@@Gunngirl Actually, that's not true. Dave has shared his story of going broke decades ago & he & his wife struggling; however, it is my belief, based on what he has said, he doesn't like all of the fees.
@@smallbusinessdreams Absolutely! I showed all the math in my other comment but the difference between 0%-20% down on a $272,446 mortgage (national average according to Zillow) purchased at 30 is if you put 0% down and invested that down payment instead it would be an additional $613,134 in retirement at 65. I wish people would actually run the numbers before listening to people who preach about 20% down.
Exactly. Maybe the VA loan is a nightmare for the seller because only the actual value of the house will be given, and the appraisal sticks around. The person we bought from was very angry he couldn't get an extra 50k for his property that hadn't been updated out of the 80's and that even if he backed out of our offer everyone else would see what the house was actually worth.
I'm a platoon sgt in the Army, and I have two types of soldiers. Paycheck to paycheck and savers. I recommend Dave Ramsey to my paycheck to paycheck soldiers, and I recommend Graham Stephan to my savers. I will start introducing this channel to all of them. Thank you, this is a really great content!
Thanks so much FAMC! I agree with probably 90% of what Dave tells people and about 97% of what Graham tells people. I definitely try to offer the best information via the math to empower people to take responsibility for themselves. I appreciate you sharing my content with other service members for sure! Cheers!
@@JakeBroe I agree with about 10% of Dave. If you are stupid, Dave will help you not lose that much money but his idiotic policies don't help people gain wealth.
@@glennwilliams2950 90% of people could benefit from his program. I know multiple people that follow his program and well on their way to being millionaires. Every week I have to turn people down for VA even though FHA will do it. VA also does not allow us to use their equity in the veterans land to pay closing cost. Unless the veteran is getting disability VA loans are more expensive due to the funding fee.
@@Robert-po8jn I just disagree. If you followed his debt is terrible, pay off low interest mantra you screwed your self out of a ton of money. If I would have followed his directions I'd be much poorer. His "advice" is a great way to end up broke during retirement.
ramsey can shove it.. we had plenty of “painful” experiences to learn from while in the service, i personally appreciate the VA making homeownership less “painful” 😌
I listen to Ramsey and agree the va funding fee was a surprise but not bad at all. Now that I’m a disabled vet, the va funding fee is waived. I currently have a va loan and will use it again this year but now the fee is waived. The VA process was actually pretty easy and saved us from buying home with structural damage.
I’m new to this channel and I don’t care what Dave said...We’re in the process of buying a new home using our VA loan. We’re grateful for the VA! My hubby served in the Navy for 22 years and my son is active Army...thank you VA!
Great video. I just paid off my VA loan in less than 12 years on a 30 year loan. Any responsible service member can, and will, greatly benefit from using one.
@@glennwilliams2950 this move definitely worked for me. I know what I have going next and am in position to offer on my first proper real estate venture.
@@richardgrimes2274 so ur saying it's better to pay it off at year 30 than year 12? Can u elaborate a little more as to why it's not beneficial to pay off ur va loan sooner
In 2004 I went from $750 per month rent to $510 per month ownership thanks to my VA loan. I was lower middle income and could never have saved 20% for a down payment especially with real estate prices going up 10% a year. It was only after I got my VA loan was I able to start getting out of debt and refinance at a much better rate. The reduced cost for housing allowed me to pay off all my other debt faster and now I'm actually saving at a rate I never thought possible.
@@MrSivram28 Well, clearly a VA loan isn't easy, or free to get, when it requires a person to be a veteran to qualify for it lol! Most people do not sign that military contract! I think the VA loan is well deserved!
@@MrSivram28 He should love the VA home loan then. I'm an eligible veteran and I already know that when I try it, its gonna be a huge hassle. It's the only thing I can count on the VA for.
As a mortgage loan officer I can assure you that the VA home loan is the best loan product on the market. Yes even better than conventional... Why? Many reasons but here are a few: 1) va interest rates are subsidized and backed by the government typically and are anywhere from 0.375%-0.625% lower than a conventional mortgage rate. Even if you do not have a disability rating and have a funding fee your savings from the lower rate will outweigh it. 2) leverage - va guidelines allow for alternative means for loan qualification by using residual income (money left over at the end of the month) rather than a standard debt to income ratio. Hypothetically speaking, this will keep you from being house poor. This will allow you to be more competitive by having more purchase power. Just remember, just because you can doesn't mean you should. 3) the va will work with you during times of hardship. There are more but buying a home is a way to acquire wealth. Waiting is costing you future equity despite what happens in the short term because the alternative is paying rent.
Had a question for you Dashel. If you were getting a VA loan and your credit score was high 750+, is the interest rate effected by the money you put down, I know it is for other loans but is it for VA loans? Like is the rate better if I put down 5% as opposed to 0%?
It is! When your funding fee can be reduced by the more money you put down. As far as the difference in 0% vs 5% it will have a small adjustor to the the cost for the interest rate. That doesn't mean your rate will be lowered necessarily, rather the cost or credit at that rate would be slightly better. I could go into more detail on how pricing works but it would probably bore you. But basically the biggest factors effecting your interest rate on any given loan product are credit score, loan to value (how much you owe vs how much your home is worth), property type (sfr, condo, manufactured) and sometimes loan amount.
Yup it pained me to pay the one time but as you stated I checked into conventional loans and the rates were higher so tome the fee goes away when you pay significantly less interest than a conventional. Now if you buy a home with conventional loan then pay it off in 7 years may be the case but there are not many who do this
I’m a veteran and I’ve bought and sold twice. The process was seamless. The VP of my bank which works at a well know bank rather do VA loans versus any other loan. The process is the same as FHA as it pertains to appraisals and inspections so don’t let banks and people like Dave discourage you from a VA loan. I’m attempting to o relocate to Georgia and the housing market along with greedy realtors has told sellers to not consider VA or FHA loans. This is horrible and a slap in the face to the people who served and can’t lay down roots bc of the lies.
I think Dave's advice is best for people who suck at math and have no impulse control. His method definitely works for people. He gets results. But he doesn't waste time on explaining the math of anything that he preaches to people.
@@JakeBroe that's because he works with behavior in mind, not maths. I follow his podcast and he says it over and over to people with Finance degrees. The numbers don't always make sense. It's 80% behavior and 20% numbers.
@@JakeBroe by the way I just listen to his podcast because I love it when he scolds people who make stupid purchases and they think they are smart on top of it. I don't always agree with him but the drama is too funny sometimes 😂.
@@evangeliamintzai6302 I do follow his podcast too, I am on the same line of thinking 🤔 Dave plan is for people that can’t control his expending. But it is funny the way he talks to people when people misbehaving with money 💰
I disagree with Dave’s thinking about military benefits. Making a good buy using a VA loan is your first step to build your net worth. Soldiers can repeat 🔃 and buy another property using a VA loan again and rent it out once it is time for PCS, and someone else will be paying their mortgage. But, you must be disciplined with money. Dave always tells them not to buy until they retire 😏🤦♂️
VA loan is amazing. I was able to pay off my house in 5 years. I did put 40k in down payment (no need for PMI on regular loans), but I saved me money on closing costs being a disabled vet.
Have used a VA Loan to buy two of my homes so far. Both homes Ive bought with a VA Loan the payments were WAY less than the rent I have paid. My current mortgage payment is 600 a month for a 3BR 2.5 BA 1500 sqft home. Cant beat that.
Dave Ramsey doesn’t know what he’s talking about in this particular situ...he speaks with great confidence even when he lacks meaningful knowledge on a topic. Often times, the VA loan is the most affordable option!
He does that pretty often. While I do agree with his overall message, he is a salesman selling a product. He barely understands how federal student loan programs work and he is always talking like he is an expert in them. He’s either being dishonest or willfully ignorant about certain things. They both bother me. I used to listen to his channel a lot but he’s become rather hard for me to listen to.
@@Gunngirl debt is not bad. I make enough to buy my house and cars outright. According to Dave I should do this. But my highest interest rate is 2.35 (house), why would I give that money up when I can deduct most of the interest and invest my money. Listening to moron like Dave would have cost me hundreds of thousands of dollars. It makes no sense.
VA loans are a fantastic product. If someone has any VA disability, the funding fee is waived too which makes it a no brainer no matter how much down payment you have. The rates are often lower than conventional rates. For higher income people, you can do VA loans with no maximum loan amount (although I think wholesale lenders cap at $1 million) and with down payments in the jumbo loan sizes smaller than normal jumbo loans would require, and far better interest rates.
I did 20 yrs in the military, I have a VA home loan, I have earned that home the hard way with 2 tours in Iraq and 2 marriages because I was always deployed somewhere a lot. My Apr on my house is 2.5 on a 30 yr fix, the house cost 100K, but its value now is 230K. I owe 75K after 10 yrs, but got 110K in a CD since I plan to retire from my second job in 3.5 yrs with another 20 yrs in a state retirement. My retirement checks will equal 11K a month when I retire and I will be 60 yrs old.
