In this 20‑30 minute lesson Alan Akina walks beginners through the entire process of buying a first home, from the underlying reasons to own property to the practical steps needed to close a deal. He begins by explaining why homeownership matters—providing shelter, tax benefits, equity buildup, personal control, and a platform for wealth creation. He then guides viewers to define their ideal starter home (size, location, price range) and conduct online research using comparables. Alan breaks down the components of a monthly housing cost (principal & interest, property taxes, HOA fees, homeowner’s insurance) and shows how to calculate them with online calculators. He stresses the importance of “getting your financial house in order” by checking credit scores, improving them, and saving for a down payment (ideally 20% to avoid PMI, though lower‑down programs exist). He explains pre‑qualification, obtaining Good Faith Estimates from a bank, broker, and credit union, and the value of shopping for loan quotes. The lesson then outlines the transaction team: realtor, mortgage loan officer, escrow agent, insurance agent, and home inspector, describing each role. Alan recommends a “mortgage rehearsal” where viewers simulate paying the future mortgage while still renting, saving the difference to build a down‑payment fund and test affordability. After rehearsing, he advises making offers based on research, negotiating, and then accelerating payoff—aiming to retire the loan in 5‑10 years and repeat the process to build a portfolio. He assigns a homework task to research a specific property (example: 3‑bed, 2‑bath in Las Vegas) and calculate all cost components using Zillow, with a giveaway incentive for participants. Throughout, he emphasizes a growth mindset versus a fixed mindset, encouraging viewers to believe they can become homeowners and investors. The video ends with a brief Q&A covering buying during a pandemic, the definition of a down payment, and how to choose the best place to live.
Questions this video answers
Alan says it's a great time to watch the market, suggesting that waiting six months to a year may be better, but emphasizes using the current period to research, calculate, and practice paying the mortgage so you’re prepared when the timing is right.
Alan explains a down payment is the upfront cash you put toward the purchase price (e.g., 20% of $100,000 = $20,000). He notes some programs allow as low as 3‑10% but recommends 20% to avoid PMI and get better rates.
Alan says it’s a personal choice based on preferences like weather, schools, and lifestyle. He shares his own experience living in Utah and Hawaii, emphasizing that anyone can achieve homeownership with effort.
Chapters
Good morning, kids, and welcome to another edition of the ABCs of Money. Thanks for joining me again. Lesson number 11, can you believe that? We've been through 10 so far, but for today we're going to talk about one of my favorite subjects. Lesson number 11, how to buy your first house. Yeah, I'm going to tell you, this is one of Uncle Alan's favorite things to do is buy houses. And in my lifetime, I've done just over 30 houses and, and it's been fun. Now, I got to tell you, though, my first one was the scariest. I was scared out of my mind. Why? Because I didn't understand the process. I didn't understand the game. And so today I want to teach you some things in the next 20 to 30 minutes They can help make the process easier for you when you get to that point. See, knowledge is power. Remember that. And I'll tell you, owning a home is still considered today the American dream, and it does so many great things. So I want to start off by talking about why. Why do we buy a house? Number one, everyone needs a place to live. You need a place to live. So because you need a place to live, why not own it? You see, when you rent, that money goes to nothing. Okay? But when you own a house, the mortgage payment actually goes to reduce your balance that you owe the bank so you can eventually pay it off and own it free and clear, which is like one of the ultimate goals that, that you should have. Okay? That's, that's number one. Number two is tax breaks. So the government actually gives you a tax break so you can pay less taxes by owning a house versus renting. Okay, that's a great benefit. Remember we talked about money that goes out as taxes? The next thing is what we call equity buildup. Equity buildup. Here's what I mean, kids. Very simple. When you start to make payments on your mortgage, okay, on the house loan, that balance will start to go down. And also over time, remember we talked about this, kids? Real estate will start to go up in value. So most likely the house that you're in today will be worth more in 10 years than it is today. In 20 years, definitely be worth more. and 30 years. So the value goes up and the balance on your debt or the mortgage goes down. And the difference between the balance and the value is what you call equity. So this is— it's not like money in your pocket, but it contributes to your net worth. And we talked about becoming a millionaire, and that