Homes with Benefits: Your Home Appreciation Story!

Rick Ripma: 0:00

What are the four biggest long term benefits of homeownership? Stay tuned. We'll talk about that and more today on Indy's Real Estate Gurus,

Announcer: 0:10

Advisors Mortgage Group is proud to present in these real estate gurus hosted by Rick Ripma and Ian Arnold, the hard working mortgage guys, please contact Rick Annie and for all of your mortgage needs at HardWorkingMortgageGuys.com. That's HardWorkingMortgageGuys.com. Now, here's the hard working mortgage guys, Rick Ripma and Ian Arnold.

Rick Ripma: 0:33

Good afternoon. I'm Rick Ripma, your hard work and mortgage guy. And I'm Ian Arnold with the Advisors Mortgage Group. And we're the hard work and mortgage guys. And

Ian Arnold: 0:41

if you did miss our podcast last or a show last week, go to our podcast Indys Real Estate Gurus. Also, if you have any questions or anything we talked about today, or you just want to have questions, go to HardWorkingMortgageGuys.com. That is HardWorkingMortgageGuys.com. All right. So this week, some numbers did come out. And I know Ricky were briefly talking about them earlier. So what really caught your eye this week?

Rick Ripma: 1:10

Well, you know, there there are quite a few things actually. And because a market is really going. It's it's just a it's a different market than you know, I've been in I've been in and around mortgages for nearly 40 years. And, you know, I, I grew up I was I graduated from high school in the late 70s. In the 70s. You know, as a kid, you don't really know. But I was old enough to kind of understand the inflation and all the issues that were going on. And it's very similar to that. But in this industry and mortgages, it's just and buying homes. It's a weird time I was meeting with a real estate agent yesterday, or a couple days ago. And he was telling me that the market in like Indianapolis and Broad Ripple area, things like that. He said that's really slow down. But he said the Hamilton County market, which is where he generally works has been booming still. So there are still very, he said it's really strong, you put a house on the market and Hamilton County, so it goes very, very quickly. So the market is still good, which a lot of people are starting to hear negative things about the market. It does matter where your house is located. Obviously, it doesn't matter. He said the other thing is you have to price the home correctly.

Ian Arnold: 2:28

That is correct. I mean, there's one in my my in laws live in Westfield, which is Hamilton County, there was a house that was priced up there. And it's been priced for, I think four months. And I'm like, why is this housekeeper All right. I mean, it looks like it's two doors down from them. And I'm like, why is this house keep being? Why isn't it sold? So that I just did a little little thing, just checking around? Yeah, it's like $100,000 Over the next house. There's an extra bedroom 100,000 more square foot? And it was it sold for the same price they're trying to sell this one for and I'm like, That doesn't even make sense. No,

Rick Ripma: 3:06

it makes no sense at all does it and that's and that's what he said that's the problem is when people price the home incorrectly. And the you know, the other thing if you're in a market that's hot. And this is he was he and I were talking about this because I didn't really understand it. And he if you're in a hot market now you need to listen to your real estate agent. But you he says most people need to just get it on the market while the markets hot before it slows down.

Ian Arnold: 3:35

Yeah, he's I mean, it's the same thing. Even when you're talking about buying something that's like stuck, you get it why it's going up. You don't want to get it when it plateaus at the top. So

Rick Ripma: 3:45

yeah, and he was specifically talking about people who I think it's I think it's we've been this has been drilled in our head, you know, I gotta get my House prepared to sell, I gotta paint my my rooms, I got to do this. There's little things I got to fix. In a market that's super hot, where you're getting more bar buyers than you, then you know, you can only handle one buyer and if there's 10 of them trying to buy your house or even three of them trying to buy your house, even to try to buy your house. When I sit in an auction. I go to Car Auctions. You sit in an auction, what you want when you're selling a car is two bidders fighting each other. That's all you need. Okay, it's great to have three or four but you really only need two, you have two bidders bidding the car up, you have two bidders bidding the house up. That's what you need. You need to get you need to get that going. So you can't wait to fix things. You can't wait to do it just get the house on the market when it's a hot market. Now, if you're not in a hot market, or you know, then you might need to do some work. But he was talking about a client he had that he kept trying to get him to get in the market and by the time they were ready. He said it cost him a bundle of money because it did all this work and in the market slowed down so it's a much tougher market than it was. So anyway, that's that's one of the things I wanted to talk about. The other the other piece So are two other pieces really? I'll just do real quick. We've talked about this before, but I think I think it's worth talking about, again, and maybe maybe again next week. But the conforming limit for mortgages, I think people need to understand you can borrow on a conforming limit, this would be not non jumbo loans. On a conforming loan, the limit now the the loan limit is $715,000. That means if you're putting 20% down, you're more in the, what? 850 900 range? Yep. That's incredible. And it was