Thanks for the info! About to use my VA loan for the first time out here in California where the cost of living is outrageous. No down payment, PMI nor funding fee! Since we’re artists, we appreciate the older refurbished homes (ie., mid-century moderns & craftsmen homes) designated as “historic landmarks” which cuts property taxes an additional 30% to 50% for those of us who don’t live in homestead approved states such as Texas, Florida, Alaska etc. All veterans and homebuyers should be searching for unique or unadvertised discounts given out by local government(s) as well.
Haha, Dave doesn't tell even disabled veterans to use the loan. He knew the listener wasn't disabled, but even if he was, he would try and talk him out of due to nebulous "gotchas" that he can't actually name.
Wow! This is my favorite video yet! Spot on Dave Ramsey analysis. First video I've ever seen of military as it relates to a financial advisor's financial order of operations.
Glad you liked it Michael! I think Dave is a really interesting guy. His method works for a lot of people, but his philosophy dictates that everyone else has to be wrong for his believers to have confidence he has is right. Anyone who can see through this doesn't need to listen to him honestly. Dave knows this as well. He is playing a character.
I bought a house with a VA loan.. in 2019 for $300k, and now in 2021 its worth $359k. I then refinanced with IRRRL from a 3.9 APR To a 2.3APR. I’m planning on selling the house in 2024 and hopefully getting $65k in profits
I think you're spot on with this video. Dave most likely is worried that with 100% financing loans is that people will jump into homes that they haven't been diligent to acquire yet.
Yeah who cares people buy 72 month car loans with 0%interest. Same thing as 7% for 60 months. Not like the one who paid off sooner is smarter. Why, because it frees up cash and one can always pay off sooner for the longer loan.
This was a great video my friend. I appreciate your words and diving into this exact subject. I have been huge on Dave ramsey and his methods changed my lofe forever for the good. But i am now at this point in my life “3B” and i live in California in the crazy hot market area just outside the Silicon Valley. And our Market is growing so fast and we want to use the VA loan to get into our first home.. The biggest fear we are facing is it will be about 40-50 % of our take home pay for our mortgage. We have no debt, no car payments and a baby on the way... The only thing we feel we want is a home and would be fine sacrificing most of our income for a beautiful brand new home using the VA loan. The market in our Area we feel is continuing to grow and we feel we will build equity in this home in 10 years forsure. But thank you again for diving into this.. Dave is a great man, but conservative none the less which makes it hard to deviate in any form or fashion no matter the circumstances. And sometimes we have different issues we are facing and have to do it differently.
We bought our first home with a VA loan. Only had 5-10% down. Had to pay mortgage ins.for 1 year. The value of the home went up. We called the lender and they said to qualify to reasses the homes value and drop the mortgage insurance We had to make improvements. I bought a miter saw, installed molding throughout the home. Got reassessed. The home appraised for more than 20 of the loan value. No more mortgage insurance. The home is almost 3x in value now.
You don't need a house just rent a apartment and save up for a house. I grew up in apartments and they are amazing, you don't need a house unless you have a huge family.
We had a VA loan. Was paying $1,200 on rent for an apartment. With a VA loan we paid the same amount on the mortgage. Bought the house in 2014 for $150k 7 years in, it's worth more than $300k. I agree with you my dude; VA loan is good for Vets and get it when you can. Houses appreciate in value over time. If I followed Dave Ramsey, I'll probably just about to afford a down payment now but home prices just doubled, so few more years of renting to do it. Debt is not a one size fits all deal, do what's best for you!
Sorry Dave...I've followed some of your teachings, but I used a VA loan and house hacked a quad-plex where I rent the other 3 units. $306K property value, $0 Down, $8K closing cost, $1,500 mortgage, 2.73% APR and no PMI! Renting the 3 units for almost $3K monthly. Love my VA loan, it's allowed me to step into the real estate investment arena for less than $15K out of pocket. AAAAAANNND I get to change the life of my 5 year old daughter! Priceless.
@@brandonhill7452 Good 👍 for him being in the rich 1%. But That doesn't give him the right to trash and talk down on what the other 1% (men and women that were willing to serve and die for the country) which make it possible for him to buy any house he wants. The VA loan is best loan you can get period for those who can't buy a house outright; which is reality for 99% of the world. Not the fantasy world he lives in. Quite with the elitism garbage.
Great balanced points you make. The real risk of VA loans is that some people will get into too much house. Excellent point. Proof that even very good advice by Dave Ramsey could be wrong for the person who can show some restraint.
I have bought 2 homes through VA , 1st one in my 20s...next one in my 40s. Now i used the saved money from both payoff to purchase a 200k home debt free. You can use VA home to gain wealth over the years
Dave Ramsey's approach to finances is extremely conservative, and really it's meant more for people who have nothing to start with. The VA funding fee he mentions is how they guarantee that they can back up to 25% of the mortgages. The VA is essentially co-signing your loan, and they need their own money to do it. Maybe he's right, however I just went from 1570$ per month in rent for a 2 bedrom apartment, to a 3 bed 2 bath house for 1044. The VA loan isn't the Government giving out free stuff, it's just a benefit for Veterans, not unlike our healthcare. I would also argue that his 7 baby steps make it incredibly hard to build any real wealth, at least before retirement. If you want to make money you have to take (calculated) risks. Dave Ramsey doesn't account for that at all, much like the video says.
I think you hit the nail on the head. What Ramsey isn't considering is the opportunity cost of renting. As you point out, rent goes down the toilet as far as your asset accumulation is concerned. For most people, a house is the largest purchase they will ever make that won't (on average) depreciate over time. Just bought a $100,000 car? Drove it off the lot? Now it's worth $90,000. For veterans who can get a 0% down, government backed loan, that they don't have to pay PMI on, the deciding factor about whether or not they want to buy or rent should be the optionality of moving frequently. Renting is great for those of us who move a lot, especially military families. I've owned 3 different houses over a period of 9 years, which means I've probably lost a lot of money on all the transactional costs associated with buying/selling a house, vs if I had simply rented instead. The problem is that I always assume "this is gonna be the house I own for the next 20 years", then something comes up, and I end up moving. In the long run, if you can settle in a house for 5-6 years (the break even will obviously depend on multiple factors including rent prices, mortgage rates, and all of the fees associated with buying/selling houses) it will most likely be advantageous to buy a house with no money down (assuming you haven't been able to save a large down payment) than to continue renting until you've saved enough for a down payment large enough to avoid any funding fees or PMI if you go with a conventional loan. Also, you need to consider the value of that optionality. When renting, you can just move out as soon as your lease is up, or find a sublet and it costs you virtually nothing to do so. Which means there's value in that emended "option" of renting. You're putting the risk of vacancy on the property owner, and like any risk, the property owner needs to be compensated for accepting it. If you ARE the property owner (you bought instead of rented) then you are accepting the risk that you might need to move at some point, so your mortgage should be less than a comparable rental. If that optionality is something you don't need because you are very confident that you won't be moving again soon, then buying is clearly a better option. And not waiting forever to accumulate a down payment is most likely better than continuing to throw your housing money away on rent.
I live in CA, specifically the Bay Area and there is absolutely no way I’d be a home owner here if It wasnt for the VA home loan. As mentioned no funding fee if you have a VA disability rating which for me I saved over 16k.
Did you put anything down? I from Bay Area but live in another state and want to purchase there. I’m afraid they won’t give me the VA loan without a hefty down payment.
When buying your house, make certain to set up your mortgage as bi-wkly. The 1st payment is for the taxes, the next is all principal. This will create a great savings of paying less taxes, and paying off the house sooner. From a 30yr mortgage to a 15yr mortgage. And if possible, definitely have the mortgage rounded off at $.99 at the end of the month. More savings on the taxes that will create more towards the principal.
Dave Ramsey is full of shit! I recently bought my first house using the VA loan, I'm service connected, so I didn't have to pay a funding fee or get PMI...it was perfect!
I bought a home before I heard of Dave, using the VA loan. I have a disability rating with the VA. I’ve been house poor for almost 8 years since my spending was out of control. The VA puts people in a position to be house poor because there is no down payment. For example, I didn’t put a down payment on my home. I wasn’t ready to buy, fast forward 8 years (a few years ago I found Dave) paid off all of my debt, and my wife and I are about to sell and buy another home where we have no other day, and over 70K in equity which we’ll dump in the next house. Still trying to follow Dave’s plan, but 25% at a 15yr fixed rate isn’t feasibly. Especially now during covid. Just make sensible decisions! Don’t buy too much house.
To be fair, Dave WILL suggest callers find ways to increase their income, either by trying to get in some overtime, or a second job for a few hours outside of their regular work hours. And he has said, "I won't yell at you for having a mortgage" -- only kind of debt he won't be against. I'm not against VA loans, myself. I benefited from one once.
IMO, another perk of the $0 down: Even if you have the 20% to put down, why take that liquid cash out of our bank account when you have (usually) negligible monthly payment increase? Basic scenario: for a 2.5% loan and $250k house, do you drop $50k in downpayment or pay an extra $197/month over a 30 year loan? How long will it take for you to recoup that $50k that took you years to save? I'd rather have that money in my bank account and have it for additional emergency funds, invest, renovate...whatever. Am I wrong in that thought process?
