The Debt Trap

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Episode Transcript

Speaker 1 (00:00):
Six one seven, two six six, sixty eight sixty eight
is the number?

Speaker 2 (00:05):
Okay? Should we have fifty year mortgages?

Speaker 1 (00:09):
Trump and his economic inner circle are now giving it
a serious hard look to deal with the affordability crisis.
It would clearly lower monthly payments by about two hundred,
maybe even two hundred and fifty dollars every month. But man,
you'd be paying for it much longer, obviously, and the
interest you'd be paying interest through the nose. So in

(00:34):
the end, is it really worth it. Let's go right
back to Tanya in Boston. She is talking about when
this was about maybe twenty years ago. She was a student,
had two hundred thousand dollars in debt, basically had about
one thousand dollars to her name. They said to her,
you've got to become a homeowner. That's the best way

(00:55):
for you to advance. So she took out a loan
and then we had to get we got a hard break,
We had to go can you please pick up where
you left off?

Speaker 3 (01:07):
So I got the loan, I had a point to pay,
and prior to owning the house, I owed about thirteen
thousand dollars in taxes when the year went by and
I had this loan. It was like a break even
for me because when I did my taxes with the house,
now I had something to my name, and I got

(01:27):
about sixteen thousand dollars back from all the interests I
had paid with this loan. But the fine print of
this loan is what a lot of people didn't read.
You can't You couldn't stay in those loans. You had
to refinance. So I ended up refinancing three times. So
the second time I refinanced, I refinanced to get rid

(01:48):
of the points, and then the economy was, you know,
the bubble was bursting, the things were starting to settle down.
And then the following year for those taxes, I still
got about sixteen grand back. And then the third time
I refinanced was to get a better interest rate, and
then I stayed in that loan. But I can understand

(02:10):
why they want to do this fifty year mortgage because
I'm in the same predicament right now in a little
bit different scenario. We are currently in a house and
I have a seven to one year arm, and that
arm is going to expire this coming August. We're trying
to get a house edition we have not moved forward
yet because the interest rates are like six percent and

(02:34):
my seven to one year arm is at an interest
rate of three percent. So right there, once I refinance,
it's going to double my payments, my payment amount, and
then if I want to add the addition on top
of it, we're looking at like three times the amount
of money that we're spending per month. So for me,
I think if you thinking, if you're talking about the

(02:56):
fifty year I can put kind of a positive spin
on this. It's depends on the mentality that you're going
to use a fifty year loan. So when I heard
you say it on a radio today, I immediately text
my husband. I'm like, they're going to do a fifty
year alone. That's our win because we can get in it.
And it depends it really depends on what the what
the fine print of that fifty year loon Here.

Speaker 1 (03:18):
You and Tanya, I think what you're saying is this,
use the lower monthly payments to your advantage, and obviously
don't stay in it for forty fifty years, right because
then the interest, you know, just kills you over the
long term. But if you're smart, use those lower monthly
payments add some equity to the home, let it build

(03:42):
up a little bit, and then get out and buy something,
say with a lower a thirty year or twenty five year,
or a better home or better interest rates. In other words,
use it as a means to an end correct, not
as an end in itself.

Speaker 3 (04:01):
Plan on moving out of this house after we do
the addition we plan, so my goal would be to
keep the same monthly payment that we're paying right now,
and if we get into that fifty year it's literally
going to cut our payments into a third and just
pay three times the amount of that. But if you
get to a point where, oh my god, I can't

(04:23):
make that payment this month, then guess what. You're not
in the squeeze where you have a high interest and
a high monthly payment that you have to pay it,
you know what I mean. So, like, if you have
one month that it's like, Okay, I really can't afford
to pay three times the amount of the mortgage payment
that I'm paying.

Speaker 4 (04:41):
You don't have to because.

Speaker 3 (04:42):
Your payment now is only eighteen hundred dollars. But normally
my mentality is, no, we're going to pay four thousand
dollars a month on this and get this thing paid
off faster. But we now have a little bit of
wiggle room.