contributes to your net worth. Okay, so that's equity buildup. The next thing I have is more control. You see, when you own your house, you can't get kicked out by your landlord because you are the owner, right? Renting a house, sometimes you never know what happens to the landlord. They may have some financial issues of their own and they got to sell the house, or there may be a divorce or something goes on, a death, and, and then, then you're out. They'll just say, sorry, you got to move out. We've got 30 days. So as a homeowner, you have more control. And then lastly, you can use it to build wealth. Okay. How do you do this? Well, I've used real estate and my first, my first home that I bought, which was a small condo, I used that to build wealth rapidly. I first leveraged off of it, so I used some of the equity to go acquire more property. And then the second thing I did is When we moved out to another house that we bought, I turned it into a rental. So I still have my first house from 17 years ago. And so that's kind of a cool thing that you can do. Okay, so that's number one. Number 2 is where do you want to live? Okay, so there's 3 aspects that we're going to cover here when you start to look for a house. So first, the question is, what kind of house do you want to have as your first house? Now, I know a lot of us have the house on our dream board. These are beautiful, nice houses, and I want you to get there. But that doesn't necessarily have to be your first house. Could be a starter house. So what does your first house look like? So, so how many bedrooms? How many bathrooms? How many square feet? How big? How big is it going to be your lot? You know, the yard. Okay. So next is where is this house going to be? So what city, what state do you see this house being in? Is it going to be in the same neighborhood that you're in now? These are all important things to start to write down when you start to project out for your first house. What do you see it looking like and where is it going to be? What we want to do is we're going to start the research. Now you understand what kind of house you want, where it's going to be. Now you have something to target in. So you're going to research and I say start online. You start online, tons of great information. I'll give you a website at the end that will be huge, hugely valuable to you in your research. You want to research homes that fit this description. So let's say you're looking for a, a 3-bedroom, 2-bath home that's about 1,500 square feet on 5,000, 6,000 square feet of land in Las Vegas, Nevada. So now we go online and we look for those houses and we start to pull up prices. What are these houses selling for? And then you want to look back over the last 6 months to maybe a year for this same type of house. What did they sell for? Because that's how they determine the value is through what we call comparables. Comparables are like-kind or similar houses that have sold. So look back the house that you like in the area that you want to live in. What did these houses previous sell for in the last six months? Now you got that down. We're going to go to number three, and number three, we're going to calculate the payment. So we want to know how much is it going to cost to live there, and there's several things. It's not just the mortgage payment. So I want you to write this down. There's there's four things here that you should calculate. Number one is P and I. So let me tell you what P&I is— principal and interest payments on the mortgage. Because most likely you're gonna have to borrow money from a bank to buy the house. And so the bank's gonna want their money that you borrowed. So let's say you borrowed $200,000. So they're gonna want their $200,000 back. It's called the principal. And then the interest, which is their profit. So they're gonna charge you to borrow their money. They're going to charge you to use their money. So you can find this online if you just Google mortgage calculator. There's a ton of them, and you'll find principal and interest, P&I. Okay, remember this: if you say this to realtors and other investors, they'll know that you're smart when it comes to this stuff. Okay, P&I. The second thing that you're gonna have to calculate in your payment is the property taxes. What, what are they charging in your area? So if it's Las Vegas, There's probably that property taxes might be a little higher because they don't have state income tax, so they jack up the property taxes. In Hawaii, property taxes are high because the values are high, and so you better calculate that again. I'll show you a website where you can find this information. Third, you're going to search to see if there's any HOAs. HOA stands for Homeowners Association fees or dues. Okay, HOA is Homeowners Associations, and they charge usually a monthly fee. So where I first lived, it was in a condo area, so they had an HOA and it was several hundred dollars a month. That's kind of on the high end. Where I live today, in this area that we built the house, there's no HOAs. So depending on where you're, where you're living is going to