This Faith and Finance podcast is underwritten in part by Movement Mortgage. Movement provides residential home loans and reverse mortgage options in all fifty states. Founded in 2008 during a major financial crisis, Movement was created to love, value, and serve people and communities. Learn more at faithfy.com/slash movement. Movement Mortgage LLC supports equal housing opportunity.
NMLS number 39179. For licensing information, visit NMLS ConsumerAccess.org. Uh We know that God owns everything and that what we have is simply entrusted to us, but do we apply that everywhere? Hi, I'm Rob West. Today, Harlan Akola joins us to talk about why the equity in your home should be considered as a part of your overall stewardship plan.
And he's brought some surprising stats to make the point. And then it's on to your calls at 800-525-7000. That's 800-525-7,000. This is Faith and Finance, biblical wisdom for your financial decisions.
Well, Harlan Akola leads the reverse mortgage team at Movement Mortgage, a faithful underwriter of this program. Movement is a national mortgage lender committed to not only helping families with home financing, but also to investing in communities through its charitable work. Harlan, always great to have you with us. Great to be with you, Rob. Thank you.
Harlan, we often say that God owns it all and we're simply stewards of that which he has entrusted to us. We apply that thinking to our income and our savings and our investments, our giving.
So why do we often think about the equity in our homes differently?
Well, Rob, it really comes down to tradition and culture. It's always been separated out that even though the home equity is wealth, it's wealth that is put aside and designed simply to be leaving it to your children. You pay off the house and leave it to your children, and there's no other thought in it besides that. And that doesn't mean that everybody needs to tap their home equity, but we should think about how it fits in with our overall wealth no differently than what we look at our IRAs or our savings accounts. Yeah, I think that's right.
It's certainly an asset alongside those other assets. And for many older homeowners, that equity represents a significant portion of their wealth, especially in light of the rising home values we've experienced. Just how important has home equity become in retirement planning today, Harlan?
Well, Harvard's Joint Center for Housing Studies a number of years ago said that the average person had $250,000 in home equity, and that's way up from $150,000 to $170,000 in the past. And at the same time, many of those people who have seen a tremendous increase in wealth in their house don't have nearly as much money in other places, sometimes less than $200,000. And so that's something that makes it much more difficult to retire or to be able to just meet basic needs. Yeah. There's also a deeply held assumption, Harlan, that parents should leave the family home to their children free and clear, but you're encouraging Christians to at least reconsider that idea.
Why is it worth examining?
Well, you know, most biblical references to what we leave behind have more to do with our beliefs, our values, our examples, our teachings, even more so than money. And there's nothing wrong with leaving a home that's a wonderful legacy. But when we really take a look at the whole picture, should that money be used in a different way, either while we're alive, could that wealth help meet needs during retirement? Could it allow greater generosity while we're alive? Could it reduce financial stress or help care for a surviving spouse?
There are so many other things that we can do besides just saying, I'm going to leave it to my kids. And the most important things our kids really need is our example and our godly teachings to pass on, even more so than money. Yeah, that's right. And my experience is that the kids are far more concerned with mom and dad having an enjoyable fourth quarter of life than they are squeezing a little more equity out of the house after they pass. Harlan, having significant equity in your home doesn't necessarily mean you have the cash flow to live comfortably in retirement, right?
No, we run into those people every single week that we're talking to those that have a lot of equity there, but they're having problems making ends meet or even fixing their air conditioning system. That same Harvard study showed that 41% of homeowners from 65 to 79 were still making a mortgage payment in 2022. That is actually now up to over 50%. And the big issue is more than about 43% of those older homeowners with a mortgage are housing cost burden. That means they're spending more than 30% of their income on housing, sometimes 50%.
So even though they have all this wealth in their house, they are struggling to meet expenses. And that's why it should not be separated from their other wealth. Harlan, just 20 seconds left. What should someone who's listening today think about or consider as they look at this?
Well, start with look at a big picture of everything that goes together, all the things that they have. And then at that same point, start with your goals, not with a specific financial product or asset, and prayerfully consider the stewardship of your home. Harlan, always enjoy our time with you. Thanks for being here today. Thanks so much.
