A Home Buyer's Market?

This faith and finance podcast is underwritten in part by Movement Mortgage.

Movement provides residential home loans in all 50 states. Founded in 2008, amidst one of the biggest financial meltdowns in American history, Movement set forth on a mission to create a movement of change in their industry, in corporate cultures, and in communities. So that a portion of their profit creates a long term positive impact in communities, both close to home and around the globe through the Movement Foundation and Movement Schools. It all comes back to their mission to love and value people. Learn more at movement.com slash faith. dot org. Well, we're delighted to have Dale Vermillion with us again today.

He's the author of The Mortgage Maze, the simple truth about financing your home. Dale, great to have you back, my friend. Always great to be here, my dear friend.

Thank you. Absolutely. Dale, interest rates are always a huge factor when folks consider buying a house, of course. We've seen major increases in the past year, but what is the trend right now that you're seeing? Well, I wish I could tell you they're going down, but they continue to be going up as the national average.

They've been creeping up for the last almost two months now. Now, the good news is the Mortgage Bankers Association just had their annual conference. My friend and Tony, their chief economist, said that he believes in 2024 we'll see four rate decreases. So hopefully the outlook in 2024 is going to be better than what it is in 2023. Yeah, that would certainly be helpful. Are we seeing Dale a return to assumeable mortgages due to these higher rates?

You're seeing some of that. You know, it's not obviously every mortgage that has that. It's a somewhat uncommon thing to have in today's mortgages, but it's certainly something that if you're buying a home, you want to ask the seller if they have an assumeable mortgage, because if they do, you might be able to tap into those low rates. Remember, you have to qualify for that loan with that lender as if you were the original buyer. You still have to buy out the equity of the seller, and you do want to have an attorney represent you in that because it could be pretty complex.

Okay, yeah, that's helpful. What about home values, Dale? We've of course had a lack of inventory, which has propped up prices. Are prices moderating?

Prices are moderating for sure. We saw in this last month, we actually saw a 3.1% increase year over year in property values. We're still continuing to see that, but 7% of properties that were listed through the week ending October 22nd actually reported a price drop in that four-week period. So we're starting to see now certain markets of the country where listings are a little bit longer, values are starting to decline there, they're starting to drop the listing prices, which is a good thing for buyers. Overall, though, for homeowners nationwide, property values continue to go up a little bit this year. We'll probably see a 3% increase over the course of the year.

All right, very good. Dale, could this actually be a good time to buy, given everything you just said? It can, and there's a couple of reasons for that. Number one, obviously there's a lot less buyer competition, so that's very helpful in being able to get into a contract. We don't see the bidding wars that we used to see, so you can generally get in right around the selling price or a little bit less, which is good. And most importantly, a lot of the contingencies that were being waived when the market was really hot, things like having an appraisal done or an inspection done or having a home that you want to sell to be contingent to buy the home, these are now being accepted again, along with seller concessions. We're seeing over 50% of sales now have seller concessions, and that means you could use that money to buy down your rate a little bit.

These things, combined with the tax benefits of higher interest rates, all actually create a pretty good market for buying if you're in the market. All right, what about going into that purchase from a mortgage perspective? What does someone need to know to be prepared? Number one, make sure that you're talking to at least three different lenders. Number two, do your homework online so you kind of know what to expect from a rate and fee perspective.

And then number three, just really be prepared. Have all your income documentation ready for the lender. They're going to need that to let you know what you qualify for. Make sure that you have figured out your down payment and that you're trying to put that 20% down that we talk about all the time to avoid mortgage insurance.

And just make sure that you have done your homework before you go into that. That really is going to help you to be more successful when you go into that transaction. No doubt about it.

Well, that's encouraging information, Dale, for folks who've been waiting on the sidelines ready to purchase that home and just been afraid this was not the time to do it. Hey, thanks for stopping by. We always appreciate your insights. Appreciate you, my friend. God bless. All right. That's Dale Vermilion, author of The Mortgage Maze, the simple truth about financing your home.

You can pick up a copy wherever you buy books. Now, if you need a mortgage and you want to learn more from a partner that shares your values, check out Movement Mortgage at movement.com slash faith. Your calls are next. Stick around.

We'll be right back. What if your everyday purchases could support biblical causes with the all new cash rewards visa card from Christian Community Credit Union? A portion of every purchase goes to ministries that spread the gospel, combat human trafficking and protect vulnerable children. Plus, earn unlimited one point five percent cash back. There's a joint Christian community dot com membership eligibility required. Each account is insured up to two hundred and fifty thousand dollars.

