[00:00:00] Speaker A: 43% of first time homebuyers believe that they need 20% or more as a down payment in the United States to purchase a home. And obviously that couldn't be further from the truth.
[00:00:18] Speaker B: Our guest today is Mike Kajar, a trusted mortgage loan officer and a leader at Landmark Mortgage Planners. Over the last 20 years, he's helped over 2,500 families achieve their home ownership dreams. Truly incredible. Through his podcast, the Financial Rebound, he shares his journey of overcoming seven figures in debt, rebuilding his financial life, and helping others avoid common pitfalls. Welcome to the show, Mike.
[00:00:44] Speaker A: Thank you so much, Richard. It's a pleasure to be here and I'm excited for what we got going today.
[00:00:50] Speaker B: Yeah, we're going to have a lot of fun. Of course, before we hit record, we were talking a little bit about some of our backgrounds. We have a lot of similarities in how we think and how we want to help people, both in the financial category, really, really increase financial literacy. But that must stem from somewhere. And so this idea of overcoming seven figures in debt, I'm sure there's some people who have similar numbers there and just people in general who are struggling with debt, especially given the crazy inflation that we've seen, the rise in food prices. It's been a wild financial environment for the last number of years, both in United States as well as in Canada, where I'm based. What I'm curious, Mike, is, you know, how did this problem develop for you and when did you realize that you needed to really tackle it?
[00:01:34] Speaker A: So I was in 2016 is kind of where I was struggling with being seven figures in debt. I was. Probably had too much of an ego to file bankruptcy, so I wanted to kind of push through that. But I was sitting down with my coach and we were talking about some mortgage concepts and whatnot, and he paused me in my tracks and he said, mike, hold on. You know, he was asking me a question. He could tell I didn't understand it. And he said, all right, before we do anything, I want you to entrench yourself into, you know, these financial literacy concepts. He said, you're, you're a numbers guy, but you're not. The basics of financial literacy, you just. And then what I appreciate is that he didn't sugarcoat it. He's like, you just, you need it. So.
And then prior to that, what, what really stemmed to all of that seven figures of debt was when, when I had landed in the hospital, diverticulitis, I ended up having a surgery, and it kept me in the hospital for two weeks. But, you know, I'm not like, it's somebody who could sit and watch, like, movies, and I lose my mind already being in the hospital. So I picked up Dale Carnegie's how to Win Friends and Influence People, and that was probably the first book that I read willingly. Now, you know, I've got a plethora of a whole library of different things, but, yeah, definitely sitting there and in the hospital by myself eating ice chips while my team was being stolen from me, it's kind of focused on that book and it allowed me to really see things from other people's point of view and simultaneously. So after I had read that book, where that ties to what my coach said was I had really created my own urge for, for learning at that point. And I just became a student then of a lot of the books that you see behind me now.
[00:03:44] Speaker B: Amazing. And had you'd heard about that book, obviously, somewhere, was it your coach that had recommended it to you? Is that where you got the inspiration to get the book?
[00:03:52] Speaker A: No, I was so irritated at the, at the hospital. I was like, let me, let me just go online and see what, what, you know, good book recommendations would, would be. And I'm happy I landed on that one. You know, divine timing.
And it was, it was really a book that, that changed my life forever. It wasn't. I had heard of the book, but, you know, as you hear of like, the Think and Grow Rich and some of these, these popular books, but that one was just standing out to me. I wish it was a cooler story on that, but it, it stood out to me for, for whatever reason, and I've probably read it, you know, five, six times since.
Since the first time, yeah.
[00:04:35] Speaker B: That's amazing. And so being in the hospital two weeks, I mean, myself, I've. I've spent at least a week in the hospital before I know how much of a pain that can be. Not to make a joke about the pain you may have been in, but recovery, there's a lot happening. You know, you're a young man at that stage. There's a lot going on. You're trying to grow and run a business. What were some of the other things that started to happen at that same time? I mean, I would imagine, you know, there was some things leading up to you getting into the hospital and then being there for two weeks. Hard to run a business, especially in a mortgage practice, from that. From a hospital bed. So what were some of the things that started to happen around you during that time frame?