Speaker 1 (04:55):
Interesting, oh, interesting, interesting, Tanya. Do you think part of
it is leave aside now the fifty year mortgage that
Jerome Powell is just keeping interest rates way too high.

Speaker 2 (05:10):
This is just.

Speaker 1 (05:11):
Literally one of the main reasons why the housing market
is flat on its back and why the economy is
just not taking off the way it should.

Speaker 3 (05:22):
Wrong that one person has the control of the entire
United States, and I think he's just doing this despite Trump,
And it really irritates the crap out of me because
he's really making everybody squeeze, and he's just going to
do that until he's out. And I think that's wrong
that someone can corrupt the system that badly.

Speaker 1 (05:43):
And with you, I'm so with you. I'm so with you, Tanya.
Thank you so much for that call. Look, that's why
I know it would have been very controversial. But if
you remember months and months ago, I said, fire.

Speaker 2 (05:56):
Him, fire him. I think it's outrageous.

Speaker 1 (05:59):
You're right that the chairman of the Federal Reserve, one man, unelected, unelected,
remember this, and ultimately unaccountable. This man has that much
power over the economy. Over the country, over our lives.
I mean, look, Grace is a real estate agent. Okay,
my wonderful wife, She says, do you know how many

(06:21):
deals are just sitting there? Homes are you know? You know,
people are ready to buy homes, to sell homes, to
build homes, and they're just looking at the rate. They're
looking at the interest rate, and there's they're waiting for
Powell to move, and the guy just won't move. I mean,
I know he did a small cut, but basically the
interest rates have to come down much more. It's so obvious,

(06:44):
and so one man is clogging up the entire economy.
Jeff coon Er Boston's Bulldozer six one seven two six
six sixty eight sixty eight. Mike and I were just
talking off air, and I just want to throw this
out there. I think a lot of this also is
a personality type issue. And what I mean by that

(07:05):
is Sandy texted me because she likes the idea of
a forty year mortgage, but for the reason that Tanya,
the previous caller laid out. In other words, Hey, if
it'll lower my payments, you know, and it'll make my
life better, you know, it's not an end I'm not
going to stay in this thing for fifty years. It's

(07:27):
a means to an end. In other words, don't worry.
You know, we'll get lower payments. Yeah, you got to
you know, you're you know, you got more interest in
theory over fifty years, so you're carrying more of a debt, right,
But well, you know, we get lower payments, and then
we'll move, We'll you know, do another decision. We'll go
to another home, we'll sell it, will whatever it is,

(07:49):
we'll sell the house and get into a better situation
or a better home or whatever. And so I was
just talking to Mike and I said, you know, Grace
is the same, you know, like philosophically, that's one of
the differences we have. She's more comfortable with debt than
I am. And I'm not saying this in a critical
or negative way. Grace will look at something and say, no,

(08:13):
can I use it to my advantage? Well, yeah, fine,
I got to pay the banks or whoever. But does
it lower my payments every month? Does it give me
a financial economic edge? Okay, well yeah, don't worry about it. Then,
you know, well we'll sell it or we'll we'll make
something out of it and then we'll get out of
this situation. Everything will sort itself out. And I remember

(08:36):
when I was young, despite everything my parents said about,
you know, pay down the home and don't have debt,
I forget what it is. I was about maybe nine
ten years old and my dad had to get a
second mortgage on the house. I forget what it was.
There was some kind of a family crisis. Anyway, he

(08:56):
got a second mortgage, and I was young. I was
a young boy, and he's explaining to me how the
second mortgage works. And I remember, even as a young boy,
it stressed the hell out of me. I mean, I'm like,
I swear like I almost had panic attacks. I'm listening
to him, I'm like, I feel my chest tightening, and
I'm like, Dad, how we're going to get out of this?

Speaker 2 (09:17):
And my dad was.