This institution is not federally insured. Absolutely free. We know you've learned to be suspicious of those words, but really you can get biblical financial wisdom delivered to your inbox each week. Absolutely free articles, videos, podcasts and special offers on biblical resources. Nearly sixty thousand people receive our free weekly wisdom email and you can to create your free faith by account by going to faith by dot com and click Sign up to begin receiving weekly wisdom in your inbox.

Welcome back. This is Faith and Finance. I'm Rob West. We're taking your calls today. Eight hundred five two five seven thousand.

That's eight hundred five two five seven thousand. By the way, you don't have to call. Just send an email. Ask Rob at faith five dot com.

That's ask Rob at faith. The letters f i dot com. We're going to go to Peoria. Hi, Barry. Go ahead, sir. I'm a sixty three year old man. I'm single.

I do not have internet, smartphone, computer, any of that. I go, I'm very generous in my finances. The Lord provides everything I need and even more. I love giving to help others.

I'm just concerned or thinking whether if it's like an idol, I don't do it all the time. I don't do it to the detriment of myself, but I do love helping others. And I'd like some wisdom, counsel, well, wisdom on that, because I would literally do without and help others. And I know the Lord provides and takes care, meets all my needs.

Yeah, well, that's a great question, Barry, and I appreciate your transparency and even asking it. You know, first of all, I would say that, you know, we were created in the image of the ultimate giver, God himself. For God so loved the world, he gave his one and only son. So as image bearers of God, we have giving hardwired into our DNA.

And so you're doing what you were created to do. And I would go beyond that and say that some even have the gift of giving. You know, we all have gifts bestowed to us by God and we have different gifts. And that's why as the body of Christ, we come together and, you know, we more accurately reflect the picture of Christ as we bring those gifts together. And some have the gift of giving.

And I would say it sounds like you in fact have that. Now, with anything, we always need to be checking our hearts. What is our heart motivation?

Why am I doing this? Is it because, you know, I want to give and make it a show like the Pharisees because it brings, you know, I like the way people respond to me and wow, look at his giving and look what he did and it's become about me. Or is it really just that I have great joy when I'm giving, which should be expected because again, God is a giver and I get great joy from being able to help others and so I'm just living into that, you know, created order that God has put out there. And I just want to be able to give as the Lord leads and I'm doing it in a way that makes sense in light of what God has entrusted to me and so I'm not, you know, robbing, you know, my family of needs that they have because I'm, you know, giving all of our money away. Although, you know, I would be careful there and, you know, ultimately that's between you and the Lord and there's plenty of people that have said over the years, I mean, you know, we're going to just trust the Lord for everything.

And, you know, I remember when Bill Bright, the founder of Campus Crusade, you know, he and Vonette gave away one of their biggest retirement accounts to start a school in Russia that ultimately shared the gospel and they made that decision. That was between them and the Lord and so I would never get in the way of that, but I would just say, like, if you're violating biblical principles, like you're going into debt to give, I would caution you there. So I think it's ultimately, first it's about a heart posture and second it's giving according to your ability freely and proportionately and not violating any biblical principles along the way. But if it's done, you know, as a cheerful giver and not about you, but ultimately about you being able to bless others and serve the Lord as an act of worship, then I would say, by all means, you continue.

Is that helpful? Yes, sir. I tell you, I get so much joy out of giving, not just financial, but otherwise it excites me as much as being a witness for Jesus Christ.

Yes, yes. Well, I think you're doing exactly what God's word said. I'm reminded of 2 Corinthians 8, 12 to 14, for if the willingness is present, it is acceptable according to what a person has, not according to what he does not have. For this is not the relief of others and for your hardship, but by way of equality at this present time, your abundance, here's the key, your abundance will serve as assistance for their need so that their abundance also may serve as assistance for your need. And, you know, I think if you're giving with that right hard posture and you're giving cheerfully, whether that's time or your talent or your treasure or relationship, whatever it is, that honors the Lord.

And I believe that God is pleased by giving done in that way. So I would say just based on, you know, what you're describing, you know, this is entirely appropriate and, you know, I think the extent to which you feel like it perhaps could become an idol in your life, well, pray about that and just ask the Lord to reveal that to you. But apart from that, I would say, you know, continue on. Thank you.

Would I be able to ask the other? Yeah, quickly, go ahead. Okay. My mom is elderly. She's losing her memory and only the Lord knows how long she has, but she had set aside some money for all of her children. I have no idea how much it will be. I want to be wise with this and to make sure I just need some wisdom.