[00:05:13] Speaker A: Was a lot of health issues, right? The mortgage industry was, was changing at that time and I was always in the mindset like you know, it doesn't matter whatever we, we, we do, I'll always be able to go back tomorrow and make it, make it back times three or which, which served me well in some aspects but did not serve me well in the overall because it started to take a toll on my health.
The stress levels got out of control, a lot of doubt and fear crept in and a lot of those you should give up, you should change industries, you should do this.
A lot of, I think not only my physical health but my mental health was, was affected. And I think more than anything, probably the, the, the biggest thing that I can attribute to that, that I hold on today is never quitting because that, that was, I had every out to do it there and I wouldn't be where I'm at today. And, and, and doesn't mean there's not challenges always, but we learn how to deal with those challenges better and I just wouldn't be where I in the, the position that I am now had through and, and persevere.
[00:06:36] Speaker B: And so knowing that you, you know, seeing the impact on your health, what were some of the things you started to shift and change when you were able to get back into the business?
You know, obviously you increased your reading, I can tell. But how did you start to look at approaching your business life differently than had you than you did prior to landing in the hospital?
[00:06:59] Speaker A: I ran it like a business, not like a, I don't know what I was doing. Well, I was a phenomenal salesman. I had, you know, some great people on my team, but I sat down and started to work on the business, committing to that more so than all the time that I was working in the business. So from that 30,000 foot view of what a business owner would look like, all the things that come, you know, to start reducing those stress levels, time management, tracking activities and really just making sure that I was in line. But I don't know that anything was more powerful than mindset for me because that was what I had to hang on to and I just started to see things through a different lens. At that time I didn't see things the same. I, and for the positive right, not in a negative way. I started to look at things as okay, there's going to be challenges, take accountability as a leader and do the things that you need to do to push through. I know it sounds cliche, but there's a lot of power found in those cliches that's hence the reason they are cliches. Right.
So. And I really started to change my circle at that point. It was, you know, I was, I was in my 20s, I was heavy in the party scene.
You know, just what, what some of us do in our 20s. Not, not the brightest when it came to my outside of work life. But I started to change that. I quit drinking.
I think that was, was another huge thing for me, both on my physical and mental health. And you know, at the time I kind of, it's kind of a fad now for people to stop drinking, but when I did, it was like, you mean you don't drink? You know, so it was, it was a different sort of aspect. But that was a godsend because I don't think the mindset would have been there had I continued to, to drink and stay out till 4am you just, you can't run a business that way.
[00:09:08] Speaker B: Yeah, absolutely. And you know, they say that you're the makeup of the top five people you spend the most time with. And so obviously, you know, that was becoming more present to you. And you know, what I'm hearing, Mike, is that being in the hospital gave you the time for self reflection and allowed you to reposition your thinking and make conscious choices about how you wanted your life to run moving forward.
[00:09:33] Speaker A: Correct.
[00:09:34] Speaker B: Amazing. Now shooting forward. That was a number of years ago. I mean it was about eight to nine years ago roughly that that happened to you. You've had a really good run since then in a new environment. How have you restructured things from a business standpoint and with your team since that hospital experience?
[00:09:52] Speaker A: It's a great question. So back at that time I was running more of a consumer direct transactional model, scaling national consumer direct teams. And I switched my business to a relationship model where, you know, again now with, with back to becoming a student, I was able to go and talk to professionals that I didn't, I didn't have a value add for before. You know, of course in the mortgage business a lot of people work with, with real estate agents, so there's always a value add there, but where we really shine on the mortgage planning side and why Landmark Mortgage Planners has been the number one branch at American Financial Network the last four years. Not because we're so smart or cool or, you know, it has nothing to do with us. And it has everything to do with a mortgage planning business model, which in short is the concept of being there for the client before, during and well after the closing. So sometimes a client is, you know, making a Short term decision and saying, all right, off of emotion, like I want to put 50% down, I want to pay cash or whatever it may be. Where we would look like to someone like yourself or you know, a financial advisor, whatever the, the, the, the professional we needed was to come in and say, okay, what is the opportunity cost on this? What does that look like? You know, on, on what, what does that look like 30 years out and, and how detrimental can that be to their retirement? I don't care if they're 30 or 55, because somewhere along the way we were all told we'd be in a lower tax bracket in retirement. Now that might be true for people retiring today, but guys like you and I and people that still have a run going, we have a TBD tax rate.