Speaker 1 (09:18):
Just very calm, cool, and he said, don't worry, and
I'll never forget this phrase. We'll swim out of it.
And we did paid off the second mortgage. Then he
paid off the first mortgage. But what I'm saying is
he was much more comfortable having debt. It was sort of,
we need this now, trust me, it's better that we

(09:39):
do this because we can't afford to pay everything in full,
and as long as it benefits the family, don't worry
about the debt. And so, you know, and I was
asking Mike, I go, Mike, are you how are you
about debt? And he said, honestly, it really depends on
the kind of person you are. And I said, you see,
I'm always a pessimist when it comes to the future.

(10:03):
I'm always things could always be much worse. So you know,
I don't I don't like debt because I'm not optimistic.
I mean, just by nature, I'm not optimistic about the future.
I always assume the worst about the future. Grace is
the opposite. Grace always sees opportunities. Grace is always much

(10:25):
more optimistic about the future. And then Mike says, that's
because you're a depressing man. But so I think a
lot of it really is just your personal character. And
I've just noticed I hate that, like of any kind,
I just hate that. I worry about that. It keeps
me up at night. Grace sleeps like a baby. No,

(10:48):
it's not a problem, Jeff, it's not a problem. Don't
worry about it. So I think a lot of it,
to be honest, is who you are as a person.
Let me just put it to you this way. I
be a horrible entrepreneur. That's why I admire business people
because they have to take on a lot of debt.

Speaker 2 (11:07):
I mean, that's just a nature of business.

Speaker 1 (11:10):
And you just you know, and you use that debt,
you leverage that debt to your advantage. I bite my
nails debt, I bite my nails six one seven two
six Sex sixty eight sixty eight Aaron in New Hampshire.

Speaker 2 (11:26):
Thanks for holding Aaron, and welcome.

Speaker 5 (11:30):
To privilege and a pleasure. Thank you so much for
taking the call. Thank you, Thanks having They've been so
many wonderful points macro points about the economy. Let me
just say briefly, briefly about the said because and I'm
not an expert here, but there's there's a slight misconception
he controls short rates. Mortgage rates are controlled by the
longer end of the market. It's it has to do

(11:51):
with the debt and the depth. I so want to
live four to five people in apartment. People don't want
to do well. You know, back in the seventies and
eighties when I was coming up, that's that's exactly what
we did you know interest rates were crazy? Nobody could
afford anything. We we we lived four to five an apartment. Uh.
I personally, I went to night school, people got second jobs,

(12:13):
got my first fixer up for home and built it
up and built equity. Uh. And and if I was
starting out today, Jeff, in my business, over my career,
I go into the trades, the electricians, the plumbers, the
h vac people. Uh, the home builders. They can't find people,

(12:37):
They can't get anybody. Uh, try to get your truck fixed.
You know. Wait, it's it's there are opportunities. And I
don't want to say that any of these macro points
about the economy are wrong, but you know, we got
to have solutions too. And and and I want to,
you know, try to offer a word of encouragence to
people that that that maybe if they're willing to work

(13:03):
hard and look at things in an objective way, there
are things that they could do to help their own
personal situation, which I think is what people should be doing.

Speaker 1 (13:15):
Oh, I agree, Oh, Aaron, you and I on that
are a million, not a thousand, A million percent in agreement. No,
come on, there's still a lot of opportunities out there.
Especially if you're willing to work hard and tighten your belt.
I'm with you, and look, Aaron, this is not your point,
but I just want to add something to what you
just said about people, especially in the past. We're willing

(13:36):
to sacrifice more, and you know, a couple of people
would live together for a while and save up, and
people maybe wanted a little bit too easy, too comfortable.

Speaker 2 (13:44):
I hear you.

Speaker 1 (13:46):
The other thing I've noticed, and I'm one thousand percent
guilty of this, So please, I don't want anybody to
think I'm on my high horse, because it's the exact opposite.
I look at my dad. My dad was a jack
of all trades. I mean, master of none, but he
was a jack of all trades. My dad changes on oil.
You know, you didn't go to Jeffy Loop. It changes
on oil my dad. You know, whatever home repairs, my

(14:10):
dad basically did most of the home repairs. He I mean,
if it's a very serious, complicated job, well yeah, then
you call a handyman, you know, or a plumber if
it's a real serious issue. But I'm telling you, even
fixing our toilets, fawcets, you name it, I just couldn't
believe how good my dad was with his hands. And frankly,

(14:32):
I'm not saying all the men, but many of the
men in you know, thirty forty, fifty, sixty years ago,
they were just they did it themselves.