Okay. Yeah, what I would do is connect with an advisor. I think this is a great opportunity for you, Barry, to have a financial advisor that could be a great accountability for you, could help you with a plan. If we are talking about significant wealth, helping you to determine how much to spend freely and enjoy, how much to put away for the future and what an investment strategy looks like and how much to give and how to do that wisely.

So I would head to our website at faithfi.com, click find a CKA and perhaps start a relationship with a certified kingdom advisor there in Illinois that could be a great resource to you once this inheritance comes down. Thanks for being on the program, sir. Let's head to Wheaton, Illinois. Hi, Victoria. Go ahead. Hi, Rob.

Thanks for answering my call. I have a very simple set of questions. The first one, there have been a number of reasons why it was very challenging and almost impossible to save over the last decade.

And before that I worked for a ministry where I wasn't paid much. But our children are getting older. They're 11, 9 and 7. And I want to start saving for their college education. So I really have two questions.

This is the first one. Saving for their college education in a way where wherever I'm putting it is like an official place so that it can't be withdrawn. But that if they decide that they're going to go into business, just say and start their own businesses without even going to school, which some people are doing nowadays, that they could still access the money. So that's the first question. And the second question is retirement savings for our family are basically zilch and any money to invest is basically zilch. At this point, that will change when I get my new job. But as of right now, I just am kind of looking towards the future in terms of being starting to be prepared. I'm 44 and I just wanted to see if you might be able to say, hey, the projected, you know, like 20 years from now, you know, what's projected for, you know, living, living life retired, you know, say out in Wheaton, Illinois. And how much should I aim to have saved by then?

And which way can I go to, you know, gain as much as possible between now and then with like risky investments and safer things like stocks and bonds? So those are two like the second question is bigger. So thank you. Yeah, happy to do it.

So let's do this. I really appreciate that background on both of these. And I love the way you're thinking about college and wanting to be efficient in how you save, but also wanting to be flexible. If for some reason they didn't go to school and then also your own retirement, which is really, I think, from a purely financial standpoint, more important because there are other ways to pay for college and without debt, like scholarships and grants and work study. And your kids working, you know, during high school and during college to pay.

There aren't other ways to pay for retirement. So I would actually prioritize that if you feel like you're behind and it sounds like you are. I've got to take a quick break, but I'll give you my thoughts on both just around the corner. Stay with us. We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states guided by a mission to love and value people and a goal to redefine the mortgage process. Movement seeks to help others achieve their financial goals. You can find out more at movement dot com slash faith movement mortgage LLC supports equal housing opportunity in MLS number 39179.

For licensing information, please visit in MLS consumer access dot org. We are grateful for support from sound mind investing in the faith and finance program. If you have money in a retirement account or just a general investing account, you know, the stock market can sometimes seem like a roller coaster. But it is possible to enjoy both profit and peace of mind in investing no matter what's happening in the market. You can see a short video webinar on that topic at sound mind investing dot org. Since 1990, sound mind investing has sought to offer financial wisdom for living. Well, sound mind investing dot org. Welcome back to faith and finance. I'm your host, Rob West. The number to call is eight hundred five to five seven thousand. We'd love to hear from you again. Eight hundred five to five seven thousand.

Just before the break, we were talking to Victoria in Wheaton. She's wondering how to go about saving for their children's college because of a variety of things, including having limited income in the past. They've not been able to save for either college or retirement. They've got kids that are in middle school, one in high school, it sounds like, and just wanting to think about prudently saving for college, but also having that money available. If the kids don't go to college, perhaps they want to go to a straight into the workforce or start a business. And then they're also feeling behind on their retirement savings.

So just wondering how to approach that as well. What I would say, Victoria, is, you know, in terms of the priority order, just from a purely financial standpoint, as I was sharing before the break, you know, I would actually put your retirement savings above the college savings primarily because there's no way to pay for retirement apart from saving or continuing to work. And there are ways to pay for college scholarships, grants, AP classes, working both before college during the summers and maybe even on campus.

So you can get creative when it comes to college. You don't have those options when it comes to retirement savings. Now, you asked how much you should be thinking about in terms of a savings goal for retirement. Typically, the rule of thumb, and that's all it is, is folks will say, well, you probably need 10 to 12 times your income in retirement savings by the time you retire.

Now, you might say, well, that's great, but there's no way I can do that. Well, that's only a rule of thumb. I mean, ultimately, it's going to come down to what will our expenses and lifestyle look like in retirement. Most folks pay, not pay, but end up spending around 70 to 80 percent of their pre-retirement income.

Hopefully, the house is paid off. The kids are off the payroll. We're not spending as much for work, lunches and clothes. So expenses come down. Our life insurance goes away because we don't need it.