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[00:12:22] Speaker A: That we're deferring. So when I started to understand one of the books behind me is Tax Free Retirement. And you know, I was able to take those concepts to a lot of different professionals. And now what we've created is what's called a client advisory team, which every client is surrounded with the realtor, of course, ourselves as the lender. And then I will go bring in a financial advisor and then if that advisor doesn't sell financial products, a life insurance specialist, a CPA and an estate planning attorney. So we're making sure that decisions today are in line with the goals that they have 10, 20, 30, 40 years from now. And we want to make sure that there's not a mistake made today that that can impact that, that goal in the future. So I can't do that by myself. And I also didn't know how to communicate that to each one of those professionals, but allowing myself to change the business model and I ate dirt through that, that time period, right, because it's tough going from having, you know, unlimited amounts of leads that you've got your team calling on to like, all right, now I got to go deliver these value to high level professionals that at first I was having an imposter syndrome, right? I was like, do I belong in this room? Whatnot.
But because of the focus of everything being on the client first, it was more of a magnet to those other professionals. So the business model changed completely from consumer direct to relationships.
[00:14:06] Speaker B: Yeah, very interesting. I love how you indicated, of course, the TBD tax problem. And we like to talk to people about what would you rather pay tax on? The harvest or the seed? And the reality is that there's an awful lot of spending happening by most national governments around the world, certainly in Canada, certainly United States. And those unfunded liabilities have to be paid by someone. When the entire revenue stream for a nation is the, the backs of the taxpayer, that's the only place they can get the money. And so if they're not taking it now, they're going to have to take it eventually. So I think that's really important for people to understand. I'm glad that you brought that up. It's something we, we talk about as well. And just being clear that, you know, why would you put money away to pay tax at some unknown future when you're also complaining about how the government's spending the money now knowing that they have to spend more of it? There's a very different, like, it's kind of like a, like a mental boxing match that you're having with yourself in that scenario. So when you can get people clear on those things by asking good questions, it's very interesting to see how they process that themselves and come to a conclusion that's right for them. You know, you know, we're not trying to guide people down a certain path or, but you know, it's the importance of asking good questions. And so when you take this client focused approach, I'm guessing that's a big part of the approach because you're really trying to get clear on this deal or this property or this thing that you're purchasing. How is this in alignment with some of the things you want to do in the bigger future that you have set out for yourself?
[00:15:38] Speaker A: That's a great question as well. So that, that part, especially on the retirement planning side is, is, is really the direction that we want to go and, and not say that we would ever get away from the mortgage side because the mortgage is where we're able to ident those challenges. You hit right on the tax bomb. As soon as I saw David McKnight's Power of Zero documentary and then I read the book, I'm like, all right, we have a serious, like you just mentioned the unfunded liabilities. Did a presentation yesterday. I think right now US debt clock shows 36 trillion in national debt, you take those unfunded liabilities, Social Security and Medicare and Medicaid, add them in and I think we were looking at 213 trillion or it might be as wild as 223 trillion. I say that to say that a year ago when I did the same presentation it was at 187 trillion. So the trillions are ticking at a significant rate. So that really made me not only interested but passionate about the retirement side of things and making sure that, you know, I'm not trying to be a tax free nut. I just, I want to be at the same time I need to be able to forecast a little bit. I'm not telling people, you know, where to put their money or to, you know, run from financial advisors. But if I'm a mortgage guy and I pull up your retirement portfolio and I can quickly calculate you've got an 86% percent chance of running out of money, that's a problem. You know that, that the, the advisors are not having these conversations, I shouldn't say all of them but some of the big boys, right, are not having the conversations about tax risk, longevity risk, all these, these different factors that you know, a lot of the methods now are, they stem from the money rules from, from the Great Depression, right? And the rules of money have changed 10 times since then. But we still want to stick to these old school methods because Dave Ramsey said so. And I'm not bashing Dave Ramsey, I think he could be great for getting out of debt. But at the same time there's a lot of bad information going on based on what's going on today. And so the future of it is we're very heavy in the heck I'm a K a reverse mortgage space. And we dispel a lot of those myths around there. And it's been proven. FINRA had instigated a study by the Journal of Financial Planning. They launched a 12 page white paper which was proven that the earlier in retirement a reverse mortgage was, was taken. It would increase cash flow survival by 8 times. Meaning instead of taking a million dollar portfolio, drawing it to zero and then coming in with a HECM as a last resort because there's a tax free line of credit, we actually bring in the HECM or the reverse mortgage immediately at their 60 second or reverse mortgage birthday. And what we do is called the coordinated withdrawal strategy, meaning if the market is down, we're going to pull off the tax free line of credit from the hecm, allow the portfolio to recover and if in, when the market is up, we'll pull from the market, allow that their tax free line of credit to grow and compound. And you know, then with guys like yourself or, or, you know, anybody in the retirement planning space, sometimes we'll use that, the, an annuity to supercharge the payoff of the mortgage. But we're taking that annuity, which is taxable or tax deferred, and placing it somewhere where it becomes tax free and a growth component. So it's just some, some equity repositioning retirement. Sorry for the long winded answer, but that's, that's, that's where we're headed.