Speaker 2 (14:42):
Now that's a lot of money.

Speaker 1 (14:45):
Like I'm just telling you, like, I have a handyman
coming to my house all the time because I'm useless.
Like really, I'm useless. So a handyman is expensive, a
plumber is expensive. Getting my car service is expensive. If
you know, I go to Jiffy Lube, and so it
all adds up.

Speaker 2 (15:05):
I mean, it's not cheap.

Speaker 1 (15:06):
So what I'm saying is we pay for things now
that we never used to pay for before. And when
you actually you know, you don't think much of it
at the time, but one hundred here, one hundred and
fifty here, two hundred there, and before you know it,
you're talking thousands and thousands of dollars And then you

(15:28):
say to yourself, well, I have no money in my
bank account. Well, my dad always had money in his
bank account because he was a self reliant man. So
I think that's another issue that we're such a we
live in such a service economy now where things that
our parents and grandparents did for themselves. We we just

(15:48):
pay for services. I mean, I don't Aaron, am I wrong?

Speaker 5 (15:54):
Your dad, my dad, myself, me, we're all Taizar Yet
couldn't agree with you. More the less you pay for something,
the more you keep in your pocket. And as you said,
it's all about living debt free every over a lifetime,

(16:16):
every decision that you make to build your equity in
your home, to make that extra payment, to pay the
thing off early, to fix something yourself, rather than calling
somebody absolutely, oh.

Speaker 2 (16:29):
Your debt on and look, I agree with you.

Speaker 1 (16:32):
The mentality was different, and I think in many ways
better no debt or pay off debt as quickly as possible,
be debt free as quickly as possible. You can't beat it,
to me, and just for any no matter whatever else
you think about it, for your own peace of mind.

Speaker 2 (16:51):
To me, it's just it's like you're.

Speaker 1 (16:53):
Liberated, okay, to do a fifty year mortgage or not
to do a fifty year mortgage?

Speaker 2 (17:00):
That Shakespeare would put it, that is the question.

Speaker 1 (17:04):
President Trump now wants to tackle the affordability issue, which
has for many Americans still a crisis, and he's now
seriously considering legalizing a fifty year mortgage option, especially for
first time home buyers. Like don't like good idea, bad

(17:25):
idea six one seven two six six sixty eight sixty eight. Okay,
this is from Dolores on Messenger, and I got to
tell you it brings back memories. And if I'm getting
a little sentimental, forgive me. The passing of my dad
is going to be about it a month from today,
just over a month. So I'm thinking of my dad

(17:46):
again as we approach a one year anniversary. So I
think about how much he did. He and my mother did,
and I gotta say my parents were the same, so
she writes. Dolores writes on Messenger, Jeff, my parents everything themselves,
the roofing, gardening, furniture, remodeling, cooking. We never ate out.

(18:10):
My mother made all the girl sorry, my mother made
the girl's clothes. Jack of all trades, master of none,
just like your dad. My parents were literally the same,
with the exception of making clothes that you know, they
never made clothes.

Speaker 5 (18:29):
I met.

Speaker 1 (18:29):
Mother would knit once in a while, you know, mittens
or a sweater or something like that, but that's about it.
But my dad, he fixed the roof. I can't tell
you how many times you went up there and he
fixed the roof.

Speaker 2 (18:43):
The guy did it.