210 day rule implemented by VA in 2018 will screw you out of using your VA loan if constructing your home. Most of these people will not tell you that. What is it? 210 days you have to wait to lock in a fixed rate, and you will have to make a minimum of 6 mortgage payments in your home. Thanks VA!
It’s in the book .We are debt free and have listened to him for 22 years .We started our business listening to him and have survived all the economy crashes .House is paid off .We fell off the wagon because of health issues .Your house should only be 1/4 of your income
I was hoping you would go into the fees and why it is more expensive as he mentions. I dont ever see him go into the detail and show the math. That would be a good follow-up showing that info. (It may not be 100% true but I would like to see the numbers. )
I used to listen to Dave and did what he preached but then I started a really thinking for myself. I don't understand where the logic comes from that a VA loan is bad. I have no PMI (which saves about $100 bucks off a month) and a low interest rate. He thinks because the VA loan doesn't require a down payment that you are buying your house while you're broke. Which is completely untrue.
I'm a disabled Veteran I'm getting a VA loan. but to your point of over buying a house. I rent right now "I pay $575/mo" My lender asked me what's your price range. 100K 200K 300K no $600/mo. which is like $140k. here's the thing I know I could, like could afford a $1200/mo payment. but there's alot of "stupid stuff" I want to buy and I'm going to buy it. don't sacrifice Living for the place in which you live.
I have a VA loan. It’s a nightmare It was NOT zero down Veterans United immediately sold the mortgage to Pennymac Loan Services. My mortgage goes up all the time, even with a fixed amount, yet my service connected disability stays the same. I’m stuck in a house and getting rammed by the man. Oh and the whole Covid forbearance... If you need it..what will happen is that the lender will want all the money backup front or else they will foreclose
Loan Officer here. VA Loans are easily pound for pound the best loan out there. No MI, most competitive rates based on credit score, highest qualifying ratios, only 1% allowed to be charged in origination fees. Dave, i'm sure is a smart guy. But if you were to compare the funding fee to the LOWEST downpayment you could put down on a conventional loan (3% on certain circumstances.) I could go on and on lol.
Total Money Makeover, but I get what you meant. His advice HAS made me smarter with money. Still working on the 3 - 6 months of emergency savings. Gotta STOP allowing my sister to slow down my progress. She's currently unemployed but has been interviewing. Hopefully, SHE will land a job and quit having emergencies that she comes to me for help with. She's going to have to stand on her own two feet and hopefully build HER OWN emergency fund once she lands that job. If I have to rely on MYself, she's going to have to LEARN to rely on HERself.
Dang, Jake...when did you get to 19k subscribers?! Holy Moly, congrats man!! From one Milwaukee military native to another, keep at it man, I watch and like every video!!
I bought all my investment four plexs via fha usda and va loans and 100% seller financed my cash flowing assets... Dave Ramsey provides advice for inadequate educated people with no understanding in finance.... an asset the produces a break even point at 50% occupancy/vacancy is one of the most successful investments you can buy especially if it’s 0-3.5% down without capital improvements.... Ramsey doesn’t understand the importance of increasing returns utilizing leverage
He lost me when he said he buys houses with cash. The whole point of real estate is leverage, if you're just paying cash you might as well just shove it in an index fund
The VA loan is ideal for me, especially if in May when I’m ready to buy it’s still a seller’s market. Since I’ll likely have to foot at least some closing costs (if not all in the current market) I won’t have to foot a down payment. I’m 100% P&T so I don’t have a funding fee. My upfront net costs are literally lower than any other loan type, period.
I'm no expert, but I would assume Ramsey's statement that the VA loan is the most expensive is true if you utilize the no down payment option. A lower (VA) rate on a higher principal (due to no down payment) is likely going to cost more than a higher (traditional) rate on a lower principal (due to 20% down payment).
The fees are definitely high especially the one time fee but they let you take a loan of up to 100% of home price and from what I have seen they have a lower interest rate than conventional loans. It pained me to pay that one time fee when I got my VA loan but my rate was lower than any other rate being offered so I see the lowered interest over time of loan offset the fee. It’s almost like paying points to get a lower interest rate.
DR's concepts are targeted at people who have misbehaved financially and need that rigorous and rigid regimen to correct their financial situation. A lot of people are too leveraged between all their payments for their given income- you definitely see that everywhere. I do agree with the concepts, but will dial them back a bit because reasonable leverage (like the mortgage loan) is OK, but you should still wrap these up as quick as possible rather than lingering with the mortgage for 30 years (you are just paying a ton of interest at that point). The core of any good financial plan is to live below your means (otherwise get "meaner" aka income) and dont just borrow your way through everything because that means you just cant afford it. I did a conventional loan for my home, and have refi'd a couple times now to bring down interest, take out PMI, etc etc. But i dont care what label you slap on your particular mortgage loan- make sure it is a good deal (no crazy interest, fees, or other terms), you arent "house poor," and otherwise pay it off and get it out of your life!
Hey Chanh Le! My next video will talk about the 15 year vs the 30 year loan. I think you might find the math behind it interesting. Thanks for the comment. Cheers!
Great advice! I thoroughly enjoy Dave Ramsey but regarding this topic I agree with you. The military functions differently than most of society. We have Basic Housing Allowance in addition to our base pay. Unless you are a TERRIBLE performer, the military will not “fire” you (higher tenure). You have job security unless you choose to leave the military. Because of this, I feel there is SOME flexibility on the 3-6 months pay equivalent saving for military. Also, using the BAH to pay the mortgage on the house is the way to go if you’re military! You can even continue to build equity by renting it out when you get orders to a new unit. Side note, the VA loan is available to exclusively to veterans, but also active duty, qualifying reservists, and some spouses of military members killed in combat.
You can do 3% with conventional. And there are grants out there where you get that for free. The VA is the most expensive. There’s no way to show it any other way. Even with PMI conventional is cheaper. Dave knows what he’s talking about and he breaks it down further. If you get into a house too early it will “get” you. Anyone who follows does well. Anyone who doesn’t takes on lots of risk. And yeah the government waste nearly all of its money especially the military.
Devil’s Advocate here…the average time spent during baby steps 1-2 is roughly 2 years, give or take. Unless you really suck at paying off your debt and following the plan this is only a temporary part of your life. In addition, why would someone buy a house with no money down while in the process of getting out of debt? You’re just welcoming in a whole host of variables that could extremely detrimental to you and/or your family. Maintenance and unexpected things come up. As someone who did do a VA loan with no money down and had over $100k in debt with cars, student loans, etc I completely back Dave Ramsey and his plan. Now my family and I are completely debt free 2.5 years later with $25k in the bank and continuing to save for our 20% down payment for our next home. It was the best decision I ever made for my family and I. Please do yourself a favor and don’t buy a home until you’re responsible enough to know what you can afford and you’re 100% ready to do it. It’ll save you heartache in the end.
Pros and cons... but 2 years of paying rent on a place that you could have just bought cost you equity and cost you property value appreciation. Definitely risk with a mortgage... but if people are serious, then if they can do it (for the same cost as renting a house), I still say they should buy.
It's easy to dog Dave Ramsey, but he is good for some people. To me, he is good for people that have no clue on finances and have no control. He might not be for you if you're doing well and have managed finances well. For the VA Loan, it's a benefit for us service members so use it.
Fun fact. The VA is actually limited at the county loan limits. 550k or so (in most places). Also you can use the loan twice at the same time if you fit criteria, assuming you don't exceed that "max entitlement" I just mentioned.
Great video...Dave is either wrong and don’t know VA loans well or he’s pushing his ideology ...Dave Ramsey has some good advice, but he’s wrong at times. VA loans usually have lower interest rates and you save avoiding PMI. Fees are somewhat reasonable.
Thank you for making this video. This is why I like different perspective. My wife and I love Ramsey’s get out of debt model and we followed that to the T. But I agree that his perspective on VA loan is all sideways. Thank you for making all the points I was thinking.
@@JakeBroe since we're talking about numbers don't you think it is important to provide some context to Dave's "baby steps" in terms of what interest rates were until recently. I see you used 2.8% interest rate but that was unthinkable even three years ago. How many people had interest rates under 3% before COVID?
I used to hear stories about selling agents not liking VA loans due to higher home inspection standards, however, I'm not sure how true that is today. I bought a condo in 2010 using a VA loan without any problems although the complex was constructed in 1989 so it wasn't terribly old. It's a great benefit to take advantage of because of the challenge of saving 20% for a conventional loan and VA loan interest rates are generally lower as well. I made the mistake of refinancing it twice using an IRRL; the closing costs of them were rolled and I think the original mortgage would have had a lower balance when I sold it in 2018. I should have done only the 2nd one since it was near my Navy retirement date when my income was about to become lower.
The VA is the worse way to buy a home. If you are not a disabled vet there are extra fees conventional loans do not have to pay. In addition with no down payment you pay more per dollar of the house in interest rate since it is 100% financed, actually most likely to be over 100% financed because the VA loan will let you roll so much into the loan. In addition most people move out of their first house in 5 to 7 years. Using the VA loan after 5 to 7 years of paying the loan you would have as much equity as someone who had a conventional loan with one year of payments. I bought my house through a VA loan, and I regret it so much. Probably the most expensive mistake of my life.
