The Newest Trend in the Mortgage World (It’s Scary)
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Raise your hand if you've ever been guilty of spending hours fantasizing over homes you can't afford on Zillow. We've all been there. I get it. Lime wash brick facades, the Carrara marble backsplashes, exposed beams, a detached pool house with a separate entrance for the cabana boy bartender. Definitely swoon-worthy. Not the pool boy, everything else. I don't need the competition at the camel house. Don't hate me because I'm beautiful.

But this fantasy is sadly out of reach for a lot of people. According to a recent survey, only about 30% of Americans have between $500 and $5,000 in savings. Or is it out of reach? Well, it turns out it doesn't matter if you don't have two pennies to rub together for a down payment. Because America's biggest mortgage lender, United Wholesale Mortgage, is offering zero down mortgages. No pennies? No problem. That was sarcasm.

You can't tell. Because the truth is, diving into a zero-down mortgage is like diving into a zero-water pool, a really bad idea that could leave you financially maimed, to put it politely. So in this video, we'll deep dive into the comeback of zero-down mortgages, why people fall for them, and why you'd be better off renting for the rest of your life than falling for this garbage. But before we get to it,

hit the like and subscribe buttons and share this video with all of your friends who need some wholesome content to, you know, break that Zillow doom scroll addiction. All right, here's the story. United Wholesale Mortgage, AKA HOME, rolled out a new program that makes it possible for first time home buyers to buy a house and take on a mortgage with no down payment.

That's right, no down payment whatsoever. Put another way, your house is 100% mortgaged, meaning you don't own any of it starting out, not even the haunted basement with the scary furnace. And in case you need a refresher, this is how buying a home with a mortgage usually works. You save up a down payment, the median down payment in the US, currently about $30,000.

You find your dream home and you apply for a mortgage. You put your money down. Conventional mortgages require, at the very least, a down payment that's worth 3% of the home value, but first-time homebuyers usually put down around 6%. This means you would own 6% of your home from the day you roll up in that U-Haul. But with the Zero Down Mortgage Program, you don't have to put a single penny on the table to take out a massive home loan, and that's if you even qualify.

How do you qualify? Well, you have to make 80% or below of your area's median income or be a first-time homebuyer. Now, while this sounds great because people who otherwise couldn't get a home can now get one, it also means that really broke people with no money are about to embark on the most expensive journey of their life. And in the words of Taylor Swift, I think I've seen this film before and I didn't like the ending. And for the record, Folklore was a deeply moving and underrated return to her Americana roots. IMO.

He gets it. Now, if you're a millennial or older, you may remember this little thing called the subprime mortgage meltdown. Yeah, the one that fueled the 2008 financial crisis. It's where mortgage companies started giving out home loans to people who really couldn't afford them. Those people started defaulting on their loans and ended up owing more than their homes were worth. They were underwater on their homes. Are they really going to let this happen again, though? I mean, we've learned from the past, right? We're better than that, right?

Right? It's amazing. You are 100% wrong. The guy handing out these loans, of course, says yes. And BT dubs, this is the guy. Matt Ishbia, CEO of United Wholesale Mortgage. He's a billionaire and owns the Phoenix Suns. Because why not? Now, I don't judge a book by its cover, but does this guy look trustworthy to you? And remind me, how many NBA championships have the Phoenix Suns won? I think that tells you everything you need to know about this guy. Burn!

So how do the folks at UWM respond to the 2008 comparisons? Well, they say that borrowers must go through strict underwriting guidelines and that the people who are worried about zero-down mortgages are, quote, uneducated about the current state of the industry. Uneducated, huh? Well, look at that.

let's get educated using a hypothetical scenario involving our friend Joe. Scratch that, Josephine, equal opportunity example. Josephine wants that 1920s bungalow she's been thirsting after, but she can't scrape together the cash for the down payment. No worries, she calls up UWM and bypasses that problem with a zero down mortgage, but it doesn't come without a price. Here's how the program really works. UWM blesses her with an interest-free loan

at 3% of the home value, capped at a total of $15,000. And by the way, the other 97% of the home value? Our girl Josephine's got to take out another loan at current market rates and somehow still make the giant payments on both. And that's not even considering costs like homeowners insurance, property taxes, HOA fees, and maintenance and repairs. Now, Josephine may not have to pay interest on that $15,000, but she will have to pay it back immediately in full if she sells the home or pays off the mortgage. So,

This could work out great for Josephine if nothing bad happened ever. And I don't know about you, but I haven't reached that point in my life where I know nothing bad will happen ever.