There's not that risk there. And so we're living on less. And then the idea is Social Security was intended to cover about 40 percent of your pre-retirement income. And then if you have 10 to 12 times your salary in retirement savings, then at a 4 percent withdrawal rate, you should be able to make up that 70 or 80 percent.

And that principal balance in the retirement account, if it's invested properly, should be able to stay flat and maybe grow slightly, even though you're pulling out 4 percent a year. Now, if you can't get there, that's OK. And you can work longer. You could save less and live on less. I mean, at the end of the day, it's just going to be a matter of balancing that budget. But that would be my priority. You all trying to just, you know, as you get a higher paying job, just sock away as much as you can, which means you're going to have to live well below your means and try to put as much as you can every month and every year into a tax deferred environment, a retirement account so that you can leverage the compounding effect for the rest of your working life to save as much as you can. And I would prioritize that over college.

Now, we can talk about some college savings options, but let me let you react to all of that first. That sounds excellent. Love that. That's great. It gives a lot of vision. Thank you.

That's awesome. Yeah, you're welcome. Now, in terms of if you are going to set something aside for college and you want it available more widely than just college, meaning, you know, with a 529 education savings plan, and that would be my preferred approach, but it does have to be used for qualified educational expenses or K to 12 tuition up to 10,000. Or you can get it out in a pro rata basis based on scholarship grants and awards. So if he does get a scholarship or a grant, you'd be able to take it out equivalent to that. Apart from that, the only other option would be to move it to a Roth IRA. That's a new provision that's coming out of some recent legislation.

It's not here yet, but it's coming. And so as long as it's been open 15 years, you know, you'd be able to push that to a Roth IRA. That doesn't help him, though, if he's starting a business or something like that.

So if you just want it more generally available, then I just set up an account in you and your husband's name earmarked for the child and just sock it away there, either in a high yield savings or a CD if you've got less than a five year time horizon. And then you can decide how and when he's using it at the point that you want to give it to him. Is that helpful?

Yeah, it is. And then we would also be able to withdraw it, presumably. How would they know that we're going to use it for him if it's in our name? Who is they? How would the people that are overseeing the 529?

Oh, yeah, no. Yeah. So ultimately, there's an there's an owner to the account and then there's a beneficiary. And so you would name the child as the beneficiary of that account. And so it'd be used for their qualified expenses. And if that child doesn't need it, you can move it to the IRA or you can transfer it to another child. So you would open it as the owner and name the child as the beneficiary.

But again, if you didn't want it in a 529 where it's really earmarked specifically for college, then I just put it in a taxable brokerage account, but set aside for your child. Thanks for being on the program today. Alliance, Ohio. Hi, Mike. Go right ahead. Hi, Rob.

Thanks for taking my call. I've got some money and some IRA CDs and I need to move it to some other banks. And I was wondering if you had any information on how to evaluate the financial stability with all the things that are going on with banks these days.

Yeah, yeah. Well, it's a good question. I mean, you know, we usually recommend you go to bankrate.com and, you know, they have a five star rating system. You know, a lot of that, though, is around just their customer service and, you know, how friendly is their app and website and, you know, those kinds of things. You know, in terms of, you know, if you're concerned about a bank stability, I mean, I think the key is having the FDIC or the NCUA insurance, which means that, you know, the U.S. government's essentially going to be the backstop to ensure that depositors have not only safety of their funds, but liquidity access to their funds in the event of the bank failure. You know, the Federal Reserve is constantly doing stress tests, at least on the big banks and obviously these smaller regional banks. You know, especially those that are highly concentrated in certain sectors of the economy are more vulnerable. And that's what we've seen play out, you know, not only several months ago, but even more recently. But, you know, it's not kind of a systemic problem that's going to have a ripple effect.

Some thought it might. It was really localized and, you know, the government stepped in and did what they have said they would do in terms of protecting depositors and keeping the liquidity flowing. The investors to those banks were left kind of holding the bag, if you will, on their investments, but not those that, you know, had deposits. So I would say if you're concerned about that, you'd probably want to stay with the larger banks as opposed to, you know, maybe some of the more regional type banks. I would certainly check bankrate.com, look at their rating system. But I would certainly make sure you have the FDIC or in the case of a credit union, the NCUA insurance, because I believe, you know, that really is effective.

And it's proven to be whether it was 2008 and 2009 or even just in our more recent isolated bank failures. Is that helpful? That is. Thank you. OK. I appreciate it, Mike. Thanks for being on the program today. I hope you'll make plans to join us again next time for another edition of Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.