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What Homeowners Get Wrong About Their Home Equity · The Jon Sanchez Show

• Jon G. Sanchez: Good Tuesday afternoon to you. Welcome to the John Sanchez Show on News Talk seven eighty KOH Pleasure to be with you. Pleasure to be with my co hosts. I promise there's gonna be two of them, but one's a little technology challenge right now. But mister Cory Edge of Edge Reality, how are you, my friend? Cory Edge: I'm doing fantastic sir, how are you? Nice. Jon G. Sanchez: Very good, thank you. Very good. Yeah. Dwight, like I said, all right, he's Dwight Millard: Perfect. Jon G. Sanchez: How are you, buddy? Good. Doing great. Thank you. Doing Dwight Millard: I'm doing fantastic, John. How are you? Good, good. Jon G. Sanchez: great. All right. We got the whole crew here. Let's get started. We got a lot of things to talk about today. So we're going to go through the stock market recap. Then we're going to delve into our real estate topic of this Tuesday afternoon. And it's going to be a good one. You know, we came across a a stat that is absolutely mind blowing. Absolutely mind blowing. We covered this, I don't know, guys, what's it been? It's been months ago, but the number has risen significantly. And that stat that I'm referring to is the amount of equity that is sitting in Americans' homes. This is according to the Federal Reserve's household real estate equity data, dated September 11th, 2026. So we got you some fresh data. $35.8 trillion. $35.8 trillion is sitting in America's home equity line or home equity. Significant amount. So we said, you know, what we need to really be talking about today is something very important. Your house, obviously, based upon this data. Probably worth more than ever, or very close to it at least. But the question is, are you making smart decisions with all that equity? Should you pay off your mortgage, remodel, invest, leave the equity alone? There's a million different scenarios. And a lot of us get questions all the time. It's like, you know, I'm sitting here and I've got all this money, three, four, five hundred thousand dollars sitting there on equity, and I just don't know what I should be doing with it. So I said, you know what? We're gonna be, we're gonna Cory Edge: you Jon G. Sanchez: do a show on this. Because this is again a a a major issue that many people are thinking about. And and Corey, you know, when Cory Edge: you Jon G. Sanchez: when we talk about the home equity situation, I I always hear your voice. I hear it a lot, but I always Cory Edge: you Jon G. Sanchez: hear your voice that you've said for for many years, which is the house becomes a piggy bank when people sit on a lot of equity. And so we we or not the piggy bank, excuse me, the ATM machine. The ATM machine. And so We want to make sure, of course, that that ATM machine, if you do decide to use some of your equity, that it's done in a in a prudent and effective and hopefully a nice returning type of strategy. So we're gonna be going over Cory Edge: you Jon G. Sanchez: some of the biggest mistakes that these guys see that homeowners make with their equity, how to avoid turning those, you know, your biggest asset for many of you into a biggest liability. Because Dwight, I'll I'll start with you, of course. you know, it'd be interesting to go back Dwight Millard: Right, is it came up? Jon G. Sanchez: over, you know, your your illustrious 40 plus year career Dwight Millard: Or where it works beyond better. Jon G. Sanchez: and and say, okay. You know, it out of all the people that I've given HELOCs to or lines of credit to over the years, w how mu where was this money used? Dwight Millard: That camp the alpha means pretty nice. Go have fine. All right. See you later. Yeah, you know, John, in the old days you had to tell us where you were going to use it, right? In the old days, you yeah. I had to know I Jon G. Sanchez: Did you really? I forgot about that. That's a good point. Dwight Millard: yeah that there were there there were restrictions to how you use the equity. a lot of it was home improvement. I mean you couldn't just take Cory Edge: you Dwight Millard: out a massive amount of cash out and just not let us account for it. But now, Jon G. Sanchez: Yeah. Dwight Millard: you know, I mean, now it's not as I guess as detailed. We don't need to know and and John, you you've sent me several people inquiring about getting just a home equity line of credit, even if they're not using it, just to have it Cory Edge: Okay. Dwight Millard: as a safety valve. Jon G. Sanchez: Absolutely. Dwight Millard: And we you know, we've we've we've we we've counseled a lot of people on that because like you said, they're sitting on just a lot. But you know, if you've got twenty one, twenty-two, twenty-three percent interest rate on credit cards, you know, there's the first you know, way to go after So I mean there's just lots of ways we're cover. Jon G. Sanchez: Well y you know, I I wanna not to get too Cory Edge: you Jon G. Sanchez: deep into this because this we have a tendency to do this. We get so excited about our Dwight Millard: Yeah. Yes. Jon G. Sanchez: our our show topic and and then then next thing we know we don't have time to hit the stock market. So I wanna make sure we don't do that today. But you you bring up an interesting point, Dwight, and and I wanna clarify one thing because Dwight is absolutely right. You know, I have sent numerous clients to him over my career in the, you know, geez, what, 20 plus years Dwight and I have known each other. Dwight Millard: Yeah, yeah, yeah. Jon G. Sanchez: The