I enjoy it. That's Harlan Akola with Movement Mortgage. Movement serves families in all 50 states with a range of home financing options, including reverse mortgages. He's our go-to guy. If you want to learn more, go to faithfi.com slash movement.
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Carefully consider the investment objectives, risks, charges, and expenses of Guidestone funds before investing. They are distributed by Foreside Funds Distributors LLC, which is not an advisor affiliate, a registered investment advisor, nor do they provide investment advice. We are grateful for support from Movement Mortgage, who provides residential home loans and reverse mortgage options in all 50 states. Guided by a mission to love and value people, Movement seeks to help individuals and families make informed financial decisions from buying a home to planning for retirement. More information is available at faithfy.com/slash movement.
Movement Mortgage LLC supports equal housing opportunity. NMLS number 39179. For licensing information, visit nmlsconsumeraccess.org. Great to have you with us today on Faith and Finance. We're taking your questions.
We'll get to as many as we can. 800-525-7,000. Let's go out to Missouri. Mary, thanks for calling. How can I help?
Hi, how are you today, Rob? Thanks for taking my call. I'm well, yes, ma'am. One of my siblings that passed, um, my sister passed away four years ago. left everything to her daughter under a TOD.
accounts except for one bank account. Uh the bank had originally said they were going to send it to unclaimed properties. After three years. we went online and found out that probably it may be five years. But we went back up there recently and now the bank is saying is going to go to a probate and not unclaimed properties when there is nothing else in probate.
Her daughter, my niece, is trying to figure out what we can do. We took an affidavit of death and a death certificate that was Recommended for us to do by an attorney to the bank, and they still wouldn't release the fund.
Well, I'm sorry about that. You know, that can be frustrating as you're trying to get this all closed out and you've got this just one account remaining. And I can certainly understand that you'd want to get it taken care of. I think the first thing I would do is ask the bank why the affidavit was rejected. Is it because the account exceeds the small estate limit?
Is it because the affidavit wasn't the correct one? Or are they requiring probate for some other reason? Did they say? They said that they was the uh would not accept that because if the bank account was in my sister's name only. And now all the other bank accounts were in Um her my sister's name and her daughter's name at this same bank.
And this bank is saying that because this account and we know that it's less than thirty, forty thousand dollars, she this was the bank account that she used to pay her monthly bills out of. It's probably not that much in there. But the bank is still taking a monthly fee every month for nonactivity. Yeah. Well, I certainly understand that.
And yeah, that's frustrating as well. Yeah, essentially, it sounds like, you know, the bank's position is probably that, you know, unless the estate qualifies for a small estate procedure under the state's law, you know, that's maybe why they're saying it needs to go through the estate process, the probate process. I mean, a next step would be you could ask to speak to the bank's estate department, not just the local branch. And I would ask them, you know, why doesn't the affidavit qualify? What legal document do you need to receive the funds?
If they just simply insist that probate is required, you could ask specifically whether it qualifies for a small estate affidavit or what's called a summary probate in that state, because many states have a simplified process, but the dollar. Limit varies.
So you would just need to see if you're under that. And if you are, that may expedite things. If it has 30 to 40,000, that may exceed the small estate affidavit limit. And so they may legitimately be requiring probate, and that may be exactly right, just depending on the rules of your state.
Well the last statement that my niece received at the home probably a couple of years ago. We say it was probably less than $10,000 in there. Oh, it's not like it's a whole lot of money. You said small estate. We should act with small estate what?
Yeah, so you'd want to ask them specifically if it qualifies for the small estate affidavit or what's called a summary probate. Because if it's truly under $10,000, there's probably a simplified procedure available depending on the state. In some states, the bank-specific affidavit can be used to collect a deceased person's bank account without opening full probate. But each state has a different threshold or requirement. And that's why I think going to the bank's estate department in writing and ask why it was rejected and whether it can be released on a more simplified basis, I think would be important because they'll know exactly what the thresholds are and whether this could be expedited in a way that doesn't require full probate.
Okay, so the State Department has the bank.
Okay. That's right. Thank you so much. Thank you. All right, Mary.
All the best to you. Call anytime. Mike is driving through Oklahoma. Mike, go ahead. Hey, thank you for taking my call, first of all.