Ian Arnold: 5:36

actually in today's market in Indiana. I mean, you got to think this is over the whole United States. So when you're talking about just Indiana, I mean, most our houses aren't 1,000,002 million stuff like that, like if you were to go to California or New York or something crazy. I mean, our houses are pretty reasonable. I mean, so I mean, you don't find I'm not gonna say there's not any because guy Easton. There's some parts in Carmel that are up there and more slaked that are in the millions. But the average is well below that here in Indiana.

Rick Ripma: 6:12

Yeah, it is. And, and it's, it's, it's kind of crazy. If you were at 715 loan amount, if you were putting 5% down, that means you're you could buy a house at about seven 750 to $752,000. That seems to me is going to get a lot of homes. Right. If you're putting 20% down, you're looking at just under $900,000 893,000, almost 894,020% down puts you in the conforming limit. Yeah, I guess I guess because I've been in the business so long. It just blows me away that we're, we're at that number. It just seemed like yesterday, we were in the two

Ian Arnold: 6:51

hundreds. Yeah. I mean, I mean, it was it. What was it like 505 90 something or something like that. year ago or something?

Rick Ripma: 7:00

A year ago? It was fine. You know, it's so hard to remember, I think it was 517 or 18. But this year right now, it's 649 200.

Ian Arnold: 7:08

Yeah, I mean, it's how much that just tells you how much houses have appreciated these last couple of years. You know what you're right.

Rick Ripma: 7:15

That's a great way to see, because that's what this is based on is that that inform you know, the appreciation, it's a great way to kind of understand what happens, those, those limits go up. That's because the appreciation, so your houses have been going up. The other thing that just off the subject routes on the subject, that's a single unit, right, that's buying a single family, not one, one, but let's say somebody wants to buy a double, that limit is 916,000. a triplex is 1,000,001. Little over that million 177 $1,107,000 in a four units $1,376,000. Now, I don't even know if we have anything in our market like that, that, you know, a four Plex is worth that I'm sure in other areas they do. But that is amazing. Yes, and it is a great way you get if you could buy something like that and rent out three, three of them. And it's that I mean, obviously at that price, it'd be a darn nice. Yeah, I mean, you could probably pay for the house, it wouldn't cost you anything, it's just,

Ian Arnold: 8:15

but the nice thing is when it tells somebody, if you're looking at doing a duplex or saw or three or four units, it's easy to get approved. Now, it's still upon your bank account, and also getting your debt to income and stuff like that. Don't get us wrong. But here in Indiana, you're gonna get you can long as everything checks out, your easier to get those units here. So if you do have want to get that or you want to see if you can get pre approved from contact us at HardWorkingMortgageGuys.com. And again, that is HardWorkingMortgageGuys.com. And that'll be a free consult. So you don't have to worry about anything. Just let us talk to you figure out your situation,

Rick Ripma: 8:56

right? And make sure you know, you want to do that. Really before you do anything. That's the first thing you should do. Even you know you.

Ian Arnold: 9:03

Oh, you at least got to think about it first and be like, Yeah, I

Rick Ripma: 9:06

want to do this. Yeah, I mean, we should be the second but the first actual step after thinking about it as giving us like, you know, getting online getting getting with us. The other part. The other thing I wanted to talk about is the housing starts and the reason is, is I think this is important. This is builders starting homes. And it's telling you what the, you know what the activity is out there. One of the issues we have with the lack of inventory right now is over the last 10 1215 years, we have built way too few homes. If you look at and why do I say that? Because if you look at the numbers, and you look at the increase in the families in the US and the number of people in the US and you look at the Housing Starts were like 3 million short. It's a huge number. And the housing starts month over month fell 8.1% last month.