number one reason is when someone is going to retire and they've done everything Cory Edge: you Jon G. Sanchez: right, they've got everything paid off, the house is paid off, et cetera. And they, you know, they about fall out of their chair when I said, You know what? You got to go see my buddy Dwight. And they're like, we just got the house paid off. What do you mean you want us to? And the reason I recommend this is purely as a safety net. Because as Dwight, Cory Edge: you Jon G. Sanchez: and I hope you will allude to this, Dwight, I think this is a great point to bring up here later in the show. You and I both know, and Corey knows. How difficult it is in today's environment for a retiree to get a loan, right? Not saying it can't be done, but there's a lot more Dwight Millard: Mm-hmm. Mm-hmm. Uh-huh. Jon G. Sanchez: hoops that people have to go through. Dwight has had me, you know, write letters saying, yes, the client has this amount of money in their investment account. Dwight Millard: Yeah. Jon G. Sanchez: As the CEO, yes, I'm validating that that we are comfortable with the amount of income that the portfolio is producing and we you know feel it can produce it for X number of years. And Dwight has to get all that validation. But there's a lot of hoops. Remember that one client, Dwight, years ago I sent you? Dwight Millard: Mm-hmm. Jon G. Sanchez: You know, the lady, she Dwight Millard: Mm-hmm. Jon G. Sanchez: was a widow, she had god, I don't know, two or three million dollars with me. Thought it was a slam Dwight Millard: Mm-hmm. Yeah. Jon G. Sanchez: dunk. She gets turned down by everybody, good credit Cory Edge: . Jon G. Sanchez: and everything else. And you know, you got that out of everybody, of course, you got it done as you always do. But remember the hoops that you made me jump through. And I I don't say that in Dwight Millard: Hell yeah? Hell yeah? Jon G. Sanchez: a in a derogatory fashion, but John, I need a letter, I need a proof of this. I mean be and I said, What's going on? And he said, You know, without a job, lenders are very, very careful about giving lines of credit. So That's why I send people to Dwight, not when they retire, but right before that, when they still have a job. And we get that line of credit just in case something comes up. And you know, my clients, they're the best in the world. They're not stupid with their money. And they never touch it, right? But but boy, if they something ever comes up, I know it makes me as their financial advisor sleep very well at night. Dwight Millard: Yeah, John, a hundred percent. I mean, we still qualify him. I mean, every HELOC company, every we still have to go through debt to income ratios. Actually, probably there'll be a little more scrutiny on that sometimes than others. But yeah, it and it doesn't go through an automated people think because they have 40%, you know, or 60% equity, I'm I'm a slam dunk. We still got to qualify you. So, no, to your point. Yeah, yes, yeah. Well, they don't like that either. Jon G. Sanchez: Right. Right. Or or even a hundred per even a hundred percent equity, right? I I've said too yeah, that yeah, I know. Dwight Millard: Yeah, they don't like anything, right? So yeah. So it's just yeah, if you if you think you're gonna retire in the next year or two, this is a good way to probably you know, it doesn't it's a sixty dollar a year maintenance fee. Yeah. Jon G. Sanchez: Yeah. Absolutely. Absolutely. Yeah, right. Big deal. Cory Edge: you Jon G. Sanchez: Corey, one thing I'm really looking forward to teaching us about this afternoon is, you know, for those that and and we've had this happen, of course, with Dwight and I and and sharing clients back and forth, where they had things they needed to improve. They needed to to redo the landscaping or they needed to get the house ready for sale and they needed a new roof and you know, a lot of expenditures. I really want to have you emphasize What's what's a good ROI, right? If we are going to take the risk, and this is it, this is a risk, right? It's not a slam dunk to take equity out of your house. It's it's the roof over your head. So you got to be very careful with it. But there are certain things, Corey, that you've taught us over the years where it's a good return on investment, whether you're gonna stay, whether you're gonna sell, whatever the case is, versus again, going out and blowing it on something dumb. Cory Edge: Correct, and we talk about return on investment if you're in the process of selling or going to sell, but there is also a return on investment just of happiness, right? Like Jon G. Sanchez: Sure. Cory Edge: people have built up all this massive amount of equity, but they hate their backyard patio. Well, Jon G. Sanchez: Yes. Cory Edge: I mean, maybe you deserve a new backyard patio. Some of them are personal questions you'll have to answer yourself. Will they all get the best return when you ever do have to sell? Not all of them, but if you get 15 years of enjoyment out of it, then maybe Jon G. Sanchez: Sure, sure. Cory Edge: that makes sense. I do find that when I talk to people, it's not always individual, but a lot of it comes down to the individual Jon G. Sanchez: Mm-hmm. Cory Edge: as to what they feel is important or not important. Jon G. Sanchez: Well, Dwight, to Corey's point, I I think the last referral I sent you in in regards to to HELOC, it was exactly what Corey just alluded to. Remember, they needed a a bun they had to spend a bunch of money on a backyard remodel. They loved Dwight Millard: Mm-hmm. Jon G. Sanchez: where they lived, they're gonna stay there, they're