yeah, so we have some home buying rules when it's time to buy a home. Obviously, one of the things to say is you only have to put down 3 to 5% on your first home. We want you to make sure that you're in the home for at least 5 to

seven years. But then there's this third part. We want to make sure that your total housing costs do not exceed 25% of your gross income. Well, if only putting down 3% causes that mortgage and, you know, principal, interest, taxes, and insurance to be more than 25%, then you might have to put more down to get that number down. So, you need to put down at least as much to make sure that your mortgage payment is not greater than 25%. Okay, once you've done that math, the very next thing you need to do is you have to do a personal opportunity cost assessment because that's really what you're navigating here. And you got to think about if I'm going to deploy dollars, if I'm going to put dollars to work for me at 26 years old, is it more advantageous for me to put a larger down payment down on the house and I'm going to save whatever my mortgage rate is right now. So, if it's 7%, 7.2%, whatever that number is for you, is

that going to be the best use of those additional dollars, or might it be better for me to take those additional dollars and go put them to work, go have them working for me outside in my Army of dollar bills? And you'll have to make that assessment based on where you are in your financial journey. For a young person, generally speaking, paying down the mortgage earlier, putting a larger down payment, is a harder thing to justify than for someone who's a little bit older. Even though interest rates are high now, the argument that I'd make is I think that at some point in the future, I don't know, 3 years, 4 years, 5 years, there will probably be an opportunity for you to refinance that mortgage down to a lower, more reasonable rate if it's super high right now. What you won't be able to do three, four, five years in the future is go back and get those five years that you missed putting those dollars to work. So, you have to do the assessment for yourself around opportunity cost and what's the best use.

of my dollars, and when you talk about opportunity cost, there's also risk. Sure, that comes into play, and Bo is exactly right, because I think a lot of people get this risk element wrong when they're thinking about mortgages, especially for young people. There's just like there's a risk that debt is dangerous, without a doubt. Debt is dangerous, but there's also a big risk, because if you look at the majority of Americans, they just don't become wealthy. A lot of times, it's a behavioral thing that they don't save, they don't invest, and they don't build. So, there's a risk that you never start saving and investing in building that army of dollar bills that work harder for you than you can with your back, your brain, your hands. But then, once you're successful, and this is why when I talk about paying down mortgages post-45, there stay wealthy behaviors. So, when you're trying to handicap the risk, whether it's the risk of debt, whether it's the risk of building wealth, that's

why when Bo talks about incremental decision or opportunity costs those things all it's a decision you're moving you're you have a balloon here of risk reward and you're squeezing it and there's usually a give and take and you just have to balance that journey to maximize what your risk profile is what your goals are and what you can do to maximize your financial life you only get one so you better make sure you're doing it right I just don't want you to have regrets 20 years from now so take all this into account consider even using resources like millionaire Mission or even going and checking out our wealth multiplier Bose's already laid out the the home buying checklists all that is going to help you make the right decisions and help you be educated as you're figuring this all out.

How Much Should My Down Payment Be? (5% or 12%)

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