That is good for a person that is renting not for a person that is a home owner plus when you get a VA loan you are paying a bigger mortgage payment every in top of taking a loan for 30 years instead of 15 years like Ramsey said.
The cost of a home is more complicated then simply mortgage > renting because equity. If you factor in the cost of repairs, property tax, and opportunity cost of not having your down payment in the market the equation may very well change for some people.
So his problem with it is really that people abuse it and take a bigger loan then they can afford. I've done both and the VA loan and refinancing programs have saved me money.
I find that the more financially literate I become, the less Dave's opinion or advice make sense. I personally know people who have used his plan to great success, but I can't help but think they would be more successful if they didn't take his word as gospel.
Dave is still right on most things! Don't buy new cars (that you can't afford), don't take expensive trips (that you can't afford), don't buy things just to impress other people, save and invest today so you can live large tomorrow. I still think he mostly gives great advice, but he just treats all his listeners like they are idiot children with no impulse control.
@@JakeBroe Those are not really what I'm talking about, I think that living below your means will be most smart peoples financial advice. What I talking about is his inflexibility on stuff like, traditional mutual funds, 15 year mortgages, credit cards, getting a pizza delivery job during a pandemic instead of getting the unemployment, and prioritizing playing off a house before putting money into much more productive investments.
@@alexanderlavoie5461 I feel like a good way to think about it is that his advice is best for anyone who isn't good at or willing to do the math. The habits that he suggests won't make things worse for you, but they certainly won't get you ahead either. And part of getting ahead is doing the math, understanding the risks, and coming up with plans to compensate for those risks.
@@JakeBroe that is a great advice from him but people will still have to live life the way they want to. If they want to spend money on trips they barely can afford just for experience go for it. As long they aren’t going to become homeless. Nothing beats experiencing things you want to experience in the present than saving all your money just so you can take trips when youre 65 years old.
It is a tool that should be used responsibly. It doesn’t mean you abuse it and go buy a home you really can’t afford. I have used mine several times. Bottom line work the numbers both ways both conventional and VA loan to see what numbers work out best. In this market with interest rates as low as they are a VA loan doesn’t necessarily provide as much benefit as in other housing markets. ( with higher interest rates when referring to the IRRL) The primary reason it exist is to afford the opportunity to veterans who do not make as much money by comparison to the civilian market for the industry they are in. Second it is a marketing tool for recruiting talent to join the military. Much like the GI bill.
I have a special place in my heart for veterans but as a seller VA loans often expect us to compromise or bend over backwards for buyers, sacrificing proceeds from the sale to make the deal happen. Not again, no thanks.
Having just bought a house I could see where the VA loan caused a bit of trouble for the seller. I had so many people tell me to play hardball while negotiating but I knew I really wanted the property and knew that the seller honestly would have had less trouble with another non VA buyer. I have another friend right now trying to make offers on homes and I'm trying to break it to her she might need to offer above listing right now in order to be competitive. It's interesting how the VA loan is a really good tool but based on my experience if you don't have any savings to walk up to the deal with then you might still have trouble closing on the house because then there's no flexibility with negotiating.
For sure Barano! Working with some veterans or people on active duty can be a challenge since they can act entitled. But the free market still applies and everyone still has to get paid. If you've had bad experiences processing VA Loans, then don't do them. Simple as that!
Unfortunately, the AD Military community are one of the least financially responsible people in this country, statistically speaking. I think Daves issue, and what Ive seen in my career with people and VA loans, they don't have money saved but choose not to put a down payment, They don't have any money saved period. When you don't have a fully funded emergency fund, and you have a house, you are a ticking time bomb of financial nightmares. As Dave always mentions, if you were listening to the math, you wouldn't have gone into debt anyways. Finances are way more than just math when it comes to human beings. It is emotional, and whenever emotions are involved with humans, it changes the game completely. Renting gets a bad wrap because its "throwing away money". But the reality is, there ARE benfits to renting. For example, if you are renting and you have appliances go out, it is up to the land lord to correct the issue, not you. If you own a house and zero money saved, a broken washer and dryer is now a life emergency. I am not trying to argue with you, just wanted to give you another perspective.
I personally take a mathematical approach to money because like dave likes to say “The number don’t lie.” Feel free to put all the numbers in a calculator they’ll match up minus the pennies. Let’s use an example of 2 Vets Jack and Jill, both 30 when they pull the trigger and buy a $272,446 house (US national average home price according to Zillow.) both get a 30 year mortgage with 3.25% interest and both save up the 20% down payment. Jack listens to Dave and on step 3b he saves up a 20% down payment ($54,489) we’ll act like there’s no funding fees with private mortgages since you didn’t show that there’s mortgage origination fees. Jacks P&I payments are $1,127. Jill however learns about the VA home loan and puts 0 down. With the 2.3% funding fee her mortgage is $278,712 her P&I is $1,395. Which is only $268 more a month and didn’t pay anything out of pocket. And instead invests the $54,489 she saved for the down payment in mutual funds at 10% until 65 and never put another penny in. After 35 years she’ll have $1,531,273. What about Jack? Well since he only has that savings of $268 a month over the same 35 years until they’re 65 he only has $918,139. That’s $613,134 less for retirement because he listens to good ole’ Dave. I think that’s dave’s definition of “stupid tax”.
Thanks for watching! Check out my entire playlist of videos on buying a home here:
th-cam.com/play/PLscTZuOqKWIz97DBmq5r-4IciwL6uKJfQ.html
I just bought a home using a VA loan. My rent was $1550 a month. My mortgage is $1064. I’m better off not listening to Dave.
That's a win!
Dave hates anything that helps people financially. 😒🙄 He don’t know about no struggles.
Everybody is better off not listening to Dave.
@@mississippipitbull1700 Oh stop ...
@@Gunngirl Actually, that's not true. Dave has shared his story of going broke decades ago & he & his wife struggling; however, it is my belief, based on what he has said, he doesn't like all of the fees.
I'm a veteran and I used the VA Loan to purchase my home. Just do what's best for you.
100% Darrius! People know their own finances best!
Ramsey probably had a few VA loan deals fall through. VA loans make sure the homes are livable. VA loans #1 way vets build wealth.
Thank you!
@@smallbusinessdreams Absolutely! I showed all the math in my other comment but the difference between 0%-20% down on a $272,446 mortgage (national average according to Zillow) purchased at 30 is if you put 0% down and invested that down payment instead it would be an additional $613,134 in retirement at 65. I wish people would actually run the numbers before listening to people who preach about 20% down.
Exactly.
Maybe the VA loan is a nightmare for the seller because only the actual value of the house will be given, and the appraisal sticks around.
The person we bought from was very angry he couldn't get an extra 50k for his property that hadn't been updated out of the 80's and that even if he backed out of our offer everyone else would see what the house was actually worth.
I'm a platoon sgt in the Army, and I have two types of soldiers. Paycheck to paycheck and savers. I recommend Dave Ramsey to my paycheck to paycheck soldiers, and I recommend Graham Stephan to my savers. I will start introducing this channel to all of them. Thank you, this is a really great content!
Thanks so much FAMC! I agree with probably 90% of what Dave tells people and about 97% of what Graham tells people. I definitely try to offer the best information via the math to empower people to take responsibility for themselves. I appreciate you sharing my content with other service members for sure! Cheers!
@@JakeBroe I agree with about 10% of Dave. If you are stupid, Dave will help you not lose that much money but his idiotic policies don't help people gain wealth.
@@glennwilliams2950 Bingo! Dave is interested in keeping people as poor as poor as possible under the guise of “responsibility”.
@@glennwilliams2950 90% of people could benefit from his program. I know multiple people that follow his program and well on their way to being millionaires. Every week I have to turn people down for VA even though FHA will do it. VA also does not allow us to use their equity in the veterans land to pay closing cost. Unless the veteran is getting disability VA loans are more expensive due to the funding fee.
@@Robert-po8jn I just disagree. If you followed his debt is terrible, pay off low interest mantra you screwed your self out of a ton of money. If I would have followed his directions I'd be much poorer. His "advice" is a great way to end up broke during retirement.
ramsey can shove it.. we had plenty of “painful” experiences to learn from while in the service, i personally appreciate the VA making homeownership less “painful” 😌
Me too, Edwin! Cheers!
I second that 👍🏽
I listen to Ramsey and agree the va funding fee was a surprise but not bad at all. Now that I’m a disabled vet, the va funding fee is waived. I currently have a va loan and will use it again this year but now the fee is waived. The VA process was actually pretty easy and saved us from buying home with structural damage.
VA loans suck for the seller
I’m new to this channel and I don’t care what Dave said...We’re in the process of buying a new home using our VA loan. We’re grateful for the VA! My hubby served in the Navy for 22 years and my son is active Army...thank you VA!
Great video. I just paid off my VA loan in less than 12 years on a 30 year loan. Any responsible service member can, and will, greatly benefit from using one.
Congrats Darren! That has to be an amazing feeling!
Unfortunately, that was a very poor financial decision. Don't listen to Dave Ramsey.