gonna die there at this house. So to your point, Corey, you're absolutely spot on. You know, they're gonna amortize this this loan for the next, you know, fifteen years from a from a personal satisfaction standpoint. And, you know, Dwight got the deal done in in no time, of course. And and But happy, happy people, you know, and then Dwight Millard: Yeah, yeah, yeah. John, there's so much flexibility to the HELOC. You know, to to these Jon G. Sanchez: Yeah, yeah. Dwight Millard: specific clients, I think they're gonna pay it off in a couple of years. But they'll leave but they said I'll leave it open. I'll leave it open. I mean for sixty bucks, I'll leave it open. Yeah. Jon G. Sanchez: Yeah, well, that was our plan. Yeah. That's right. And and that was their plan. And this is where, you know, again, please, folks, if you're gonna do a a a line of credit, please involve your financial advisor in in and your CPA and so on and so forth. Because I know for like from our standpoint, we try to help the client get that loan paid off as soon as possible, right? If they have a great year in the market, it's like, hey, you know what? You're you've been taking, you know, let's pick a hypothetical $5,000 a month out for your retirement income. But you know what, you just had a hell of a year in the market. Take an extra whatever, 30,000, 40,000. That was kind of free money that you made this year. It's not going to impact your cash flow going forward. And send it off and pay down that line of credit or put a good chunk towards it. And they love it. It gives them a great feeling of satisfaction. So there's a lot of ways, but again, you've got to communicate among the team to to let everybody know what's going on, what's the goals of the money, and and you know, how do you wanna, you know, how and when are you gonna pay it off? So it's It's a really interesting topic that that I've been looking all forward looking forward to all day, I should say, to to discuss with you guys. All right. When we come back, we'll hit the stock market side of things today and then we will get into our topic, what homeowners get wrong about their home equity with Dwight Welcome back to the John Sanchez Show on Newstock 780 KOH with Corey's Vidriality Cory Edge: you Jon G. Sanchez: and Dwight Millard of OnQ Home Loans. All right, let's give you what happened today. And then we've got some news for you that's occurring in the after hour session. Pretty good stuff here. so as far as the regular session was concerned, stellar day for the Dow. 530-point gain, 1.02%. finished at a level of 52,495. So nice to see that bad boy come back just a little bit. NASDAQ, though, was up and down and all over the place today. But not right now in the after hour session. I'll give you a little hint. Right NASDAQ futures for what it's worth, they just started trading at three o'clock. They're up about 250 points. And but the regular session, Nasdaq lost six, and the SP finished higher by 22 points or 0.28%. before we turn it over to Dwight for the mortgage update, let me tell you again what's going on in the after hours. So on the SpaceX conference call that occurred not long after the close, Elon Musk indicated to the to the analyst. That he is they're they're looking into. I don't know how far they are into the deal. So I don't really know how you know, again, how convincing this is, but he stated that the company, meaning SpaceX and Tesla, have formed a special committee or committees to discuss merger, and that he thinks a merger would be a good idea. Says he can't assume that a merger is a certainty. So, you know, guys, that that had been rumored a long time ago, long before SpaceX even went public. And remember, SpaceX absorbed X, and SpaceX has absorbed a lot of different things. So obviously they sw swap Cory Edge: you Jon G. Sanchez: a lot of technology. I mean, it's not that crazy of an idea, but let me tell you what's going on. SpaceX right now is taking off to the moon. regular session, it finished down 17 cents to 147.79. Right now, after the comments by Mr. Musk, stock is up ten dollars and four cents, a 6.79% gain to 157.83. Tesla finished the regular session up $5.65, 1.54% gain to $373.71. Right now in the after hours, Tesla's up $5.84, 1.56% to $379.55. So yeah, it's going to be an interesting one, guys. You just never know. You never know. So we will see. Okay, tenure treasury today, down two basis points, five twelve. Let's turn it over to you, Dwight. How'd we do on the mortgage side of things? Give us some good news. We need it. Dwight Millard: Well, we're heading the right direction, John. I mean, so today, according to Mortgage News Daily, 7.40 down three basis points, which is, you know, and you look at your governments, you know, I didn't think we'd be saying this this late in the game this year, but your 30-year Jon G. Sanchez: Yeah. Dwight Millard: FHA and VA just just slightly above seven. So we might crest that six point something this week, maybe if we can get a couple good days. Jon G. Sanchez: And a couple of weeks ago we hit what was that about seven six, seven, six five, somewhere around there? Dwight Millard: set yeah, yeah, we were we were going we were way Jon G. Sanchez: So Dwight Millard: north of seven and a half headed towards eight, right? And now we're kind of heading out towards it the six sixes, hopefully. So but John, I Jon G. Sanchez: Yeah, yeah, yeah, yeah. Yeah, yeah. Dwight Millard: you know, if when you look at one of the headlines and y maybe you you've talked about this is it just says the tech concerns are keeping the bonds in play. Meaning