Ian Arnold: 9:57

So here's something to really think about that I mean, you live up in the Zionsville area, you got the Carmel, you got the fishers pick out how many homes have been built in the last 10 years. And yet, we're still under what we should be at.

Rick Ripma: 10:14

Right. But crazy, you know, right now, you know, or at least the last couple of years we drive by and you see quite a few houses going up, there's been a lot of sticks, what we call sticks in the air, right? Yeah, a lot of houses being built. But if if you think back, and maybe because I was in New Home Sales, and worked for a builder, I kind of recognize that more than most. But I remember. I mean, it wasn't seven, eight years ago, there was hardly anything there were there were very few new communities. They, they were slow. I remember the villages of West clay, because I ride my bike through it all the time. It's always on the top of my mind, I really think it's a beautiful community. But it wasn't that long ago, when it was struggling, nobody was building houses in there. It's because the market just went away. And that and it's come back the last few years. And now it's slowing down some places the builders are are getting concerned, you can see it in their builder. You know, the builder, what do they call that the anyway, that confidence builder confidence. You can see it in that number. But those are the main things I wanted to talk about any numbers that you were thinking of that you

Ian Arnold: 11:20

basically hit because I know we like to talk a lot throughout the week on what we see and stuff. And I mean, you hit the numbers pretty good. Now, let's get to talk about a little bit more numbers. And then we'll hit some a little bit and then we'll go to a break. And we'll come back. But we really like to talk about the four biggest long term benefits of home ownership. So the number one, it'd be more the financial the money side. So I know I was briefly talking about so let's say rent for however long, and we're talking about many different years, is $1,000 per for per month. So if you did a if you rented a place and you just stayed there, instead of buying a house, after five years, you would have spent$60,000 on rent alone. So basically, that's just coming out of your pocket and going to somebody else.

Rick Ripma: 12:14

And that's being conserved that's $1,000 a month. And that's not raising the rent know any of those years, right? And $1,000 a month right now really isn't,

Ian Arnold: 12:23

now you're not getting anything, you're not really you're not getting much. So then go to 10 years, that's$120,000 Go to 15 year 180. Now, here's the big kicker, say you're just totally anti, I just want to rent I don't want to own. If you did that for 30 years, that's $360,000 that you just gave to somebody. That is crazy. Now, let's take a look. And last five years in Indiana, the home prices have changed 66.4% positive for your appreciation in your home. So what does that mean? That means a house, if you were to bought a house at 150,000, now the value would be 250. But remember, under five years, so you would have applied roughly 60,000 to that house, or you would have put $60,000 to somebody else.

Rick Ripma: 13:20

Right. And that and that five years, that means you use it would be like saving$20,000 that you had to put away in a bank? Correct? That's a lot

Ian Arnold: 13:30

that is huge. That's gigantic. Now, let's say your house is 300,000 Still the same five year gap, the value when would be 499. So you're almost at 500,000 for your house. And again, if you were to say hey, at $300,000 loan, I'm going to do a 30 year you have spent 360,000 in rent for 30 years. Or I mean, or you can easily at 30 years have your house. And in five years, it's already increased What 200,000 I'll take that any day of the week write it that appreciation is what I think goes over a lot of people's heads. Now we're gonna get into a little bit more of this when we come back from the break.

Rick Ripma: 14:14

Yeah, that that's great. After the break, we will get more into these numbers I think it's important to talk about and please if you have any questions you want to talk to us you want to you know ask anything on mortgages or just have a general question just go to a HardWorkingMortgageGuys.com. That's HardWorkingMortgageGuys.com And again, after the break, we're going to talk more about the four biggest long term benefits of homeownership.

Unknown: 14:42

Advisors mortgage brokers licensed by Indiana Department of Financial Institution equal housing opportunity. NMLS 33041 Rick Ripma is NMLS 664589

Rick Ripma: 14:50

Hi, I'm Rick Ripma with the hard work and mortgage guys and advisors Mortgage Group where we believe delivering the best mortgage for you is why we exist and it's how we all succeed

Unknown: 14:59

we believe With honesty, kindness and hard work are how we honor each client

Ian Arnold: 15:04

at hardworking mortgage guys, we believe in custom tailored loans, not the one size fits all approach. We believe

Unknown: 15:09

in always presenting you with all your options. So you get the loan you want the way you want it. We believe in continually monitoring the rules, rates and market trends. So you don't have to we believe in working hard to meet your closing date so that your entire plan isn't upended. We believe in offering the same quick online process that the bookstore mortgage companies brag about whether you're refinancing or buying your first home,

Rick Ripma: 15:33

we believe there is the best mortgage for you and we believe we are the team to deliver it find us online at hardworking mortgage guys.com.