determine if there's an HOA. And typically it covers certain things. And then lastly, you're going to want to calculate the homeowner's insurance. Okay. Homeowner's insurance. Every house needs to have insurance on it just in case of fire, water damage, theft. And there's all kinds of things that homeowner's insurance will cover because this is probably going to be one of your most expensive purchases in your lifetime. And so it's good to have great coverage. All right, now you're gonna get that payment. So you're gonna know exactly what you're looking for. And that's gonna come in handy in just a little bit. But the next step, number 4, is we're gonna have to get our financial house in order. Okay, so not the house that you're buying, but your financial house. Here's what your financial house includes: your credit score. So you're gonna have to look at your credit report to see if everything's correct. If there are errors, you gotta get that fixed right away because that can improve your credit score, right? The The report generates the score. So we have to look for things that need to be fixed and find areas that we can improve our credit score. And there's a lot of websites out there that give you advice. I'm not going to do that right now because we talked about it yesterday, but find ways to improve that credit score. And the second thing you need to do to get your financial house in order is save up for a down payment. Now most loans are going to require a down payment. There are, there are special programs out there for first-time homeowners, so I would definitely look it up and research first-time homeowner programs in the area that you want to live. Depends on where you live, they have different programs. So sometimes they give assistance, sometimes they'll match up to a certain amount, sometimes they'll offer you a chance to get a mortgage with a low down payment. But a good general rule of thumb for a down payment to save up 20%. Okay, 20% down payment is what you want to have as a general rule of thumb. Why? Because it usually gives you the best rates and you can avoid what we call PMI. Okay, not TMI, PMI. PMI is private mortgage insurance. It's it's another wasted cost if you don't have the 20% down. Now we're going to go number five, which is prequalification. Okay, so you're going to go to a lender and you're going to ask that lender to give you a prequalification letter. And this prequalification letter, what that'll do is let you know that based on your current financial situation, your income and your credit score. And your credit history, you can get up to this much in a mortgage loan. So it shows you how much you can borrow. Now, I would get a prequalification letter from one of these 3 institutions. So a bank, a broker, or a credit union. You only need one to have an idea. But then when you do go for the real mortgage, I would get 3 quotes from the same bank, broker, and credit union just to test the waters, shop the market. They might be offering different specials at the time. Okay, so a prequalification letter lets you know how much you can qualify for. And then when it's time to pull the trigger and you're ready to go, then you get 3 quotes. Okay, 3 quotes from a bank, a broker, and a credit union. And they're called— and this is getting a little technical for you kids, but— It's called a GFE, good faith estimate. That's what a quote is, okay? Good faith estimate. You got that, kids? All right. Now we are gonna start to assemble our team. Okay, so you got a lot of work done here. Now you can start to put your team together that will be there to help you to buy your first property. Number one on your team, especially when you're brand new, I recommend getting a good realtor. So this is like a realtor is just a term or a brand of certified real estate specialist. Okay, so a realtor is good because they typically know the rules, they know the area, they have access to the MLS, which is a database that tracks all the houses. And they're a great resource. And you typically— it's— you don't have to pay because it comes out of the sellers, but it's in there. So find a good realtor, somebody that's experienced. Now, later on, do you need a realtor? No, I, I do a lot of deals without realtors, so without the pay their commission, I can do it myself. But at the beginning, you need a good realtor. Okay, second thing I'm going to suggest is a mortgage loan officer. Okay, that's going to be a key member of your team to help you to get the loan to buy the house. Third, you're going to need an escrow agent. So an escrow agent typically can be referred to you by the realtor or the mortgage broker. But what the escrow agent does is they, they're like the middleman and help the transaction go through between the— let's say here's the seller and you're the buyer. Escrow's in the middle. They handle the transaction here and your money going in, and they're the middleman to make sure everything's done properly, and they check with everybody. The next person on your team is an insurance agent. You need to have— you're going to need to have insurance as