that, you know, Jon G. Sanchez: Sure. Dwight Millard: so you've been talking about this little, you know, you and Corey, the the concern in the around the tech market. So Jon G. Sanchez: Yeah, yeah. Well, yeah, and Dwight Millard: I guess the bonds are benefiting for that, right? Jon G. Sanchez: and let's yeah, and and let's explore that. So, you know, again, we're we're in one of these scenarios, guys, where you guys know this and the audience knows this. You wake up that day the market hates tech, specifically AI when I'm saying tech, they hate it like yesterday, next day, they love it. You know, like today, right? this news should give us some nice fuel, rocket fuel tomorrow if everything holds overnight. Cory Edge: Thank Jon G. Sanchez: But do I, you know, when you look at that, people are gonna go or to your point, what what's happening is people are they're rotating. We've seen Cory Edge: you Jon G. Sanchez: you know, I follow the sectors very closely. We've seen a lot of the I like to call them the boring sectors, right? Utilities and consumer staples and and you know, pharmaceutical or or geez, not pharmaceutical names, excuse me, the sector, but healthcare. Thank you. Jeez. Kind of the boring areas. We've seen a lot of money rotate into that area. I mean, today's a prime example. Okay, so as I said, NASDAQ what lost six, right? Eli Lilly today, up forty four dollars and eighty one cents. BioGen up nine dollars and sixty two cents. I mean, on and on and on. this is an all time high, matter of fact, closing high for Lilly. So so this rotation, people are looking for safe havens is the point I'm getting to. Well, of course, what do they go for a safe haven? They buy the bonds, which of course drives the yields down and hence why you're seeing the rates, you know, drifting down. So do I I guess I guess to to wrap up this point, you should almost be saying, come on, tech, fall apart, you know, because that'll that'll help my mortgage rates. Not out loud. Yeah, exactly. Exactly. So Dwight Millard: Yeah. Yeah Yeah. Yeah. Not out loud, John. Not out loud, but yes. Yeah. Yeah. Well John, Cory Edge: Yeah. Dwight Millard: do you f do you feel that the healthcare as these baby boomers start to need more and more healthcare, get sick, do you see them just s shifting some of their portfolios into what they're using? Jon G. Sanchez: You know, we we had that you know, we we had that theory for many years, Dwight. You know, I I you know, you and I again are are the tail end of the baby boomers and I've shared this story a million times when I was very young. I think I was, you know, one or two years into my career. This was in the early nineties, and this guy named Harry Dent, a Harvard economist, comes into our office at Shearson Lehman Brothers, and we sit down for lunch and he's like, I just wrote this book and it's called The Baby Boomers, and we're all looking at each other, it's like 30 brokers in there, and we're looking at each like, what the heck's a baby boomer? And he said, visualize this this economic, this or I should say, this demographic boom that's going to occur, you know, over the next, I forget his time period, I think 20 or 30 years. And and he said, it's like a a python that just ate a big rabbit or a big rat. And you see this python, you know, you see this rabbit that it just ate going through the body of the snake. And he goes, That's what the baby boom generation is gonna do for this economy. It's just gonna push through and it's gonna drive real estate higher and the stock market higher. Well. You know, again, back in that time period we were sh three, four thousand on the Dow and you know, here we are at fifty-two thousand four ninety-five and we've been higher. So yeah, he and he's still around. But to your point, we thought for sure that was going to be one of the hot sectors would be healthcare because, like you said, the aging baby boomers. I'm sure it still is there, but I haven't seen the data to support that. It's just my opinion. But the the healthcare, the reason it's surging so much, of course, it's it's all these Doggone weight loss drugs. I I mean these companies are Dwight Millard: Yeah. Jon G. Sanchez: making a fortune on the weight loss drugs, which is every generation's using them. You know, just Dwight Millard: Yeah. Jon G. Sanchez: it it's amazing. So I think that that's kind of the latest push there. Because you gotta think about Dwight Millard: Yeah. I can see that. Jon G. Sanchez: it too. Cory Edge: Okay. Jon G. Sanchez: These pharmaceuticals, these pharma, it's not the old heyday like it was when when you know when we were younger and our parents were were using it. Why? Because you know, Medicare was was pretty generous in those days. Medicare is tight right now. I mean, these companies are vying to make a buck when they're a Medicare provider, which at sixty five, you go on Medicare. So you're leaving it up to the government. And of course the government, the Trump administration's done really good job negotiating down lower drug costs and Medicare rates and things like that. So, you know, so from that standpoint, I don't think healthcare is that great, you know, from from the baby boomer side, other than I g you just look at the whole population, like I said, with all the new drugs Dwight Millard: Yeah. Jon G. Sanchez: and things that are happening. I think I think that's the number one driving force there. Dwight Millard: Okay. Jon G. Sanchez: Good question. Thank you. Cory Edge: Makes sense. Jon G. Sanchez: Yeah. All right a bush, let's go ahead and take this break. When we come back, let's