@@glennwilliams2950 this move definitely worked for me. I know what I have going next and am in position to offer on my first proper real estate venture.
why pay off the loan with the inflation out performing the interest? you would pay less in long run by just making the payments.
@@richardgrimes2274 so ur saying it's better to pay it off at year 30 than year 12? Can u elaborate a little more as to why it's not beneficial to pay off ur va loan sooner
I bought my house with a VA loan, being service connected it was no brainer. I live in an awesome neighborhood, neighbors are mostly all vets.
Sounds great Levesque! Cheers!
I got a great deal with my VA Homeloan. You earned it. Use it.
I agree AP! Cheers!
In 2004 I went from $750 per month rent to $510 per month ownership thanks to my VA loan. I was lower middle income and could never have saved 20% for a down payment especially with real estate prices going up 10% a year. It was only after I got my VA loan was I able to start getting out of debt and refinance at a much better rate. The reduced cost for housing allowed me to pay off all my other debt faster and now I'm actually saving at a rate I never thought possible.
This is great. Congratulations!!
Basically he doesn’t like it because it’s a privilege he’s not entitled to.
He hates anything free or easy to get
@@MrSivram28 Well, clearly a VA loan isn't easy, or free to get, when it requires a person to be a veteran to qualify for it lol! Most people do not sign that military contract! I think the VA loan is well deserved!
Shots fired!!!
@@MrSivram28 He should love the VA home loan then. I'm an eligible veteran and I already know that when I try it, its gonna be a huge hassle. It's the only thing I can count on the VA for.
@@MrSivram28 its not free or easy
As a mortgage loan officer I can assure you that the VA home loan is the best loan product on the market. Yes even better than conventional... Why? Many reasons but here are a few:
1) va interest rates are subsidized and backed by the government typically and are anywhere from 0.375%-0.625% lower than a conventional mortgage rate. Even if you do not have a disability rating and have a funding fee your savings from the lower rate will outweigh it.
2) leverage - va guidelines allow for alternative means for loan qualification by using residual income (money left over at the end of the month) rather than a standard debt to income ratio. Hypothetically speaking, this will keep you from being house poor. This will allow you to be more competitive by having more purchase power. Just remember, just because you can doesn't mean you should.
3) the va will work with you during times of hardship.
There are more but buying a home is a way to acquire wealth. Waiting is costing you future equity despite what happens in the short term because the alternative is paying rent.
Had a question for you Dashel. If you were getting a VA loan and your credit score was high 750+, is the interest rate effected by the money you put down, I know it is for other loans but is it for VA loans? Like is the rate better if I put down 5% as opposed to 0%?
Thanks for that helpful information Dashel! I appreciate it!
It is! When your funding fee can be reduced by the more money you put down. As far as the difference in 0% vs 5% it will have a small adjustor to the the cost for the interest rate. That doesn't mean your rate will be lowered necessarily, rather the cost or credit at that rate would be slightly better. I could go into more detail on how pricing works but it would probably bore you. But basically the biggest factors effecting your interest rate on any given loan product are credit score, loan to value (how much you owe vs how much your home is worth), property type (sfr, condo, manufactured) and sometimes loan amount.
True. I never understand these money gurus who think one way because it’s ideal for them. But everyone’s situation is different.
Yup it pained me to pay the one time but as you stated I checked into conventional loans and the rates were higher so tome the fee goes away when you pay significantly less interest than a conventional. Now if you buy a home with conventional loan then pay it off in 7 years may be the case but there are not many who do this
My wife and I used the VA loan, bought a new home, used the BAH to pay mortgage, then sold the home and made 40k. It’s a great tool!
100% a great strategy!
I wouldn't be a property owner today if it weren't for a VA loan for my first home almost 50 years ago. It's a good deal for young vets.
I’m a veteran and I’ve bought and sold twice. The process was seamless. The VP of my bank which works at a well know bank rather do VA loans versus any other loan. The process is the same as FHA as it pertains to appraisals and inspections so don’t let banks and people like Dave discourage you from a VA loan.
I’m attempting to o relocate to Georgia and the housing market along with greedy realtors has told sellers to not consider VA or FHA loans. This is horrible and a slap in the face to the people who served and can’t lay down roots bc of the lies.
Dave's advice is for the average Joe who has the normal credit card debt, a luxury car that can't afford and student loans.
I think Dave's advice is best for people who suck at math and have no impulse control. His method definitely works for people. He gets results. But he doesn't waste time on explaining the math of anything that he preaches to people.
@@JakeBroe that's because he works with behavior in mind, not maths. I follow his podcast and he says it over and over to people with Finance degrees. The numbers don't always make sense. It's 80% behavior and 20% numbers.
@@JakeBroe by the way I just listen to his podcast because I love it when he scolds people who make stupid purchases and they think they are smart on top of it. I don't always agree with him but the drama is too funny sometimes 😂.
@@evangeliamintzai6302 I do follow his podcast too, I am on the same line of thinking 🤔 Dave plan is for people that can’t control his expending. But it is funny the way he talks to people when people misbehaving with money 💰
I disagree with Dave’s thinking about military benefits. Making a good buy using a VA loan is your first step to build your net worth. Soldiers can repeat 🔃 and buy another property using a VA loan again and rent it out once it is time for PCS, and someone else will be paying their mortgage. But, you must be disciplined with money.
Dave always tells them not to buy until they retire 😏🤦♂️
I signed the contract and got my key. Nothing else needed. VA loan was great for me
He doesn’t like it because if you aren’t struggling financially, then you’re not paying for his course or calling in to his show.
100% correct
😆😆😆😆😆
On behalf of vets, I approve lmao
VA loan is gold. Use it if you earned it.
It's a great benefit! Cheers!
VA loan is amazing. I was able to pay off my house in 5 years. I did put 40k in down payment (no need for PMI on regular loans), but I saved me money on closing costs being a disabled vet.
How do you save money on the closing costs from being a disabled vet, please?
Have used a VA Loan to buy two of my homes so far. Both homes Ive bought with a VA Loan the payments were WAY less than the rent I have paid. My current mortgage payment is 600 a month for a 3BR 2.5 BA 1500 sqft home. Cant beat that.
Dave Ramsey doesn’t know what he’s talking about in this particular situ...he speaks with great confidence even when he lacks meaningful knowledge on a topic. Often times, the VA loan is the most affordable option!
Dave rarely knows what he's talking about.
He does that pretty often. While I do agree with his overall message, he is a salesman selling a product. He barely understands how federal student loan programs work and he is always talking like he is an expert in them. He’s either being dishonest or willfully ignorant about certain things. They both bother me. I used to listen to his channel a lot but he’s become rather hard for me to listen to.
He wants zero fees and zero interest. If it doesn’t have that he thinks it’s bad. Where are people getting loans like that?
@@Gunngirl debt is not bad. I make enough to buy my house and cars outright. According to Dave I should do this. But my highest interest rate is 2.35 (house), why would I give that money up when I can deduct most of the interest and invest my money. Listening to moron like Dave would have cost me hundreds of thousands of dollars. It makes no sense.
VA loans are a fantastic product. If someone has any VA disability, the funding fee is waived too which makes it a no brainer no matter how much down payment you have. The rates are often lower than conventional rates. For higher income people, you can do VA loans with no maximum loan amount (although I think wholesale lenders cap at $1 million) and with down payments in the jumbo loan sizes smaller than normal jumbo loans would require, and far better interest rates.
I agree Jonathan! A no-brainer for disabled vets! Thanks for the comment. Cheers!
I am a mortgage originator and you are dead right
I did 20 yrs in the military, I have a VA home loan, I have earned that home the hard way with 2 tours in Iraq and 2 marriages because I was always deployed somewhere a lot. My Apr on my house is 2.5 on a 30 yr fix, the house cost 100K, but its value now is 230K. I owe 75K after 10 yrs, but got 110K in a CD since I plan to retire from my second job in 3.5 yrs with another 20 yrs in a state retirement. My retirement checks will equal 11K a month when I retire and I will be 60 yrs old.
Thanks for the info! About to use my VA loan for the first time out here in California where the cost of living is outrageous. No down payment, PMI nor funding fee! Since we’re artists, we appreciate the older refurbished homes (ie., mid-century moderns & craftsmen homes) designated as “historic landmarks” which cuts property taxes an additional 30% to 50% for those of us who don’t live in homestead approved states such as Texas, Florida, Alaska etc. All veterans and homebuyers should be searching for unique or unadvertised discounts given out by local government(s) as well.
Thanks for that tip RT! Best of luck to you!
Do you know where I could search?
Key word Dave said for VA loan is if your "Disabled" which VA loan would be the best option for a veteran if they are.
Haha, Dave doesn't tell even disabled veterans to use the loan. He knew the listener wasn't disabled, but even if he was, he would try and talk him out of due to nebulous "gotchas" that he can't actually name.
@@JakeBroe Agreed and that is crazy.
Thank you for this video. I'm a veteran and I've been going back and forth on what to do. This will help me make a more informed decision.
Wow! This is my favorite video yet! Spot on Dave Ramsey analysis. First video I've ever seen of military as it relates to a financial advisor's financial order of operations.