[00:19:55] Speaker B: No, it's great. I mean, what you're really identifying is using the home equity as a volatility buffer. But the only way you can do that is to have the buffer in place. And so you can have the house and you can have the equity in the house. But you know, there's this, there's this commercial that used to exist at one of the banks in Canada did years and years ago. And it was two little boys walking around with flashlights in the dark at night. And the one boy says to the other, says, what are we looking for? Equity. Dad said it was in the walls.
And so there's only two ways to unlock equity. And you either borrow against or you sell. And if you sell, you don't have a house. And so that doesn't always make sense. And equity can be unlocked in several areas. We always think about equity in a housing scenario. We don't necessarily think about it in other areas. And that's part of where, you know, the training that we do around becoming your own banker happens. The infinite banking concept. But there's lots of ways to build and create equity, but it's what level and degree do you have control? So what I hear, Mike, that you're talking about is creating an environment of education to help people recognize there are different things that could be done. If you implement these things, you have the choice. And if you have the choice, then you can be empowered to make the decision that's right for you. There's a big difference between that versus saying, hey, here's where you can go put all your money and go knock your socks off. And a lot of people just follow almost blindly the advice of someone and they'll willingly, nilly throw their money at ABC Financial product without having any understanding of it. And then the result is something goes sideways or the market tanks and the result is they're left with a lot less money and then they go looking for someone to blame. But they're not pointing the finger where it belongs, which is right back at themselves because they didn't take an ownership stake in their own money 100%.
[00:21:41] Speaker A: And where that, that reverse mortgage is, is the line of credit that comes with the reverse. The difference is a lot of advisors that tell us, well, why don't we just take a home equity line of credit? Well, that creates a 30 year mandatory payment that amortizes every month versus the way that the reverse mortgage works in the United States is that it compounds every single month at the same rate that it's amortizing. So if you're paying down the balance, you're doing two things. You're paying down the balance, but simultaneously helping that line of credit grow. To your point, they may not need it right now, but when they're not solving for things like long term care or they've thrown their money, I mean, we're coming off of a bull run right now of 12 to 13 years that I don't know and I don't, you know, not, not trying to be a pessimist, but more of a realist where we are on a potential another lost decade. Right, where you had a million dollars in 2000 and in 2010 you were left with 980,000 because of the ups and downs, sort of wiped themselves out. So, you know, when we start to talk to advisors and, and anybody in the mortgage planning thing about the reverse being the number one hedge against sequence of returns risk, we start to get their attention because again, let's just say there's four down years in a row. Well, that, that, that portfolio isn't going to get destroyed as much as it would had that buffer asset, like you said, not been put in place.
[00:23:19] Speaker B: You know, the power to be able to make your decisions and be in control of them. There's also another unique advantage that's being created where you can levelize taxable income if you know what the income is going to be, if you know what you're taking out, you know what you need, you can maybe augment or levelize as necessary without having to increase to a future tax rate and what have you. So there's a lot of control aspects there. Really appreciate you sharing on those, Mike. Love that. Now we're going to talk more about some of these strategies when we come back after this important commercial break.