get down and roll up our sleeves and talk about what homeowners get wrong about their equity. Welcome back to the John Sanchez show on Instac 780KOH with Corey Ojovidge Reality Dividment Lauder. But you know, again, you got to remind yourself, sounds huge, right? But it's only a 1% gain. $52,495 was our closed. NASDAQ lost six, but futures are looking strong up over 200. And the SP finished with a gain of twenty-one points. Oil lost two dollars and fifteen cents. Guys, I was I was starting to get really nervous this morning. it was like in the five, six o'clock hour. We had oil prices surge as a matter of fact. I'm looking at my notes and my my first update at five twenty three this morning. Oil was up three dollars and thirty nine cents to one hundred seven fifty five a barrel. Dwight Millard: All right. Cory Edge: Yeah, what was that? I saw that and then all of sudden it crashed, but I didn't see any news with either one of them. Jon G. Sanchez: Yeah. no, there really wasn't. It's again c as we were talking off air, th this market is just there's so many things that you just sit there and once again I'll use the analogy, you scratch your head. I I mean the futures are showing that we're gonna open down two hundred points and the opening bell rings and the the the market goes up hundred and thirty points, like kind of what happened today. It but it's there's there's just there's no predicting anything right now because again, these algorithms Corey back to you know the I thought about you yesterday. I think it was was it Barclays, I believe it was. no, HSBC. Excuse me, HSBC. great article in the I think it was in Bloomberg yesterday. HSBC saying they're basically about a year away from allowing AI agents to do all their bond trading. It's gonna be overseen by human beings, Cory Edge: Wow. Jon G. Sanchez: but that's that's where it's going. And that's my point. That's why we just have this crazy volatility. It's and it's only, only Dwight Millard: Yeah, Jon G. Sanchez: gonna get worse. You're gonna have, I'm telling you, you're Dwight Millard: Okay. Jon G. Sanchez: gonna have AI agents that are controlling this stock market, and it'll be good till it's good. But it when it goes bad, it's gonna be if all of you are around been long enough, you know, been around long enough for what year was it, Corey and Dwight, 2010 when we had that fat finger trade. Remember that when the market tanked thousands of points in a matter of seconds. I remember trying to get my clients Dwight Millard: Second one. Jon G. Sanchez: out of the market and there were no buyers on the other side. You we were just stuck, you couldn't do it. And but but you know, speaking of of layoffs, Dwight, before we get to our topic today. you were telling us off air, a major Dwight Millard: Anyway. Jon G. Sanchez: lender, is that correct, announced a a massive amount of layoffs today? Dwight Millard: Whether whether there's there's a few of them, John, out there, but you're you're start you're gonna start to see that the cracks are there. I mean, with AI and the slowdown of the business, a lot of these big, big companies are you're gonna start seeing lots of layoffs. They're gonna try to be quiet about it, but it's gonna it's gonna happen. And a dear friend of mine in the industry that's kind of a recruiter type of person is the phone's just blowing up from staff. that have lost their jobs that are willing to take half the half the income. Yeah, yeah. Jon G. Sanchez: I was gonna say you you gave me the example of some of these staff members, underwriters, et cetera, making north of a hundred thousand and they're begging to him for a job of forty to fifty thousand 'cause there's nothing out there. Dwight Millard: Yeah, just fifty thousand yeah, just to get back in yeah. And the problem is is you s you you called it a while ago. I mean, you're gonna this is the opportunity to cut staff. You'll never get back 'cause now you're gonna you're gonna turn everything to AI. Yeah. Yeah. And it Jon G. Sanchez: absolutely. We're seeing it everywhere. Nope. These these jobs are gone. These jobs are gone. They that's Cory Edge: Well, and I'll tell you, I'll Jon G. Sanchez: Go ahead, Corey. No, go ahead. Cory Edge: go ahead. Dwight Millard: No, go ahead. Cory Edge: I was just going to say, I'm just delaying the topic even more, but two things. I have a friend whose son is in the military and he's overseas right now doing, what do I call it? Like special operations, if you want to call it. But they're on the boats, right? They're out there making sure these ships are doing what they say to. And I saw him last night and I go, hey, how's he doing? He goes, he called me yesterday said, there's nothing to do. They're lifting, because Trump's lifting all the sanctions everywhere. The military is just basically floating around with nobody to check Jon G. Sanchez: No kidding. Cory Edge: and which may affect some of your oil prices, right? Like if Jon G. Sanchez: Yeah, yeah. Cory Edge: they're letting everybody go through, the oil will come down. The other interesting thing of what we were just talking to a very good friend of mine, dear friend of mine was in the construction business on the, he wasn't swinging a hammer, but kind of in the office setting here locally for years born Jon G. Sanchez: Yeah. Management. Mm-hmm. Cory Edge: and raised. And somebody told me, he's moving to Texas. I go, that's crazy. So I called them last week, Jon G. Sanchez: Mm-hmm. Cory Edge: just seeing what he's up to. He's like, dude, I came to Texas on. Jon G. Sanchez: Data centers. Cory Edge: data center, his pay got