Glad you liked it Michael! I think Dave is a really interesting guy. His method works for a lot of people, but his philosophy dictates that everyone else has to be wrong for his believers to have confidence he has is right. Anyone who can see through this doesn't need to listen to him honestly. Dave knows this as well. He is playing a character.
@@JakeBroe yep I think that is an accurate analysis. He knows it and he has to play along for the greater good.
Wow. Fantastic, articulate, pragmatic and unbiased review. Subscribed
Thorough explanation of the Ramsey Ideology.👍 Home Wealth = Forced Savings Account....GREAT VIDEO - STR8 EDUCATION!
Thanks Manuel! I appreciate the comment. Cheers!
I bought a house with a VA loan.. in 2019 for $300k, and now in 2021 its worth $359k. I then refinanced with IRRRL from a 3.9 APR To a 2.3APR. I’m planning on selling the house in 2024 and hopefully getting $65k in profits
I think you're spot on with this video. Dave most likely is worried that with 100% financing loans is that people will jump into homes that they haven't been diligent to acquire yet.
Thanks for watching the video Recon! Cheers!
Yeah who cares people buy 72 month car loans with 0%interest. Same thing as 7% for 60 months. Not like the one who paid off sooner is smarter. Why, because it frees up cash and one can always pay off sooner for the longer loan.
Lol yeah no money down is perfect when 20% is $150,000 😅
Haha, most would agree!
This was a great video my friend. I appreciate your words and diving into this exact subject. I have been huge on Dave ramsey and his methods changed my lofe forever for the good. But i am now at this point in my life “3B” and i live in California in the crazy hot market area just outside the Silicon Valley. And our Market is growing so fast and we want to use the VA loan to get into our first home.. The biggest fear we are facing is it will be about 40-50 % of our take home pay for our mortgage. We have no debt, no car payments and a baby on the way... The only thing we feel we want is a home and would be fine sacrificing most of our income for a beautiful brand new home using the VA loan. The market in our Area we feel is continuing to grow and we feel we will build equity in this home in 10 years forsure. But thank you again for diving into this.. Dave is a great man, but conservative none the less which makes it hard to deviate in any form or fashion no matter the circumstances. And sometimes we have different issues we are facing and have to do it differently.
Thanks Daniel! Cheers!
We bought our first home with a VA loan. Only had 5-10% down. Had to pay mortgage ins.for 1 year. The value of the home went up. We called the lender and they said to qualify to reasses the homes value and drop the mortgage insurance We had to make improvements. I bought a miter saw, installed molding throughout the home. Got reassessed. The home appraised for more than 20 of the loan value. No more mortgage insurance. The home is almost 3x in value now.
You don't need a house just rent a apartment and save up for a house. I grew up in apartments and they are amazing, you don't need a house unless you have a huge family.
I’ve taken far more advice from this channel than I have from Dave Ramsey.
Haha, thanks Chris! I really appreciate the high praise. I have lots of great videos coming soon. Stick with me!
Dave Ramsey is also considers praying as a solid investment tactic as well
And thats why you are still broke.
Used my first VA loan 2019. Zero down, NO funding fee.🏡
That's awesome Dolly! Cheers!
We had a VA loan. Was paying $1,200 on rent for an apartment. With a VA loan we paid the same amount on the mortgage. Bought the house in 2014 for $150k 7 years in, it's worth more than $300k. I agree with you my dude; VA loan is good for Vets and get it when you can. Houses appreciate in value over time. If I followed Dave Ramsey, I'll probably just about to afford a down payment now but home prices just doubled, so few more years of renting to do it. Debt is not a one size fits all deal, do what's best for you!
Sorry Dave...I've followed some of your teachings, but I used a VA loan and house hacked a quad-plex where I rent the other 3 units. $306K property value, $0 Down, $8K closing cost, $1,500 mortgage, 2.73% APR and no PMI! Renting the 3 units for almost $3K monthly. Love my VA loan, it's allowed me to step into the real estate investment arena for less than $15K out of pocket. AAAAAANNND I get to change the life of my 5 year old daughter! Priceless.
Im so thankful for my VA loan...
It's pretty great!
He doesn't like it cause he hasn't and can't earn one 😏
Probably!
Lmao the dude can just buy us a house each with cash he doesn't care bout that
@@brandonhill7452 Good 👍 for him being in the rich 1%. But That doesn't give him the right to trash and talk down on what the other 1% (men and women that were willing to serve and die for the country) which make it possible for him to buy any house he wants. The VA loan is best loan you can get period for those who can't buy a house outright; which is reality for 99% of the world. Not the fantasy world he lives in. Quite with the elitism garbage.
I used a Va loan to buy my house 11 years ago. Over 350k in equity and glad I did. Will be paid off in 4 years
I personally would never pay my house off early. It almost always a poor financial decision.
Great balanced points you make. The real risk of VA loans is that some people will get into too much house. Excellent point. Proof that even very good advice by Dave Ramsey could be wrong for the person who can show some restraint.
Thanks for watching Michael! Cheers!
I have bought 2 homes through VA , 1st one in my 20s...next one in my 40s. Now i used the saved money from both payoff to purchase a 200k home debt free. You can use VA home to gain wealth over the years
Dave Ramsey's approach to finances is extremely conservative, and really it's meant more for people who have nothing to start with.
The VA funding fee he mentions is how they guarantee that they can back up to 25% of the mortgages. The VA is essentially co-signing your loan, and they need their own money to do it.
Maybe he's right, however I just went from 1570$ per month in rent for a 2 bedrom apartment, to a 3 bed 2 bath house for 1044. The VA loan isn't the Government giving out free stuff, it's just a benefit for Veterans, not unlike our healthcare.
I would also argue that his 7 baby steps make it incredibly hard to build any real wealth, at least before retirement. If you want to make money you have to take (calculated) risks. Dave Ramsey doesn't account for that at all, much like the video says.
I know I’m a little late for a comment, but as an AD retired Air Force member, this was a great video. Thank you for breaking this down.
I think you hit the nail on the head. What Ramsey isn't considering is the opportunity cost of renting. As you point out, rent goes down the toilet as far as your asset accumulation is concerned. For most people, a house is the largest purchase they will ever make that won't (on average) depreciate over time. Just bought a $100,000 car? Drove it off the lot? Now it's worth $90,000.
For veterans who can get a 0% down, government backed loan, that they don't have to pay PMI on, the deciding factor about whether or not they want to buy or rent should be the optionality of moving frequently. Renting is great for those of us who move a lot, especially military families. I've owned 3 different houses over a period of 9 years, which means I've probably lost a lot of money on all the transactional costs associated with buying/selling a house, vs if I had simply rented instead. The problem is that I always assume "this is gonna be the house I own for the next 20 years", then something comes up, and I end up moving.
In the long run, if you can settle in a house for 5-6 years (the break even will obviously depend on multiple factors including rent prices, mortgage rates, and all of the fees associated with buying/selling houses) it will most likely be advantageous to buy a house with no money down (assuming you haven't been able to save a large down payment) than to continue renting until you've saved enough for a down payment large enough to avoid any funding fees or PMI if you go with a conventional loan.
Also, you need to consider the value of that optionality. When renting, you can just move out as soon as your lease is up, or find a sublet and it costs you virtually nothing to do so. Which means there's value in that emended "option" of renting. You're putting the risk of vacancy on the property owner, and like any risk, the property owner needs to be compensated for accepting it. If you ARE the property owner (you bought instead of rented) then you are accepting the risk that you might need to move at some point, so your mortgage should be less than a comparable rental. If that optionality is something you don't need because you are very confident that you won't be moving again soon, then buying is clearly a better option. And not waiting forever to accumulate a down payment is most likely better than continuing to throw your housing money away on rent.
Yep! I agree this is all part of the equation for sure. Thanks for sharing your thoughts Andrew. Cheers!
Very good video. I don’t know too much about the VA loan and this helped me understand it.
Awesome! I am glad I was able to help demystify the process for you! Cheers!
I live in CA, specifically the Bay Area and there is absolutely no way I’d be a home owner here if It wasnt for the VA home loan. As mentioned no funding fee if you have a VA disability rating which for me I saved over 16k.
For sure Sierra! This is just one way Dave leads his followers astray.
Did you put anything down? I from Bay Area but live in another state and want to purchase there. I’m afraid they won’t give me the VA loan without a hefty down payment.
When buying your house, make certain to set up your mortgage as bi-wkly. The 1st payment is for the taxes, the next is all principal. This will create a great savings of paying less taxes, and paying off the house sooner. From a 30yr mortgage to a 15yr mortgage.
And if possible, definitely have the mortgage rounded off at $.99 at the end of the month. More savings on the taxes that will create more towards the principal.
Amazing video and amazing channel! Your channel is blowing up that's awesome to see, keep the videos coming I love all the value you put out!
Thanks so much Krystian! I appreciate the support and I promise I have more great content coming soon!
Dave Ramsey is full of shit! I recently bought my first house using the VA loan, I'm service connected, so I didn't have to pay a funding fee or get PMI...it was perfect!