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[00:24:39] Speaker B: We are back with Mike H. We're talking about his incredible story, his journey. We've discussed how he had a major health challenge in the hospital for a while now. You know, during that time, Mike, you know, you had this pivotal revelation that you needed to retool your business, go down this relationship track, do things differently, and that doesn't come easy and it interrupts the flow of maybe normal business operations. So, you know, I can imagine even just thinking about that for myself, how things might stack up. And so you have hospital bills, you've got your, you have, you're out of production for a while. Maybe your team wasn't producing. I mean there's a whole host of things they might be uncertain that could have a lull in income. So like how did things progress when you got out of the hospital to try and build up the business that you have today that is really rocking and rolling? There had to be a transition period. What, what happened during that time frame?
[00:25:33] Speaker A: Yeah, that, that was probably one of the most challenging periods of, of my life because I still had a lot of, like you said, still this similar expenses coming in. I hadn't fully changed my, my lifestyle expenses even though I was working on changing my lifestyle in general. The spending was, was some and of course like you said, hospital bills, things getting racked up. But I lost, I lost when I had got a call from my admin or my office manager who's still with us when I was in the hospital and she was crying and I asked her what was wrong and she said they're taking all of the files. The sales manager has basically recruited all of the loan officers except a few to go.
So when I made that transition, I didn't still have the income coming in from the consumer direct side. But I so heavily believed in what I was doing and I knew that it wasn't going to happen overnight.
So I was racking up a ton of debt as soon while I was in the hospital and the year after because it took me a while to build that foundation of strong relationships and people starting to trust you to send business and, and things of that nature. So I continued to incur debt as that was happening, which again was where I probably say mindset really pushed me through that. But it was, it was a constant daily thing of, you know, credit cards declining, you know, all these little deterrents that could have pulled me away from my focus. I got laser focused. I knew that I believed that on the other side of this was going to be something that not only was going to help me get out of all my debt, was going to help me tell a story one day like this to probably the younger version of myself. Right. Which is if you believe in something, I don't care if your mom, your dad, your uncle, everyone around you is telling you that it's impossible. Well, you're the only one that knows if it's possible or not. And if you lock in. And that's where that really that, that no quitting personality and mindset had served me very well. And now from the outside, looking in from everybody, including every one of my family members, they're like, what are you doing? You know, like. But it wasn't taking the health tolls that it took on me before because I knew that there was a plan that I was following, whether or not anybody else, you know, outside of my team, of course my team was on board because I still had those salaries. Right. So, yeah, the biggest thing for me was locking in on what I knew would be the success for my future, really. It was unfortunate because again, the debt was continuing to rack up interest on interest.
It was negative compound interest. Right. So working against me. But that, that really, that mindset of, of believing in what I was doing and just never quitting, that is, is really what helped me then start to generate more income in a month after that than I was in, in a year on the consumer direct side.
[00:29:12] Speaker B: Yeah. So once, once the, the tipping point happened, it happened quickly.
[00:29:17] Speaker A: Yeah. And they say you become a overnight celebrity, right. Or you become successful overnight, but they don't see all the times you got kicked down and had to get back up, you know, 300 times before, before that happens. And yeah, it's, I guess success happens overnight to the people that are, are kind of watching you from, from the sidelines.
But it definitely doesn't happen overnight. It takes, if anything great takes time and it takes perseverance and, and a willingness to. I. Belief is just a powerful word to me. So when you believe in something, I believe go all in on that, but not just say you're going all in. Do the activities that are going to get you there and have a plan and a vision that's so bold that it outweighs whatever negative distractions could be coming at you at that time. Yeah.
[00:30:15] Speaker B: Makes sense to me. Now, you talked about, you know, speaking to the younger version of you, and with your podcast, that's something you're going to be doing a little bit, and you're focused quite a bit now on the importance of financial education. So a lot of this is stemming, Mike, from your own personal experience and in dealing with things, the things that you didn't know, some of the things that happened in your 20s where you. You probably could have more capital available if you knew how to retain it more, you know, that sort of thing. So walk us through a little bit about what you're. What you're passionate about now, how you're. You're looking to help people and serve specifically in the Gen Z category.