Announcer: 15:46

Brought to you by advisors Mortgage Group, where we believe the more you know about financing a home, the less stressful buying and refinancing will be.

Rick Ripma: 15:59

Welcome back, and thanks for joining us. I'm Rick Ripma.

Ian Arnold: 16:02

And I'm Ian Arnold with advisors Mortgage Group. And we're the hard working

Rick Ripma: 16:05

mortgage guys. You know, we're gonna get into now the oh, if you need if you have any questions, you want to talk to us again HardWorkingMortgageGuys.com. That's HardWorkingMortgageGuys.com.

Ian Arnold: 16:23

And if you did miss the first 15 minutes, check out our podcast Indy's Real Estate Gurus. And now it is time for question of the week.

Unknown: 16:32

Now it's time for questions with the gurus.

Ian Arnold: 16:41

The question of the week is brought to you by the reducer mortgage. It's our inflation fighter with the price of everything going up. Call us today to see what we can do to help reduce your payment to help out your bank account. Especially with the holidays coming up. Let's not let's not have you dipping into your savings and your 401k Call us today. And we can see what we can do to help you reduce your overall payment. Because guess what, with a lot of people hitting their house with gas, gas prices are going up and it's going to that's going to hit your you in the utility bill department. So

Rick Ripma: 17:14

everything's going up. What were the inflation numbers? 8.7 Yep. 8.7%. I mean, that's everything's going up. I know. You go to the store. Everything's more expensive. Yeah, I

Ian Arnold: 17:26

don't really want to buy bacon anymore. It's so expensive.

Rick Ripma: 17:28

Well, I could eat meat.

Ian Arnold: 17:31

All right, so last week's question was I have a neck but no head and a wear a cape? Or a cap? Sorry. What am I a bottle?

Rick Ripma: 17:40

Yeah. But she's like you wear a cape?

Ian Arnold: 17:41

I do where? I'm Superman. Okay, what anybody says? All right. So this one is inspired for Halloween coming up next week. What didn't the skeleton? Why didn't the skeleton cross the street? Tune in next week to find the answer? So Rick, we're going through and trying to talk about the financial implications of long term home ownership. So I know we were talking about, we'd went through what a five year does for somebody and the appreciation and the rebound. This appreciation is just over Indiana market. This does not include anybody else. So I know a lot of times we do national numbers. This is Indiana's appreciate, yeah, and

Rick Ripma: 18:21

this, there's no guarantees of what it's going to appreciate it could appreciate higher could appreciate lower, and actually, nobody even knows what's going to happen in the future. So you got this number by looking at what our past appreciation last ones were. There you go. So that's the, you know, there's no guarantee the past is going to be present. But, you know,

Ian Arnold: 18:37

yep. So as we as you're saying that the last five years, it is increased, the average appreciation is 66.4% which is incredible. And the reason why I say that, in the last 30 years, though, in Indiana, the average home is 214 so you can see why there was that there was a huge jump the last five years, but still to learn 14 So that's tells you if you bought a house 30 years ago, which I think you're pretty close to that a little over at 150,000 Your house value would have been 322,000 That's crazy. Also, if you had a $300,000 home, that value now would be over 644

Rick Ripma: 19:25

And I want to part of that, okay, personally, I actually bought my home 31 years ago for $150,000. Okay, and this is saying now the value would be 322 Roughly Yep. Okay. Mines mine by an appraiser was worth several $100,000 More than

Ian Arnold: 19:47

this and like you said, I mean it's gonna be a rough estimate. It just one depends on as I got told when I was looking for a house. The main thing is location, location, location, is because If you are basically in, let's say, a lower part of the community where not a lot of income comes in and not a like, you're probably not gonna see a huge appreciation. But if you live in a place, let's say, a person who bought their house 30 years and fish 30 years ago in Fishers, well, what is it 10 or 12 years ago, Fisher was named the number one city to live in the United States, that place was booming like no other, your appreciation would it would skyrocket right then in there? So there are different places where you live, I mean, so for instance, if you live in Marion County or Marion city, then your appreciation might not be as much as a Marion County Citizen. It could be