I'm paying 2200 in rent in Colorado vs. 1400 in mortgage payments in Texas with the VA loan (and 100% disabled Veterans don't pay property tax).
I bought a home before I heard of Dave, using the VA loan. I have a disability rating with the VA. I’ve been house poor for almost 8 years since my spending was out of control. The VA puts people in a position to be house poor because there is no down payment. For example, I didn’t put a down payment on my home. I wasn’t ready to buy, fast forward 8 years (a few years ago I found Dave) paid off all of my debt, and my wife and I are about to sell and buy another home where we have no other day, and over 70K in equity which we’ll dump in the next house. Still trying to follow Dave’s plan, but 25% at a 15yr fixed rate isn’t feasibly. Especially now during covid. Just make sensible decisions! Don’t buy too much house.
No PMI and the lower rates that VA loans offer will more than make up for any additional fees in the long run.
To be fair, Dave WILL suggest callers find ways to increase their income, either by trying to get in some overtime, or a second job for a few hours outside of their regular work hours. And he has said, "I won't yell at you for having a mortgage" -- only kind of debt he won't be against. I'm not against VA loans, myself. I benefited from one once.
IMO, another perk of the $0 down:
Even if you have the 20% to put down, why take that liquid cash out of our bank account when you have (usually) negligible monthly payment increase?
Basic scenario: for a 2.5% loan and $250k house, do you drop $50k in downpayment or pay an extra $197/month over a 30 year loan? How long will it take for you to recoup that $50k that took you years to save? I'd rather have that money in my bank account and have it for additional emergency funds, invest, renovate...whatever. Am I wrong in that thought process?
I agree AD! I would rather have the $50k to invest and just pay the extra $197. Cheers!
I'm thinking the same thing.
210 day rule implemented by VA in 2018 will screw you out of using your VA loan if constructing your home. Most of these people will not tell you that. What is it? 210 days you have to wait to lock in a fixed rate, and you will have to make a minimum of 6 mortgage payments in your home. Thanks VA!
It’s in the book .We are debt free and have listened to him for 22 years .We started our business listening to him and have survived all the economy crashes .House is paid off .We fell off the wagon because of health issues .Your house should only be 1/4 of your income
I was hoping you would go into the fees and why it is more expensive as he mentions. I dont ever see him go into the detail and show the math. That would be a good follow-up showing that info. (It may not be 100% true but I would like to see the numbers. )
I used to listen to Dave and did what he preached but then I started a really thinking for myself. I don't understand where the logic comes from that a VA loan is bad. I have no PMI (which saves about $100 bucks off a month) and a low interest rate. He thinks because the VA loan doesn't require a down payment that you are buying your house while you're broke. Which is completely untrue.
I'm a disabled Veteran I'm getting a VA loan. but to your point of over buying a house. I rent right now "I pay $575/mo" My lender asked me what's your price range. 100K 200K 300K no $600/mo. which is like $140k. here's the thing I know I could, like could afford a $1200/mo payment. but there's alot of "stupid stuff" I want to buy and I'm going to buy it. don't sacrifice Living for the place in which you live.
I have a VA loan. It’s a nightmare
It was NOT zero down
Veterans United immediately sold the mortgage to Pennymac Loan Services.
My mortgage goes up all the time, even with a fixed amount, yet my service connected disability stays the same.
I’m stuck in a house and getting rammed by the man.
Oh and the whole Covid forbearance...
If you need it..what will happen is that the lender will want all the money backup front or else they will foreclose
I just locked in 2.375% VA loan 10% dp, VA fee $7000. 1st time home buyer.
30 fixed rate.
Congrats Quon! That's awesome!
Loan Officer here. VA Loans are easily pound for pound the best loan out there. No MI, most competitive rates based on credit score, highest qualifying ratios, only 1% allowed to be charged in origination fees. Dave, i'm sure is a smart guy. But if you were to compare the funding fee to the LOWEST downpayment you could put down on a conventional loan (3% on certain circumstances.) I could go on and on lol.
I love how your wall is stating why King Saejong of Choseon was so eager to create Hangul. 👍
No one should deviate, because it works. I did the total money maker and it worked for me and it got me out of debt.
Total Money Makeover, but I get what you meant. His advice HAS made me smarter with money. Still working on the 3 - 6 months of emergency savings. Gotta STOP allowing my sister to slow down my progress. She's currently unemployed but has been interviewing. Hopefully, SHE will land a job and quit having emergencies that she comes to me for help with. She's going to have to stand on her own two feet and hopefully build HER OWN emergency fund once she lands that job. If I have to rely on MYself, she's going to have to LEARN to rely on HERself.
Dang, Jake...when did you get to 19k subscribers?! Holy Moly, congrats man!! From one Milwaukee military native to another, keep at it man, I watch and like every video!!
Thanks Bob! I should hit 20,000 subs by the end of this month! I am slowly working my way towards that 100k silver plaque from TH-cam!
@@JakeBroe Dude, that's amazing! All that hard work is starting to show in your growth. Keep it up.
I bought all my investment four plexs via fha usda and va loans and 100% seller financed my cash flowing assets... Dave Ramsey provides advice for inadequate educated people with no understanding in finance.... an asset the produces a break even point at 50% occupancy/vacancy is one of the most successful investments you can buy especially if it’s 0-3.5% down without capital improvements.... Ramsey doesn’t understand the importance of increasing returns utilizing leverage
He lost me when he said he buys houses with cash. The whole point of real estate is leverage, if you're just paying cash you might as well just shove it in an index fund
The VA loan is ideal for me, especially if in May when I’m ready to buy it’s still a seller’s market. Since I’ll likely have to foot at least some closing costs (if not all in the current market) I won’t have to foot a down payment. I’m 100% P&T so I don’t have a funding fee. My upfront net costs are literally lower than any other loan type, period.
Sounds like a plan ARG! Happy house hunting in May!
Va loan does have restrictions about you continuing to live in the home, but the VA IRRL doesn't have the same restrictions.
I'm no expert, but I would assume Ramsey's statement that the VA loan is the most expensive is true if you utilize the no down payment option. A lower (VA) rate on a higher principal (due to no down payment) is likely going to cost more than a higher (traditional) rate on a lower principal (due to 20% down payment).
The fees are definitely high especially the one time fee but they let you take a loan of up to 100% of home price and from what I have seen they have a lower interest rate than conventional loans. It pained me to pay that one time fee when I got my VA loan but my rate was lower than any other rate being offered so I see the lowered interest over time of loan offset the fee. It’s almost like paying points to get a lower interest rate.
DR's concepts are targeted at people who have misbehaved financially and need that rigorous and rigid regimen to correct their financial situation. A lot of people are too leveraged between all their payments for their given income- you definitely see that everywhere. I do agree with the concepts, but will dial them back a bit because reasonable leverage (like the mortgage loan) is OK, but you should still wrap these up as quick as possible rather than lingering with the mortgage for 30 years (you are just paying a ton of interest at that point). The core of any good financial plan is to live below your means (otherwise get "meaner" aka income) and dont just borrow your way through everything because that means you just cant afford it.
I did a conventional loan for my home, and have refi'd a couple times now to bring down interest, take out PMI, etc etc. But i dont care what label you slap on your particular mortgage loan- make sure it is a good deal (no crazy interest, fees, or other terms), you arent "house poor," and otherwise pay it off and get it out of your life!
Hey Chanh Le! My next video will talk about the 15 year vs the 30 year loan. I think you might find the math behind it interesting. Thanks for the comment. Cheers!
Great advice! I thoroughly enjoy Dave Ramsey but regarding this topic I agree with you. The military functions differently than most of society. We have Basic Housing Allowance in addition to our base pay. Unless you are a TERRIBLE performer, the military will not “fire” you (higher tenure). You have job security unless you choose to leave the military. Because of this, I feel there is SOME flexibility on the 3-6 months pay equivalent saving for military. Also, using the BAH to pay the mortgage on the house is the way to go if you’re military! You can even continue to build equity by renting it out when you get orders to a new unit.
Side note, the VA loan is available to exclusively to veterans, but also active duty, qualifying reservists, and some spouses of military members killed in combat.
Thanks for the comment Ana! Dave unfortunately just can't make exceptions. Cheers!
You can do 3% with conventional. And there are grants out there where you get that for free. The VA is the most expensive. There’s no way to show it any other way. Even with PMI conventional is cheaper. Dave knows what he’s talking about and he breaks it down further. If you get into a house too early it will “get” you. Anyone who follows does well. Anyone who doesn’t takes on lots of risk. And yeah the government waste nearly all of its money especially the military.
28% of my income after tax.... is there a house that is under $70k in Cali? LOL
Devil’s Advocate here…the average time spent during baby steps 1-2 is roughly 2 years, give or take. Unless you really suck at paying off your debt and following the plan this is only a temporary part of your life. In addition, why would someone buy a house with no money down while in the process of getting out of debt? You’re just welcoming in a whole host of variables that could extremely detrimental to you and/or your family. Maintenance and unexpected things come up. As someone who did do a VA loan with no money down and had over $100k in debt with cars, student loans, etc I completely back Dave Ramsey and his plan. Now my family and I are completely debt free 2.5 years later with $25k in the bank and continuing to save for our 20% down payment for our next home. It was the best decision I ever made for my family and I. Please do yourself a favor and don’t buy a home until you’re responsible enough to know what you can afford and you’re 100% ready to do it. It’ll save you heartache in the end.