[00:30:55] Speaker A: Absolutely. So I partnered. I. I shouldn't say partnered. I am an ambassador for what's. What's basically the mortgage industry's nonprofit. I donate a certain percentage of every single deal that we do to First Home iq, which is founded by Kristen Masserly. Dave Savage, who is a legend in the mortgage industry when it comes down to financial literacy. He's somebody who I gained a ton of knowledge from. And Todd Bookspan, another mortgage legend. But we're about 770ambassadors throughout the country, and we're going into schools, we're going into setting up our own workshops. And, you know, you have 40, let's just say over 40% of Gen Z, discounting that they're ever going to be able to buy a home. A lot of it is they think they need, you know, 20% down or more. But even going in and teaching things that have nothing to do with buying a home, like I think we were talking about before we got on, was that unfortunately, we do want it to be taught in schools. But if. If the teachers, you know, don't understand financial literacy, how can they teach it? So we are the ones going into those schools, you know, and sometimes we'll. We'll have little ways to get their attention. Right. I might bring in, like, somebody a celebrity buddy or something like that where, you know, he's going to have to find me and say, hey, if it wasn't for Mike, you know, I would have probably blown all of my money from my NFL contract. Even though he had a financial advisor. Right, right. He focused on the basics of. Of what I was teaching, which is the stuff that we're teaching to them about credit, income, you know, adulting. Right. Just, just going out there into the real world and, and what sort of things that they can be prepared for and like you said, making sure that they're empowered whether they're ever going to buy a home or not. I, I, I'd love for them to all be homeowners, but more importantly, I'd love for them to have the financial literacy basics that we bring in.
[00:33:12] Speaker B: Yeah, fantastic. And when you're doing these types of sessions and you mentioned 770ambassadors, that's fantastic. So that's people all over the nation being able to insert themselves in some way into these more youthful type environments and sounds like the school system is a big part of that. Fantastic to hear what's the frequency that you're able to get in and do this? Do you go to multiple schools in an area? Is it, is it putting on, you know, as an example, would you, would you be setting up, you know, sessions where people could come and attend in the general public, like parents could bring kids, they could both attend. What are some of the ways that people can get connected to this type of information?
[00:33:53] Speaker A: Yeah, so I, I have a quiz that I, I give out to that sits on a lot of my social platforms, little financial literacy quiz. But yes, there's different events that are online in person, it's all over my social media of when those are going to be. There's a YouTube video of one of the classes that I did that's, you know, out there for, for free for people to watch. And you know, the, I have the privilege of, I coach seventh grade basketball. So, you know, with the athletic director, I got all the sports players from every grade. It didn't matter, you know, it didn't make sense to the kindergarteners. But we, we brought them in anyways and we were coming in and it was tough. Right? That was a tough one to teach from like kindergarten to 8th grade. Heavier emphasis on, on the older ones. But yes, a lot of the schools in the, in Oakland County, Michigan, the county that I live in, is, is where we're going into because those are the schools that, that again, like we discussed, I wish somebody had came into that school with those concepts for, for.
[00:35:10] Speaker B: Me, makes total sense. Yeah, I can appreciate that. And it's incredible that type of work that you're doing, but also that, you know, it sounds like with that many ambassadors, there's a lot of volume that's able to take place with that. And, and it seems like for the most part these Ambassadors are folks that are connected to the mortgage industry because it's ties to the mortgage nonprofit. So. So mostly they would be brokers and things and loans officers that are maybe for different companies, but they're all circled around this same nonprofit organization. Is that right?
[00:35:40] Speaker A: It is. I'd say 80% are in the mortgage and real estate industry, and then I'd say the other 20% are teachers, financial advisors, life insurance specialists. So we're starting to get other professionals in there. But, yes, you're right. The majority is people who are in the mortgage industry. And, you know, we. I don't know, in other people's eyes, we're competitors. I don't know. Unless somebody's going to do all the loans in the country, there's enough food on the table for. For all of us to eat. So we collaborate once a month getting together on Zoom, and then twice a year, we get together in person and everybody brings these unique strategies to the table. So when you're asking how, in my head, I'm like, I may not know how to answer that because every single ambassador has got something amazing that. That they bring to the table in their own unique way. Right. In their own authentic way. And. But yeah, it's. It is a lot of mortgage professionals now, and we're looking to definitely bring in more people. And every time I see a teacher get in there, I'm happy because they already have the access to go do that. Now they're just sort of plugging into our world and taking those concepts back and using it in. In their. In their curriculum.