Rick Ripma: 20:45

higher because you just don't know you just right. Every areas and even even spots and areas will be different. Correct. One of the spots in Indianapolis has always done extremely well. It well, two of them the meridian Kessler area. Oh, yes. Right. And, and the Broad Ripple area on the north side, those areas have done extremely well. You know, on the south side, Green was always done very well. Greenwood is boomed. It's amazing what's happened in Greenwood. But it's not just Greenwich. All those areas are booming. all over the city. Yep. And but there's pockets that just don't do the appreciation.

Ian Arnold: 21:17

Okay, so let's, let's get into a little bit more of this. So let's say you did a 30 year mortgage or whatnot, and you paid on your house consistently. And at 30 years, you're going to pay off your home. So at 300,000. So you would pay more because this little interest, but at 300,000, you would have paid off your home, that 300,000 home is 644. Or you could have spent $360,000 in rent. What I mean, people don't realize how much rent hurts you. And I to be honest with you, I wish I would have done this, because I didn't get married and buy a house until I was 30. So I wish I would have done this a lot earlier. Because if I would have bought a house when I was probably 2022. I would have had it for eight years had that appreciation instead of renting all that time. So I spent almost 10 years of renting. And I'm thinking how much I mean, right here it I would I've wasted about$120,000.

Rick Ripma: 22:21

Yep. And one of my thoughts on this is because I think a lot of people look at it and they go, Well, you know, I paid rent or I paid for the house. The difference is, is if you pay if you pay for the house, let's say you paid$300,000 for the house in your with your financing, you wouldn't borrow that much. But let's say your total amount in the house was $500,000. Let's say it was $600,000. Okay, let's say you paid a total of 600,000 hours with upkeep and maintenance and all that stuff. You paid $600,000. So your real equity, if it was 644, which I think it'd be higher, then you would you would still have$44,000 in equity. But let's say at the eight the entire amount up. So all you did is breakeven where you had to live somewhere. So if you broke even, you still save the $360,000 in rent. And I'll tell you, that would be a lot higher, because that's$1,000 a month and never increasing.

Ian Arnold: 23:12

Yeah, and I just did 1000 To make it easy. Make one make it easy. And the other thing was to make it if you went 30 years ago, the average rent was not 1000. Right?

Rick Ripma: 23:21

You're you're being conservative to get people. Yeah, I agree. That's I think that's very fair. But the reality is, even if you break even on your house, after all expenses after everything you saved $360,000. Now, this also says because sometimes when you talk about this, it sounds like we're only talking to first time homebuyers, but it does make a difference. If you have a$300,000 house and you go buy a$600,000 house, your appreciation is much higher, correct because of the higher dollar amount. Now the percentage may not be higher, but the dollar amount is higher.

Ian Arnold: 23:56

It's all about the percent. I mean, it's like when you buy stock is about percent right. Alright, so we went into the financial part. Now let's let's do the little bit. Let's change it up a little bit. What about non financial benefits? What What would you think is good non financial benefit?

Rick Ripma: 24:13

Well, one is owning, you know, owning a home gives you this signal this feeling of and this sense of accomplishment you feel you're actually you feel, you know, you feel great about it. I mean, what is what do people do when they buy a house? What do you do when you bought a house? You showed it to everybody? Right? Yep. Everybody?

Ian Arnold: 24:34

Yeah, a lot of people throw a little party it. I mean, some people throw it to hey, it's people bring over some housewarming gifts I need to fill out this house. But it's one of those things. I mean, when you and I've had it where we've done some of these first time homebuyers had never thought they could purchase a home and then they call us right after they sign and they are bawling. It's not bawling because of sadness. It's a joy. Of hey look, this is now Fine. And that mental state is phenomenal when we see that it makes doing this worthwhile. It does very easy. The other thing is is what if you've rented you'll fully understand you can have the freedom to change whatever you want. So for instance, my wife recently wanted a different light fixtures, well, we change the light fixtures, she wanted a different appliance. So we got to, we're not wasting money. This is for us. So if you wanted to paint a wall or take down a wall now all we check our contractor first. But if you want to take down a wall, you can do that. You can't do that in apartment.