tripled. Dwight Millard: Mm-hmm. Cory Edge: And he goes, I had my pick, like I could have gone to 10 different data centers. He goes, if anybody's in construction Jon G. Sanchez: You gotta be kidding. Cory Edge: and they want to make, and this isn't small pay, this is hundreds of thousands of dollars. And he's Jon G. Sanchez: no, this is big money. Yes, yes. Dwight Millard: Yeah. Cory Edge: not swinging a hammer. He's like, I walk around and watch the guys swing the hammers. I'm like, that is bonkers. It's crazy. Jon G. Sanchez: Yeah. And and Dwight Millard: Yeah. Jon G. Sanchez: I I I shared with you guys last week that I read a I think I maybe it was when no, you know what apologize. I think it was Wednesday when I obviously not with you guys, but I I read this fascinating article. I invite all of you to read this. It was it was in Bloomberg.com and it walked through all of the phases of a data center and what these data centers Dwight Millard: Mm-hmm. Jon G. Sanchez: really cost, right? I mean A couple of billion is nothing for a one gigawatt data center. I mean, that's by the time you factor in everything. And they were saying, Corey, in that article, to your point, they just cannot that's the reason so many of these are getting delayed. They cannot get enough qualified workers there. They're they're begging and and throwing like stupid money at these at these construction workers. There's just not enough people doing it that want to be in construction that are doing it. But to your point, this isn't you know. I you know, I still say the two hardest jobs I ever had growing up, when I worked preload for UPS for I don't know, two or three Christmases when I was young, really young, unloading semi trucks, you know, from eleven at night till six in the morning. and the second hardest job was one summer I decided my brother in law was a a framer in in when I lived in Lancaster out there in that summer heat of Lancaster framing. I think I lasted about a month. That was the second hardest job I ever had. So, you know, construction is not like it was. I mean, Dwight, you grew up in a in a construction family. Yeah. Dwight Millard: Mm-hmm. Yeah, pal. Jon G. Sanchez: Th th those days of, you know, you're where you're you know, you're you're a fifty year old man of construction, you're making fifty grand, you've really topped out, shh, it's not anymore. But a but a hundred before that, if not more. You know. Dwight Millard: Yeah, no. Yeah. It was a great career when you're sixteen, fifteen, sixteen, seventeen years old. You're thin, you're tan, you're and you're healthy. Yeah, yeah. Yep. Can't do it now. We were just talking about yesterday. Jon G. Sanchez: Yeah, yeah, exactly. Touch your really good work ethic. Yep, that's right. Time, fit, yeah. Nope, nope. Dwight Millard: There's no way you'd get me walking on trusses right now. Jon G. Sanchez: No way, not at all. All right, boys, let's get to our topic tonight. So once again, we're gonna talk about home equity, right? When homeowners get wrong about their equity, as we said, we don't have time now to go through the report in detail. But once again, the Federal Reserve Household Real Estate Equity Data Report came out just on September eleventh of this year. So total equity eight Americans hold in their homes thirty five point eight trillion dollars. That's that's substantial. I mean, we've got all kinds of data to share with you, but again. running out of time very quickly. So guys, I I want to get down to really, you know, what's so important about this. And and that is, you know, here we are, America's sitting on just an absolute mountain of equity. I I would think, again, this is all time high and as far as the number of houses that are out there. But Duane, I'm gonna start with you because you're you're kind of the gatekeeper to this this Dwight Millard: Mm-hmm. Jon G. Sanchez: this this chunk of money that homeowners are sitting on. Let's kind of talk about the five Biggest home equity mistakes that you see. And the first one, of course, is treating equity like it's free money. Explain that point. Dwight Millard: It's just easy to get to, John. And you know, you just you find yourself with it, you're you're earmarking, I'm gonna do this, and it ends up doing something else. You buy golf clubs, you go on a vacation, Jon G. Sanchez: Ha ha ha. Dwight Millard: you know, it you you migrate. It's easy to migrate away from what your initial objective was with the equity. And it's easy to tap into now. It's not as easy Jon G. Sanchez: Okay. Dwight Millard: as was in in, you know, early two thousand and seven and six, but still really t relatively easy. Yeah. Jon G. Sanchez: Right. Right. Thank you. All right, Corey. Mistake number two, using home equity to finance depreciating assets. The RV, the boat, the yeah. All the toys. Cory Edge: Boats, cars, all the toys. Yes, correct. And so it's Dwight Millard: Mm-hmm. Cory Edge: just kind of a math equation, right? Like you don't want to take that thing that you're trying to hold onto for obvious reasons and put into a depreciating asset. then usually like as Dwight mentioned, there's other stuff that comes along with it. So just be smart with it. It's different. The other thing too, and I'm sure we'll get to it is kind of like in your world where people won't sell stocks to realize a gain, but they'll borrow against stocks to provide a living. Jon G. Sanchez: Yes, yes. Cory Edge: they'll do the same thing with the home equity line because it doesn't change your real estate taxes. It's not taxable. It's all these different, you know, benefits to it nowadays. Jon