[00:37:06] Speaker B: Amazing. Well, you know, you don't need to own the ocean to sail on it. And.
[00:37:10] Speaker A: No, no.
[00:37:11] Speaker B: With that in mind, we'll be back with Mike in just a moment.
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[00:38:05] Speaker B: We are back with Mike talking about all of financial education that he's actively helping people in and my curiosity Mike, is as we look towards a bigger and brighter future and we think a little bit out into the distance, what are some of the trends and things that you're seeing, whether it's in the mortgage industry or things that are being talked about as people are looking to buy homes in the future? We know that the, the idea or the American dream of homeownership is seemingly getting further and further out of reach for a lot of people. So how are we combating that in the future? Is technology going to help us? What are the things that are going to help people be able to figure out how to get into a home as the as as the world progresses around us?
[00:38:47] Speaker A: Great question. So typically I like to start with a statistic that 43% of first time home buyers believe that they need 20% or more as a down payment in the United States to purchase a home. And obviously that couldn't be further from the truth. However, that takes professionals like myself and just, you know, the whole real estate and mortgage industry as a whole to combat what the media is putting out there. So I think a lot of the future is education.
And one of the things that, not that I like anybody losing a job, but we lost 37% of loan originators that didn't renew in for 2024 and the stats are showing right now we may be under 100,000 licensed loan originators in the country by the time January 1st of next year comes around. So what that says and what that means to home buyers is that a lot of the people that are staying in, especially independent mortgage bankers like myself that are back, you know, I'm backed by American Financial Network is a lot of those people that are staying in have to have the skills. It's not this very transactional. You know, there of course AI is a component, I'll hit on that next. But the bigger thing is that a lot of the professionals that have stuck it through are professionals who talk about a lot of the stuff that, that I talk about right Where a lot of your transactional and maybe people that just didn't really have the, the financial literacy didn't unfortunately didn't make it right now that is a benefit to the client. Again I don't wish any bad upon anybody but there was a big cleansing in the mortgage and real estate world. So to me a lot of that education is going to bring back some hope to Gen Z. We're seeing a lot of dual and triple income people getting together to make housing more affordable. And like you said, I mean We've got a new administration coming in and I think the goal, you know not there's so many policies but I think more so than anything is that the focus is going to be helping create and earn more income to. You can't. Because housing. You're not just going to suddenly magically make it affordable even with. With lower rates at that you know those 2% rates isn't. It's not the. It's not going to come back. We call them Covid fantasy. Right. So I'd love for them to come back. I, I just don't think the economy can. Can sustain that.
But the, the AI is allowing a lot of people to. So people. I was on a podcast like a year ago and they asked me which home buyers do you see that have the most success? And I said it's the ones that come to us 6, 12, 18 months beforehand and are we're properly allowed, you know, allots enough time for us to properly put a game plan together. Hence the word mortgage planning. Because there's going to be a of time to educate around credit around, you know, why the income you know may not suffice for. For what they're looking for and making sure they're making smart decisions for that. I don't believe I'm starting to see a lot of. Of maybe underwriting and you know, some mundane tasks that AI is really starting to take over on. But where it's helping people like myself is a lot of those top of the funnel people that are very far out in their mind. I think humans have, have a. Human beings have a challenge with what's called depth perception and we think something is way further than it actually is. So they may say I'm 18 months out, but they don't realize they're saying 18 months because they're trying to save up for 20% down where they don't realize that there's a, you know, a 3% down or you know, a 0% down. Not that I'm a fan of down payment assistance.