Speaker 1 (18:45):
They we had big, beautiful garden. Both my father and
mother worked at Garden Fresh Vegetables. They were very proud
of it. Landscaping, you know, my dad got I mean
until I got older, then I would do it. But
when I was younger, you know, young kid, Yeah, cut
the grass, trim the grass. Whatever landscaping needed to be done,
he did it. A patio He installed the patio in

(19:08):
our backyard all by himself. He just you know, did it.
Furniture remodeling ditto. My mother cooked all the time. I mean,
I'm not saying we never ate out, but you know,
once in a blue moon to give my mother a break.
And even then, you know he was Kentucky fried chicken,

(19:29):
like for my birthday or my sister's birthday, or you know,
on a rare if you saw my mother was really tired,
then you know he'd roll out that twenty bucks, believe
it or not, twenty bucks in those days, got you
like the bucket, fries, coleslaw, gravy, the whole thing, and
you know he'd roll out that twenty you know, the

(19:51):
big patriarch, you know, and like, all right, you know,
get Kentucky fried chicken for everybody tonight. And my mother's like,
oh great, thank the Lord, I don't have to cook.

Speaker 2 (20:01):
I'm so tired. But really, outside of that, and that's
how we saved money. My dad did the oil. And
I could go on and on roof that no I
that I call.

Speaker 1 (20:15):
You know, cooking, weed out, way too much, furniture, remodeling,
no garden, what does that mean. I don't even know
what that means. My gardening is stopping shop or big y,
you know, at the fruits and vegetables aisle. I could
just I could just go right down that list change
the oil. If you put a gun to my head,

(20:37):
I couldn't change the oil.

Speaker 2 (20:39):
So you know, the money is just flying out the window.

Speaker 1 (20:43):
Six one seven two six six sixty eight sixty eight
is the number.

Speaker 2 (20:49):
Okay.

Speaker 1 (20:49):
This is from my better half, my wonderful wife, Grace,
who wants to remind me that she supports Trump's fifty
year mortgage initiative. So she says, Jeff, as I mentioned
and spoke with you about this yesterday at the dinner table.
Some consumers could use this idea the fifty year mortgage

(21:13):
as an option, an investment strategy, let consumers decide they
will figure it out for themselves.

Speaker 2 (21:24):
So she likes the idea.

Speaker 1 (21:27):
She thinks, if they can leverage it for their benefit,
get their payments down, and then eventually, you know, make
another move to get out of that fifty year mortgage.
Equity goes up, house prices go up, you can sell,
go buy another home, make a better investment, or get
a better home at a better rate, or at a
lower mortgage or at a shorter mortgage. She's saying, use

(21:51):
every tool in the toolbox. So she likes the fifty
year mortgage.

Speaker 2 (21:55):
Six seven two six six sixty eight sixty eight. Dan
in Florida, Thanks for holding Dan, and welcome.

Speaker 4 (22:06):
Good morning, Jeff.

Speaker 2 (22:07):
Hi Dan.

Speaker 4 (22:08):
Jeff, you know I consider you like a brother. If
I miss one of Jeff Kooner's shows, like since twenty twelve,
I've been there listening, listening, right. If I miss one show,
I feel like I missed something. I gotta go back
and listen to the podcast over and over to make
sure I didn't miss anything. So I want you to
think of me as your brother here, Okay, like my
own like my own brother. His wife is much smarter

(22:31):
than him.

Speaker 1 (22:36):
No, I knew you were going there because you're like,
you know, you're like a brother.

Speaker 2 (22:39):
You're like a brother.

Speaker 1 (22:40):
I'm like, Okay, here comes the hammer. That's where they
set you up for the knock out blow. All right,
So go ahead, Ben.

Speaker 4 (22:48):
Percent of the time, Jeff, ninety percent of the time,
I agree, And I only call you when I disagree
and I want. I don't want you to think it's
because I always disagree. It's only I got to bring
up these punts. So all right, Jeff. Right now, in
this country, we've gone from the average age of home
of first time buyer has gone from twenty eight fourteen

(23:09):
years ago to like forty two today. Okay, but in
areas like you know, Massachusetts, with a house price is
so high, you know, we're doing loans for people in
their fifties buying their first house. Now, what's the difference
between a fifty two year old guy taking a thirty
year mortgage and a thirty two year old guy that

(23:31):
we can get into a fifty year mortgage. It's the
same thing, Jeff.