G. Sanchez: Yep. Yep. Yep. I I remember and divide I don't know if this is still prevalent, but I remember my back to my younger years again when I, you know, so you guys know I worked for GMAC as a credit analyst and early career repo guy. And I remember, you know, people telling me stories that I'd go out and repo their car and they're like, Yeah, I borrowed, you know, forty thousand dollars or thirty thousand in those days against my home equity, you know, to to instead of getting a loan. I'm like, Are you stupid? You you you you're buying a car for the next thirty years, right? Because y you know as well as I do. Are Dwight Millard: Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm. Jon G. Sanchez: do people still do that, Dwight? Do you see that or hear that? Dwight Millard: yeah. yeah. Well and John and that's mistake number, you know, number three, right? Is you you you you you you borrow equity to pay car or different things and you guess what? Your habits don't change, you charge it right back up. It's I see that all the time. And what and what's amazing, Jon G. Sanchez: Okay. I wanted to ask you about that. So the Dwight Millard: John, is I I've seen so many where husband and wife are refinancing at a payoff debt and they get in there and they go, I I don't that's not my debt. Well, yes, you know. Jon G. Sanchez: Ha ha ha. Dwight Millard: It's a very uncomfortable situation for a lot of couples that didn't realize there's some debt there. Jon G. Sanchez: Well, I think I think I think you hit it spot on Dwight. And that is, and and I've seen it too with clients. They like you said they they pay everything off and they're so relieved. And next thing you know, and I always tell them, go put those credit cards, don't close them. Dwight says, don't close them, don't close them, Dwight Millard: Right back. Mm yeah. Yep. Jon G. Sanchez: go put them in the safety deposit box. but human nature, it's like, man, I got you know thirty, forty thousand dollars on my credit cards that I can use. And you do that, then you still have the payment on the home equity line of credit, and you're you're worse off than before you got the home equity line. Dwight Millard: Well in the old days, John, we used to make you pay them off and close them. We'd actually pay them off an escrow and close them. Yeah. Mm-hmm. Yeah. Thinking they would they were a little more responsible. Yeah. Well, guess what happens Jon G. Sanchez: Did you really? Okay. Interesting. Boy, things were things were a little bit better back in those days, weren't they? Sounds like that's yeah, a little more responsible. Yeah, exactly. Dwight Millard: when you pay all your credit cards off? You get a bump in your in your credit line. So they just could go higher than what they did before. Yeah. Yeah. Jon G. Sanchez: Yep. Yeah, exactly. Exactly. Yeah, that's right. You're responsible. Give me more. All right. We'll come back with mistake number six, which is refinancing a low rate first mortgage unnecessarily. this is a good one, Dwight came up with. Welcome back to the John Sanchez show on News Talk seven eighty K W it's Dwight Millard of On Q Home Loams. May we get your phone number, sir. Dwight Millard: Yes, sir. Two four zero two zero two two. Jon G. Sanchez: Thank you, my friend. Mr. Edge. Cory Edge: 673-6700. Jon G. Sanchez: Thank you, sir. All right. We're talking about what homeowners get wrong about their home equity. We're on to number five number four. I was trying to say Cory Edge: Power! Jon G. Sanchez: I was trying to say four and five together. number four, refinancing a low rate first mortgage unnecessarily. Dwight, talk to us about that one. Dwight Millard: yeah. Yeah. Why you trade off your three percent for an interest only HELOC? I mean, there's smart ways to do it. Keep keep your low interest rate. It's free money. We've talked about it. And then if you need if you absolutely need some money, the smartest way right now is the HELOC, which is what you encourage all your clients kind of to do right now. Jon G. Sanchez: Why I was confused on this point. Why I I mean a HELOC is a s is a second. I I don't know. I'm I'm confused on this point. Dwight Millard: I I well you you you you're gonna so what the what's attractive and that's the next point, what's attractive to a HELOC is it's interest only for whatever the draw period is, John five or ten. So your payment's gonna be really less because you're paying only inter you're paying interest only. So Jon G. Sanchez: Okay. Okay. Significantly lower. Okay. That's what's meant by that. Thank you. Dwight Millard: it looks good to most people. Hey, then my payment went down, but you're not cut you're not even getting into your principal. The other problem is is when it resets, whether it's at twenty five or twenty years, that payment is a twenty year term. You didn't pay anything off. So you yeah, it just Those are incredible mistakes together. Jon G. Sanchez: Corey you you Cory, you deal with a lot of high net worth people. Do they is are they with these skyrocketing rates right now, if they're not paying cash, are they just going interest only? It you know, to Dwight's point, trying to keep that payment down and some cases getting a nice, you know, interest deduction on their tax return. Do you see that much? Cory Edge: Most of them are paying cash. A lot of them refinanced or even pulled out debt, first loans or second helux, whatever, back during COVID when the rates were low. And so they're still living on that. mean, I had a conversation with a friend of mine today who's got a big house and they want to downsize, but