soon as you buy that property to cover it, just in case you buy that property. A flood could happen, a pipe could break, it could burn down. So you want to have insurance on that house right away. So find A good insurance agent. And then lastly is a home inspector. The home inspector can help you. It's going to cost a little bit of money for, for you to get going, but a home inspector will go and check out the seller. So here's a seller's house. They'll go to the house and check all around the house. They'll check inside the house, they'll check under the house, and they'll check the roof. to make sure that everything's okay, and they'll report back to you if there's anything wrong. And if there is, then you go back to your realtor and say, hey, we found out that there's a leak in the roof, or the electrical is not working. And then you have the realtor put in the contract to get that fixed before you buy it. Okay, so home inspectors can save you, uh, money and hassle and all that stuff. So they're definitely— Definitely worth it. Okay. Now that you have the team, I want you to start to practice paying the mortgage. What does this mean? So we have everything in place, but how do we know if we can actually handle the payment? So we're going to go back and we're going to say, okay, here is the payment. Okay. So let's say the payment is $1,500 a month. For this house. Okay, so, so we're going to take that $1,500 and let's say you're paying— you're renting and you're paying $500 a month rent in your— for your apartment. So we're going to include that $500 in the total that we're practicing on, but not in real life. So we're going to minus out the $500 For rent. So now that's going to be $1,000 that you're going to pay to yourself, to a savings account. Okay, so you're going to— can they see that? You pay to a savings account. And I want you to practice paying this for probably 3 to 6 months before you jump in. Because here's what will happen. 2 things will happen after 3 to 6 months of paying that $1,000 plus the $500 to rent. Because, you know, when you're not renting anymore, this will go to your payment. Okay. So if you're paying that $1,500 a month in 3 to 6 months, you'll know like, wow, that was rough. We barely made it. We were stressed out. We couldn't do this or that. And it changed our lifestyle. So after practicing, you might know that, hey, I might not be ready for this, or it might be too big of a house for us. We might need to get something smaller and less expensive. Or you might say after the 3 to 6 months, you know what, we, we came through it, no problem. We're feeling really good about it. And, and we know we can do it confidently. Mentally, we know we can do it. And financially, it makes sense. And here's the bonus. Here's the bonus. By practicing, guess what you'll have done in your savings account? You'll have saved up money for your down payment, your down payment. And so you get that practice in, you're feeling it, and you have money set aside in a separate savings account that can be used for your down payment. Very, very cool trick to do. Okay. Next, once you do this, you're good. Now we're going to put in some offers. We're going to go find a couple of houses. And here's the fun thing. You go shop around, walkthroughs, virtual tours, and you're going to say, all right, excuse me, all right, realtor, let's put an offer in and let's offer this price. How do you know this price? Well, because you did all of your what? Homework. Your research. Okay, I would not rely solely on what your realtor says. There's some great realtors, but then there's some that just don't know. So you need to know through your research and your study, working together with your realtor so you can learn from them and keep them in check because you know what's going on. Okay, and then put some offers in. Now once you get the house, congratulations! Invite Uncle Alan over for the house party. I'll be there. We'll celebrate your first house. And then we will put you on a plan to pay it off. Typical mortgages will last 30 years, but Uncle Alan says pay it off in 5 to 10 years. And we've helped thousands of people to pay off their house in that amount of time or less. That's what I do every day. I love seeing that. And if you can pay it off in 5 to 10 years, guess what? You do it all over again. And then keep doing the same process and you collect Houses. Okay, collect houses. That's what I like to do. Like I said, I've done 30 collect houses. I'm going to give you your financial assignment: research the house and area that you want to live in. So again, let's say it's Las Vegas, Nevada, three-bedroom, two-bath house. I want you to research those houses, and I want you to come up with the pricing for it. How much would it cost every month to live in this new house? And here's the things we're going to look for. P&I, property taxes, homeowners association dues, and your homeowner's insurance. Those are the basic. Now there's going to be other things like maintenance and other things that you're going to have to come up with, like utilities and things of that sort. But