Speaker 1 (23:37):
Well, let me ask you this, Dan, and you're making
a very good point. But what's different is you're paying
a lot more in interest, right. That's that's that's where
brother Dan, that's where I get hooked up, my brother.
It's it's you're paying a lot more in interest payments.
I don't want to be a slave to the bank. Now,
what say you to that, brother Dan?

Speaker 4 (24:00):
This Jeff Right, thirty five years in mortgage banking. Nobody
pays off their mortgage, Jeff. Nobody pays off their mortgage.
They refinance for a better rate, take the thirty year
term again, lower payment, blah blah blah blah blah. But
you mentioned buying a dishwasher. There was a time in
this country not too long ago, that a dishwasher at

(24:20):
a restaurant could buy a house. That's not that long ago, Jeff.
I remember it. Yeah, I'm in my sixties now, but
I remember it. Jeff. It's not good, It really isn't.
So we need to do something. And you know, I think,
you know, we we're very lucky in this country with
Russ Look and Scott Besson probably two of the smartest

(24:43):
guys we could have put in government trying to find
solutions to this problem. Right now, Like in Florida, I
get three or four phone calls a day from hedge
funds that want to buy my property, jeffs single family
houses that the hedge funds want to buy. That's not good, Jeff.
We're taking people out of houses, and we need to

(25:05):
find some way of putting people back into buying houses.
You know, we had in two thousand and seven, we
had the housing crisis, right that wasn't caused by the
mortgage industry, Jeff. As long as home prices kept going up,
we would have been fine. In two thousand and five,
we had a huge energy crisis where gas went to

(25:27):
five dollars a gallon, and no one told us the
truth about it, including the Bush administration. That's what caused
the problem. Assuming is in two thousand and five, house
prices stopped going up. That was the problem because people
are spending all their money on gas.

Speaker 1 (25:43):
So Dan, Dan, let me ask you this because we
have a guest on now. We're gonna have a mine
in about a minute, So I just want to give
you the final word on this because then I'm gonna
have to it's all related to what we're talking about.
But we've got Mark recording on. He's one of the
leading experts on illegal immigration, and we're going to be

(26:04):
talking about illegals the impact on housing, but also on
Trump's plan to bring in six hundred thousand Chinese students
on this new visa system. So you're saying, you like
the idea of a fifty year mortgage. A. It'll get
first time home buyers into a home. B it'll lower
their monthly payments. And you're saying, Jeff, most people don't

(26:27):
even pay off their mortgage. They refinance, and when they refinance,
they hang on to it a little bit longer, and
then they eventually sell it when the equity goes up
and they keep moving forward.

Speaker 4 (26:38):
Correct they agree with all of that, Jeff, Yes, absolutely,
you know.

Speaker 5 (26:43):
The weekly.

Speaker 2 (26:47):
Right forgive me go ahead.

Speaker 4 (26:51):
I'm saying, no, that's quite all right. So the CSPD
has gone, Jeff, I don't know if you realize that
rush Wolk is putting it out of business. That's a
beautiful thing because they didn't put the brakes on the
mortgage system. Jeff, they lock the brakes. You know.

Speaker 5 (27:04):
I do deals.

Speaker 4 (27:05):
I'm in the mortgage business thirty five years. I did
a deal last week thirty a thirty five year old
kid putting three hundred thousand dollars plus down on a
property barely got them qualified in the deal. Jeff, that
doesn't make any sense. He's not walking away from that property.

Speaker 5 (27:20):
He should have been.

Speaker 4 (27:20):
Able to buy that all day long. And that's what
we need to get back to.

Speaker 5 (27:23):
Jeff.

Speaker 1 (27:26):
Listen, I hear you, Dan. Look, you always make a
great call and you always make great points. My brother, Dan,
before I let you go, would do you consider me
your younger brother, or your older brother or your twin brother.

Speaker 4 (27:39):
No, Jeff, you're quite a bit younger than me by
five years, Jeff, So I'll take that as my younger
brother that I can actually push around, even though you're
much bigger than me.

Speaker 2 (27:50):
Thank you very very much for that call. I really
appreciate it.