One eternity later. Still waiting. So just for fun, let's list out all the bad things that could happen to our sweet friend Josephine. The housing market goes down in value. Homeowner's insurance rates skyrocket. Josephine loses her job. The roof needs to be replaced. The plumbing breaks. Her date shows up sporting no-show socks, which apparently is a big faux pas for Gen Z. There's just too many things that can go wrong here. All it takes is one or two of those party crashers, and now you're living on the edge. Or more realistically, just...

on edge because your financial world is about to be turned upside down. If Josephine suddenly can't afford her mortgage payments, she'll need to sell the house. But oopsie, she'll immediately owe $15,000. And if the value of her home didn't rise enough to cover that, she's screwed. Okay, now that we're educated, do we feel safe from ending right back up where we were in 2008?

Well, let's see. What was going on in 2008? Well, MySpace was all the rage and I had my birthday proudly displayed for every scammer, spammer, and thief on the internet to see. And while I can't go back

and undo some of those stupid moves, I can now use Delete.me to remove my personal data from hundreds of data broker sites. And in fact, I do, and you can too. Delete.me saves you tons of tedious work trying to find and remove that data on your own and filling out all these weird forms and all these weird sites. Plus, they will send you an easy-to-read report so you know exactly what they did.

And right now, you can protect your data and get 20% off by going to joindelete me.com slash George, or just click the link in the show notes. That's joindelete me.com slash George. And speaking of 2008 time capsule stuff, remember flip phones and affordable cell phone plans? Simpler times. But guess what? It's making a comeback thanks to our friends at Telo, a mobile service provider designed to save you money. And here's the deal. They are committed to helping you save on your texty-talky-googly TikTok device plans.

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Okay, back to the question. Do we feel safe with these zero-down mortgages being handed out like candy? Financial experts, including myself, don't think so. Check out this quote from Patricia McCoy, a professor at Boston College Law School and a former mortgage regulator at the Consumer Financial Protection Bureau. She sounds very educated.

She said this scenario is quote, "Exactly what happened during the subprime crisis. It happened before and it could happen again." End quote. Reassuring commentary. Thanks, Pat. - We are screwed. - So if we've been through this mess before, why are people falling for it again? Well, number one, they're not thinking long-term. Instead,

They're falling for the marketing in the moment that says a zero-down mortgage will make buying a home affordable for low-income folks. But they're not thinking about that giant 97% loan they gotta take on or the second loan that is instantly due if they sell. And when crap hits the Lascaux fan a few miles down the road, they're going to be screwed. Number two, they're thinking short-term. They're asking how much down, not how much.

Nothing down sounds like less than thousands of dollars down. But this doesn't magically make your mortgage payment affordable. It could be four or five thousand dollars for a broke person to try to afford. And when you finally add up the cost, you end up paying way more in interest if you didn't put any money down. Number three, they're too comfortable living on the edge financially.

The average American is running around with over $25,000 in debt, buying stuff they can't afford with other people's money and living paycheck to paycheck with no savings, one car repair away from a financial crisis. And this is normal. So getting a mortgage on a house when they don't have the cash for a down payment and living under the weight of more payments they can barely meet on a good day, well, that's just the American way. It's America, dude. Learn the rules. But it doesn't have to be that way. And listen, if you're not currently a homeowner, my guess is that you'd like to be one someday.

even though someday may feel like a Tasmanian devil-level moving target thanks to increasing home prices. And I get it. The best time to plant a tree was 30 years ago, and the next best time is now. And in this case, the best time to buy a house was 50 years ago, like the boomers, and the next best time is now. And if history tells us anything, houses are only going to get more expensive. So the sooner you're financially ready to buy a home and lock in the price, the better. But the key word is financially ready.

which means not this nothing down mortgage crap. And I know you feel the pressure and the FOMO, and it may seem like you're behind compared to your friends and your family's judging you with comments saying you're throwing away money on rent. But guess what? They don't pay your bills. And that means they don't get a vote in the biggest financial decision of your life. And not caring about what other people think is a superpower in today's world. And if you can harness that, you'll have more joy and peace and less stress and anxiety than almost anyone you know.

So until you're out of debt, you've got an emergency fund, renting is the way to go. Don't let anyone fool you into thinking otherwise. Renting shows patience and responsibility as you get your financial house in order and save up for that down payment. And I'm a big fan of home ownership, but I beg of you, do not buy a home before you're ready. And speaking from experience, you can go from just getting by and broke to getting ahead and owning a house without putting yourself in financial danger.

Check out this video to see how I did it. I'll also drop a link in the description to watch it next. Thanks for watching. We'll see you next time.