Rick Ripma: 25:34

Right? And you know, along with that a little different, but it's been a long time since I lived in apartment, but I will tell you, one of the biggest things that we were glad to get away from is the noise.

Ian Arnold: 25:46

Oh, yes, people stomping on your head.

Rick Ripma: 25:49

Or yeah, we had, we had people who live below us, we call them Beamer and screamer, because they would he drove a beamer and she would scream at him. And it didn't, it could be two o'clock in the morning, and she would be screaming at him. They would just they'd be mad. And they would in a huge argument. He'd be yelling, too, but it's it that went away.

Ian Arnold: 26:10

Yep. I think one of the other things that most people don't talk about, but you actually you feel it is homeownership can lead to a greater community engagement. And what do I mean by that? I mean, if you live in a place, do you want it? Do you want the outside around looking bad? No, you'll walk around, you'll pick up that trash that just happened to fall out of somebody's car on accident or something like that, just because that's your neighborhood, you're more willing to go out and do stuff in your neighborhood and in that area, to make it look nicer and better for you.

Rick Ripma: 26:42

And you keep you keep better care of your house. Why do you why do people neighborhoods limit the amount of rental properties that can be in the neighborhood, some neighborhoods do that or don't allow it at all? They do that because a renter doesn't have the same level of commitment to that home and to the neighborhood as a homeowner,

Ian Arnold: 27:02

it's basically the same thing is think about your first car when if your parents gave you a first car, did you take great care of it? Most times? No. But when you had to go out there and purchase that car, Oh, you took great care. You're waxing it every day and stuff. That might be an exaggeration, but you understand what I'm saying wasn't for

Rick Ripma: 27:20

me. One thing I want to clarify, or at least say is that running can be a good thing to somebody. Yeah. Okay. So when we talk about what we're talking about, like with renters when I said that they are, you know, not as much bought in is, that's the surveys. That's what it shows. But we're at the end of the show. Yes. And I'm Rick Ripma.

Ian Arnold: 27:42

And Im Ian Arnold, and tune into us next week, for our Halloween Special. It'll be very spooky, just so you guys know. And also, if you have any friends or family or even co workers that would like to buy, sell or refinance, have them contact us so we can get them on the right path. Yep,

Rick Ripma: 28:00

HardWorkingMortgageGuys.com.

Announcer: 28:04

Branch NMLS number 33041. Recruitment NMLS number 664589. And Arnold's NMLS number is 1995469. Equal Housing opportunity, some restrictions apply?

Unknown: 28:14

Well, first off, thank you for joining us, Danielle. I appreciate it. And I just was curious, how did you come to find out about Rick Ripma and advisors mortgage? Well, I was looking for a mortgage for myself for a brand new home that I was building. And I wasn't sure the direction to go, I didn't have anybody in mind. So I kind of just spoke to whoever I could speak to, I got their number. And everything seemed to be exactly what I was looking for. So I went with them. The thing I liked the most about Rick and his advisors mortgage is that I could go and upload things online. And I didn't have to always be on the phone with them or sending them documents or trying to look for certain things that I needed to get the process going. Which was really great for me, I had a processor named Mark Coleman, who really helped me out in making sure I had everything I needed because I I didn't know the first thing about having a mortgage. So it was awesome to have so much help. I think probably what I benefited from the most is really just the understanding that sometimes I would get busy and maybe I forgot to upload a document or I forgot to do a certain part of the process in a timely manner and they would get right back with me and it wasn't like a hey, we really need this right now. It was always Hey, just wanted to make sure you still remember that we need this. Well you don't get that too much. In this day and age. It seems like most people are either, you know very demanding of something they need from you and they need it right now. And, and I agree I've seen that in Rick's attitude with us over over the last 10 years that he's very patient but also helpful to get the right things he needs. So exactly. In conclusion is Rick Ripma and advisors mortgage somebody that you would use in the future and or tell your friends and family about Absolutely and I just want to thank them for all the effort they put in to help me find my dream home

Announcer: 30:05

ranch NMLS number 33041 Recruitment NMLS number 664589 equal housing opportunity some restrictions apply I'm Rick Ripma

Rick Ripma: 30:12

You can go to hard work your mortgage guys.com