he's like, if I downsize the house that's a third of the size costs more, so they're just gonna live Dwight Millard: Mm-hmm. Cory Edge: on the top floor of the current house. Like, why would I sell and go anywhere? Yeah. Jon G. Sanchez: Right. Right. Right. And probably a higher mortgage rate if he's going to get a mortgage Dwight Millard: Mm-hmm. Mm. Yeah, yeah. Jon G. Sanchez: than what he currently has. Cory Edge: And I have another friend who has a really nice house up in a very nice part of Reno. He's like, yeah, was gonna sell it and get a rental, but my mortgage is lower than the average studio rental. He's like, so why would I, the studio, a studio, and this Jon G. Sanchez: Yeah, I have that conversation a lot. Yeah, they yeah, studio. Yeah, then a studio. Yep. Then a studio. Dwight Millard: Yeah. Cory Edge: is a multimillion dollar house. I'm like, yeah, I mean, Jon G. Sanchez: That's right. Cory Edge: it's, that's, I'm way off topic here, but that's why the market's frozen. Like, why would people Jon G. Sanchez: No. Sure. Cory Edge: leave? There's no reason to leave. Dwight Millard: Yeah. Mm-hmm. Jon G. Sanchez: Right. Do you think, Corey, that the only way we're going to see to use your term to unfreeze the housing market, as we've discussed many times, that the government comes out and does some type of a, you know, transferable mortgage for those that have the the two, three, four percent mortgages, is that gonna be the only way that these people re that we're really gonna see a, you know, a a substantial increase in the inventory level? Cory Edge: I think especially when you talked about baby boomers, because that seems to be the biggest cohort that's sitting and why wouldn't they sit? They either don't know anything or they've got these super low interest rates. So to me, you're either going to have to let them carry their interest rate or you're going to have to really do something on the capital gains tax. Because Dwight Millard: Mm-hmm. Cory Edge: a lot of these people are very sharp or they have people like yourself that handle their finances that are very sharp. And I'm going be like, why would you sell this, know, Franny, because your tax bill is going to be more than But if they come out and start giving some incentives, which, you know, now we're getting off track. If the Dems get control of Congress, you'll never see those incentives because they think people with money are evil. Jon G. Sanchez: That's right. That's right. Right. Cory Edge: So will that ever happen? Who knows? At some point, something has to crack, but I'm not Jon G. Sanchez: Yeah, yeah. Cory Edge: holding my breath. Jon G. Sanchez: Yeah, no kidding. All right, Dwight, let's wrap you wrap up the fifth point with you. Borrowing without a repayment Dwight Millard: Yeah. Jon G. Sanchez: strategy. I love this point. Dwight Millard: Yeah, yeah. You you you it's good until it's not good. And that's that means during the draw period where you can take as much money or however you're gonna do a credit card checks, they make it real easy, right? So you can do whatever you then all of a sudden when that draw period is over, most people have not chewed off any of their principal unless they have a real good plan, Jon G. Sanchez: Of course. Dwight Millard: right? Hey, I'm gonna you know. So then it converts into a fixed, whatever that term is, whether it's 20 or 25 years fixed rate at the current market. Can you imagine if this market doesn't change for five years on a 25 on a you know year term on a seven and a half? I mean, that's gonna be a shocker Jon G. Sanchez: Yeah, yeah. Dwight Millard: to most people. And then they've got to, they probably gotta sell. They got to get a hold of Corey. Hey, I can't afford this anymore. And you're gonna see some of that, John, come up. We're Jon G. Sanchez: So what's your advice Dwight Millard: not there yet. Jon G. Sanchez: Yeah. Yeah, yeah. So what's your advice on those that do take out the HELOC? Be diligent, have a repayment strategy Dwight Millard: Yeah, I just be very discipl very very disciplined in what you're doing. Yeah. Have a have a plan of what you're doing. I mean, hope what we've talked about. If you're remodeling a home, if you're doing you know, doing something to improve your asset base or whatever, that's that's okay. But to take it out, you just find people get so distracted. It's the squirrel theory, right? Squirrel and they go on a vacation, they Jon G. Sanchez: Right. Yeah. Dwight Millard: go, they go drop fift twenty grand. Corey and I know peop that they've dropped thirty grand on a vacation. Yeah, Jon G. Sanchez: Yeah. yeah. I yep, absolutely. Cory Edge: Yeah. Dwight Millard: yeah. Jon G. Sanchez: And that that's if that yeah, yeah. And and that vacation, Cory Edge: You'd rather have a car, right? At least a car you could drive around in. Dwight Millard: Yeah, yeah. Jon G. Sanchez: that's that's if they don't take all their family. I I I've seen that many times though, clients are like, We're taking multiple generations on this cruise. I'm like, I think top one I've seen sixty thousand, they they withdrew and I'm like, Yeah, it's a memory, but here we go. All right, boys. Dwight Millard: Yeah, yeah. I love using the equity Cory Edge: But the ones I've seen lately are Dwight Millard: but be smart, yeah. Cory Edge: the huge extravagant weddings, the 400,000-dollar weddings. Like, you gotta be kidding me. Anyway. Jon G. Sanchez: I we gotta Yeah. Yep, that one too. That one too. Great job, boys. All right, we'll do it again tomorrow on the John Sanchez show. God bless. Have a great afternoon. Yeah.