this is the foundation. Now here's the rec— the website that I think can help you with a lot of this. If you go to Zillow, zillow.com, they produce almost all of this information for you. There's mortgage calculators on there. They tell you about the property taxes. They even show you what houses have sold for. Remember I said you gotta look back 6 months and what houses similar— they call this comparables, similar or like kind— have sold for in the last 6 months. Okay, now once you get this, if you want to be entered into The giveaway for a gift card for Stockpile. You need to write all that down or type it on a sheet of paper with maybe a picture of that house that you're looking at for your first house. Take a picture with it, tag me in it. Okay. On here on Facebook and hashtags Money ABCs, hashtag 101 Financial, tag Uncle Alan, and my assistants will be able to find you. To be able to put you in the entry for the Stockpile gift cards. Okay, we buy stock, not stuff. Remember that, kids. Okay, so this is buying your first house. Again, it's one of the greatest things that you can do to get your financial life kickstarted in gear. And the mentality is that when you get that house, we're going to, we're going to take care of it and we're going to do everything we can to pay it off quick. And then the big picture, right? This is the growth mindset versus the fixed mindset. You see, when we talked about the millionaire mindset, people that have a fixed mindset, they don't believe they can buy a house. They believe that they're going to be renters forever. They don't believe they can improve their situation. But not us, right, kids? Every single one of you here on the ABCs of Money, we don't believe that. We are in the growth mindset, which in the growth mindset we say, you know what? We can get this house. We can become homeowners. We can pay it off fast and we can go buy more houses. We can become investors. Okay? That's the growth mindset that I want all of you to do it. I mean, if you have this now at your age, kids, and get, get away from the fixed mindset, growth mindset, you will be so much further ahead. So much further ahead. And this is the foundation right here with what Uncle just shared with you. And I want you to come back to this. I'll leave it up on YouTube as long as YouTube will keep it up. And when you get ready to buy a house in 5 years, 10 years, wherever it is, come watch this video again. Any questions so far?
Do you think it's a good time to buy a house during this pandemic?
I think it's a great time to watch what's happening. I think it'll be a better time In six months to a year, this is why you have this opportunity now because you know the house is something you don't want to just rush out and buy. It's something that you take time. So this process is going to take time. You need to take time to research, calculate, and then practice, right? Practice paying the mortgage for three to six months. If you do that practice for six months now, even up to a year, you'll be ready in two ways. You'll have money saved up for a down payment. And you'll know the game because you've been researching every week, every day. You know what the prices are, so no one can take advantage of you. And that's, that's power. Knowledge is power.
The definition of a down payment?
Okay, down payment is the amount of money that you're gonna need to put up front to be able to borrow the rest. Okay, so let's say you're buying this house. Okay. And this house is, let's say it's a, it's $100,000. Okay. The bank is not going to give you the entire $100,000. They want you to have a little bit of skin in the game. They want you to show them that you're serious about this and that you're going to contribute too. So they ask for you to put part of this down as a down payment. So that's a great question. And so 20% is standard. So, so that means you would have to come up with $20,000. Okay, if it was 20% for a $100,000 house, and then the bank would give you the other $80,000 to get the $100,000 to give to the seller. And then, like I said, there's some programs that only require 3% or 10% down payment, but a good rule of thumb is 20%.
Where is the best place to live?
Where is the best place to live? Man, that, that's a personal question. That is all up to you. What, what, what do you like? What kind of weather do you like? What area do you want to be in? Do you want to be by great schools and different things? So I, I live in Utah, but I also live in Hawaii and I like both. So I have houses in both. Makes it easy. I want you to know that you can do this. You can be successful financially. It's— you have to put the time in now and into your future. And this is a lifelong thing that you're going to continue to learn about money. Just last night at 11:00 at night, I was on a Zoom with an estate planning attorney for an hour and 15 minutes. So I went into past midnight and I was still learning about wills and trusts and things of that sort. So Keep learning, but be safe, gang. Stay healthy, stay out of trouble, enjoy this weekend, and I'll see you next week Tuesday. Aloha.