For the right person it makes sense. But a lot of the, in my opinion affordability is not going to come from. You can't start decreasing home prices because it's a. That's not how it works. People are going to continue to start paying higher for homes now the future and I'm going to kind of go further out. I think eventually it'll balance out but I think we are probably 20 years away from that. And the reason that I say that in 2019, I did a presentation all over the country was called bulletproof. Your buyer and why we we had the 2008 crash. People have all sorts of theories of why it happened, but at its core what really happened was if you backed up, I think the average first time homebuyer is now jumped up all the way to like 37 or 38 years old. But at that time it was 32 to 33. Well, you back up that many years from, from 2008. Well, that's when Roe v. Wade was put into place. So what started to happen was there was a degradation in birth rates all the way through 2008. And builders never stopped and thought, hey, wait a minute, we're going to have a massive surplus of homes when we get to that. Sorry, when we get to that, we're going to have a massive surplus of homes when we get to 2008. And that's what caused the crash then. Well now with families having less children in general, I believe that the amount of homes, because at the end of the day it's a supply and demand issue is really what, what is causing the, the unaffordability. I believe that in 20 years we should have caught up with the now degradation of birth rates again. But the slowdown in building and those two will meet again. I don't have a crystal ball, but I believe in the next 20 to 30 years, that's one of the things. Another thing, you know, we've got, got the largest transfer of wealth going on right now in our country. I think 2.3 trillion in commercial notes coming due. We're going to see a lot of malls, office skyscrapers, a lot of those converted into housing. And that's not going to fix it, but that's going to help a little bit. So I think that's something that the 2.3 in notes coming due is more so in the near term. And what's going to happen more in the next five years where the balancing of supply and demand. I think we're about 20 to 30 years out.
[00:46:15] Speaker B: It's interesting because I, I could see AI being helpful for developers and people who own buildings like that, trying to figure out, okay, how can we use AI to determine highest and best use given our market climate in a given geographic area, because the value of a property is based on highest and best use. And if it was commercial real estate or leased bays, but now so many stores and businesses are operating in a more digitized version, they don't need that same larger space. Amazon's delivering everything into your house. They're putting it in your fridge the same day, you know, the guy just walks in, hey, Amazon, here we go. I'm going to put your stuff away in your fridge. Like, you know, it's that type of an environment. The need for some of that commercial space isn't exist necessarily the same way. Now granted, if we bring back a lot more manufacturing, a lot more of, of the, the rebound of kind of the, the American blue collar worker class and, and giving more of those opportunities, that may change, but it's not going to change in all markets. It's going to be selected markets. So I, I can absolutely see that, that conversion. And we're seeing similar things likely taking place in Canada.
And so it's very interesting because that will take off pressures from housing demand and the birth rates. I'm glad you brought that up because a lot of people don't realize that there is a, there's a, a population issue taking place. And both US and Canada have a similar problem because people are having less children. The real result of that is the only way to maintain the population base is, is either through migration, immigration, or we just need to start having a lot more babies. And, and it doesn't seem like that trend is happening. I don't think AI is going to fix that either. I could be wrong. You know, I'm not sure how that would happen, but you know, I'm open, you know, whatever. So I do think that there's, there's, there's definitely some unique challenges there. But one thing you mentioned earlier in our conversation, Mike, was also about longevity, risk. And with the advent of increased technology, Peter Diamandez, who created Abundance360 and the X Prize, he's a futurist and he's very focused on, you know, trying to figure out how he can live to 700 years of age. Now that's a little bit out there, but he says what does the technology need to be like to be able to do that? They talk about a singularity event where you're at a point where every year that you live now adds a year onto your life. And that's something that's becoming ever present with the advent of the modern technologies taking place. And so it's a fascinating environment to be in. And how does that affect mortgages and home buying? Well, I really appreciate how you brought in a long term thinking. You brought in things like the population gap as well as the market demand and, and giving some more macroeconomic view on what a lot of people are just looking at a micro level. How do I into a house. And so what I'm hearing you say is that the opportunities exist. They might be out there for a while. There's better deals in lending than you think. Go and get a mortgage plan together so you can see how you can get it done. Get yourself educated and don't put off to tomorrow what you can work on today. How did I summarize all that for you?
[00:49:14] Speaker A: You know what, man? You have a job with me. If you ever changed careers, we, we, we want you.
[00:49:22] Speaker B: Sounds great, Mike. This was a ton of fun. Thanks for being with us and providing all this incredible value today. Thanks for being an ambassador for financial literacy, for the youth of tomorrow, for Gen Z and and for all the help and the people you've put into homes. We appreciate it. And for those of you tuning in, stay tuned to next week's episode where we continue to unpack the incredible innovations and challenges that entrepreneurs are overcoming so that they can make a bigger and better, brighter future.