Pros and cons... but 2 years of paying rent on a place that you could have just bought cost you equity and cost you property value appreciation. Definitely risk with a mortgage... but if people are serious, then if they can do it (for the same cost as renting a house), I still say they should buy.
Dave Ramsey should of served before knocking on Benefits that we earned. Screw him.
haha, cheers!
It's easy to dog Dave Ramsey, but he is good for some people. To me, he is good for people that have no clue on finances and have no control. He might not be for you if you're doing well and have managed finances well. For the VA Loan, it's a benefit for us service members so use it.
Fun fact. The VA is actually limited at the county loan limits. 550k or so (in most places). Also you can use the loan twice at the same time if you fit criteria, assuming you don't exceed that "max entitlement" I just mentioned.
All true! Thanks for the additional info Joel!
5:46 😊
Great video...Dave is either wrong and don’t know VA loans well or he’s pushing his ideology ...Dave Ramsey has some good advice, but he’s wrong at times. VA loans usually have lower interest rates and you save avoiding PMI. Fees are somewhat reasonable.
I agree! Cheers!
Thank you for making this video. This is why I like different perspective. My wife and I love Ramsey’s get out of debt model and we followed that to the T. But I agree that his perspective on VA loan is all sideways. Thank you for making all the points I was thinking.
Thanks for watching and leaving a comment! Cheers!
PAPA Dave only wants me to listen to him and tells me all debt is bad and scary
Don't forget to buy his books while your at it.
Dave couldn't handle debt responsibly... therefore nobody can handle debt responsibly. Sound logic to follow, lol
@@JakeBroe since we're talking about numbers don't you think it is important to provide some context to Dave's "baby steps" in terms of what interest rates were until recently. I see you used 2.8% interest rate but that was unthinkable even three years ago. How many people had interest rates under 3% before COVID?
I used to hear stories about selling agents not liking VA loans due to higher home inspection standards, however, I'm not sure how true that is today. I bought a condo in 2010 using a VA loan without any problems although the complex was constructed in 1989 so it wasn't terribly old. It's a great benefit to take advantage of because of the challenge of saving 20% for a conventional loan and VA loan interest rates are generally lower as well. I made the mistake of refinancing it twice using an IRRL; the closing costs of them were rolled and I think the original mortgage would have had a lower balance when I sold it in 2018. I should have done only the 2nd one since it was near my Navy retirement date when my income was about to become lower.
That's awesome Casey! Thanks for sharing your experience. Cheers!
The VA is the worse way to buy a home. If you are not a disabled vet there are extra fees conventional loans do not have to pay. In addition with no down payment you pay more per dollar of the house in interest rate since it is 100% financed, actually most likely to be over 100% financed because the VA loan will let you roll so much into the loan. In addition most people move out of their first house in 5 to 7 years. Using the VA loan after 5 to 7 years of paying the loan you would have as much equity as someone who had a conventional loan with one year of payments. I bought my house through a VA loan, and I regret it so much. Probably the most expensive mistake of my life.
Everytime I've bought or refinanced a house I was always able to get a considerably lower Va interest rate.
Excellent review!!
My problems is that all lenders won't loan money under 100 thousand and I refuse to spend that much when it's just me.
That is good for a person that is renting not for a person that is a home owner plus when you get a VA loan you are paying a bigger mortgage payment every in top of taking a loan for 30 years instead of 15 years like Ramsey said.
The cost of a home is more complicated then simply mortgage > renting because equity. If you factor in the cost of repairs, property tax, and opportunity cost of not having your down payment in the market the equation may very well change for some people.
If disabled, your rating could determine whether/not you're paying property taxes.
So his problem with it is really that people abuse it and take a bigger loan then they can afford. I've done both and the VA loan and refinancing programs have saved me money.
Sorry Dave, your absolutely wrong. This loan was designed to actually help Veterans.
Truth!
Thanks for the breakdown and thoughts. It is never a one-size fits all.,
I find that the more financially literate I become, the less Dave's opinion or advice make sense. I personally know people who have used his plan to great success, but I can't help but think they would be more successful if they didn't take his word as gospel.
Dave is still right on most things! Don't buy new cars (that you can't afford), don't take expensive trips (that you can't afford), don't buy things just to impress other people, save and invest today so you can live large tomorrow. I still think he mostly gives great advice, but he just treats all his listeners like they are idiot children with no impulse control.
@@JakeBroe Those are not really what I'm talking about, I think that living below your means will be most smart peoples financial advice. What I talking about is his inflexibility on stuff like, traditional mutual funds, 15 year mortgages, credit cards, getting a pizza delivery job during a pandemic instead of getting the unemployment, and prioritizing playing off a house before putting money into much more productive investments.
@@alexanderlavoie5461 I feel like a good way to think about it is that his advice is best for anyone who isn't good at or willing to do the math. The habits that he suggests won't make things worse for you, but they certainly won't get you ahead either. And part of getting ahead is doing the math, understanding the risks, and coming up with plans to compensate for those risks.
@@JakeBroe that is a great advice from him but people will still have to live life the way they want to. If they want to spend money on trips they barely can afford just for experience go for it. As long they aren’t going to become homeless. Nothing beats experiencing things you want to experience in the present than saving all your money just so you can take trips when youre 65 years old.
It is a tool that should be used responsibly. It doesn’t mean you abuse it and go buy a home you really can’t afford. I have used mine several times. Bottom line work the numbers both ways both conventional and VA loan to see what numbers work out best. In this market with interest rates as low as they are a VA loan doesn’t necessarily provide as much benefit as in other housing markets. ( with higher interest rates when referring to the IRRL)
The primary reason it exist is to afford the opportunity to veterans who do not make as much money by comparison to the civilian market for the industry they are in. Second it is a marketing tool for recruiting talent to join the military. Much like the GI bill.
I have a special place in my heart for veterans but as a seller VA loans often expect us to compromise or bend over backwards for buyers, sacrificing proceeds from the sale to make the deal happen. Not again, no thanks.
Having just bought a house I could see where the VA loan caused a bit of trouble for the seller. I had so many people tell me to play hardball while negotiating but I knew I really wanted the property and knew that the seller honestly would have had less trouble with another non VA buyer. I have another friend right now trying to make offers on homes and I'm trying to break it to her she might need to offer above listing right now in order to be competitive. It's interesting how the VA loan is a really good tool but based on my experience if you don't have any savings to walk up to the deal with then you might still have trouble closing on the house because then there's no flexibility with negotiating.
For sure Barano! Working with some veterans or people on active duty can be a challenge since they can act entitled. But the free market still applies and everyone still has to get paid. If you've had bad experiences processing VA Loans, then don't do them. Simple as that!
@@JakeBroe I think one is enough, considering it my good deed for the year.
Unfortunately, the AD Military community are one of the least financially responsible people in this country, statistically speaking. I think Daves issue, and what Ive seen in my career with people and VA loans, they don't have money saved but choose not to put a down payment, They don't have any money saved period. When you don't have a fully funded emergency fund, and you have a house, you are a ticking time bomb of financial nightmares. As Dave always mentions, if you were listening to the math, you wouldn't have gone into debt anyways. Finances are way more than just math when it comes to human beings. It is emotional, and whenever emotions are involved with humans, it changes the game completely. Renting gets a bad wrap because its "throwing away money". But the reality is, there ARE benfits to renting. For example, if you are renting and you have appliances go out, it is up to the land lord to correct the issue, not you. If you own a house and zero money saved, a broken washer and dryer is now a life emergency. I am not trying to argue with you, just wanted to give you another perspective.
I personally take a mathematical approach to money because like dave likes to say “The number don’t lie.” Feel free to put all the numbers in a calculator they’ll match up minus the pennies.
Let’s use an example of 2 Vets Jack and Jill, both 30 when they pull the trigger and buy a $272,446 house (US national average home price according to Zillow.) both get a 30 year mortgage with 3.25% interest and both save up the 20% down payment.
Jack listens to Dave and on step 3b he saves up a 20% down payment ($54,489) we’ll act like there’s no funding fees with private mortgages since you didn’t show that there’s mortgage origination fees. Jacks P&I payments are $1,127.
Jill however learns about the VA home loan and puts 0 down. With the 2.3% funding fee her mortgage is $278,712 her P&I is $1,395. Which is only $268 more a month and didn’t pay anything out of pocket. And instead invests the $54,489 she saved for the down payment in mutual funds at 10% until 65 and never put another penny in. After 35 years she’ll have $1,531,273.
What about Jack? Well since he only has that savings of $268 a month over the same 35 years until they’re 65 he only has $918,139. That’s $613,134 less for retirement because he listens to good ole’ Dave.
I think that’s dave’s definition of “stupid tax”.
Cheers Zach!
Don’t forget IRRL! I’m now looking into EEM (new windows) and Ramsey is way off base on this one.