Of course. And I am on my way to Wisconsin. Oh, wow.
Okay, very cool. Yeah. And anyway, my question is, I am fifty five years old. Our Lord and Savior saved me at a very late age. Praise the Lord.
Amen, brother. He's blessed me immensely since then. between my wife and I, we make about one hundred twenty thousand a year. We have a car note, a mortgage. Other than that, we're debt free.
And we have been preparing for retirement. And we're working on getting like a three month emergency time. And my question is, what else can I do? at this age with that kind of money. And I would say about five hundred dollars is what we have left over each month.
after everything is paid, utilities, car note, house note and everything.
So, I want to know what to do with that. What can I do with that? Yeah, with that extra $500 a month. Yeah. Yeah.
How are you doing in terms of? I love the fact that you're on track to be completely debt-free, just that house and the car right now. You're working on that emergency fund. I'd stay laser focused on that. I'd probably get that up to a full six months' worth of expenses.
So at $500 a month, that's going to take you, you know, maybe the balance of the year to get there, maybe a little less than that. But apart from that, I would say, you know, let's continue to put money away because, you know, you've still got some time on your side. God's blessed you all with a good income. You've got some surplus.
So I think your ability to, first of all, let's prioritize giving and make sure you're listening to the Lord as to how He would lead you in your giving. But beyond that, I'd love for you to, you know, be setting something aside for the future so that when you get to that time where God redirects you away from paid work, either because He's got something else for you, a new assignment, or you're just unable to continue to work physically in the same capacity you are now. That alongside Social Security, you'd have some other assets that you could convert into an income stream. Do you have any retirement accounts right now? I do.
I have a I have a four hundred one K with my job. There's about twenty thousand dollars in that.
Alright. And anything else? That's the only thing. Yeah. So I think there's an opportunity there.
And the good news is it sounds like you're healthy and, you know, you can continue to work.
So what you might want to do is look at, you know, getting that emergency fund up to, let's say, that full three months expenses. And then maybe you split that surplus, $250 to continue to build it up and maybe $250. by increasing your salary deferral into that 401k so that you've got more money going in every month. That's going to kind of wind down that surplus, but that's okay. We're putting that toward productive uses of, you know, fully funding the emergency fund while at the same time, you know, adding more to the 401k so that you can build some additional assets that you could tap into down the road.
Does that make sense? That does.
So j basically Hit that 401k as hard as I possibly can. I think so. Yeah, after the uh emergency file. That's exactly right. Yeah, that's the place to be.
It's going to give you tax deferral and it's going to give you something growing for the future, which is always a good thing.
So, Mike, sounds like you're doing a great job. Keep it up, and thanks for being on the program today. Call anytime. All right, a quick break and back with much more, including your questions. Call right now with a financial question: 800-525-7000.
We'll be right back. Millions of children throughout the world lack one simple item: shoes. This month, Faith Phi and Buckner Shoes for Orphaned Souls are partnering with you to provide hope to 1,000 children in need throughout the world by providing new shoes and socks, critical care, and the love of Jesus in some of the most vulnerable places. Visit GiveShoestToday.org to learn how you can impact the lives of these children. That's GiveShoesToday.org.
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You know, each day on this program, we want to help you make much of God, seeing him as your ultimate treasure. And when you do, regardless of what passes through your hands, you're able to hold it loosely, recognizing that is not where you find your treasure ultimately. It's not in the things of this world. They can come and they can go, and ultimately, we can rest in the sufficiency of God and His finished work on the cross and the abundance that we have in our relationship with Him. And then we can manage money in a way that brings Him glory and honor him through giving and saving and investing strategically and using all resources entrusted to our care as a way to glorify God.
That's what we want to do each day on this program: help you to see God as your ultimate treasure, and also, in doing so, help you navigate the actual questions you have in your financial life, those things you're wrestling with on living within your means, and how do you manage debt? And is it even a good idea? And if so, in which cases? And what about passing wealth to the next generation? What does it look like to pass wisdom before wealth?
And how do we do that mechanically? What about your giving or your debt repayment? Perhaps it's investing for the future. All of those questions and more are in play today. We'd love to hear.
Hear from you. The number to call 800-525-7000. That's 800-5027-777777777777777777 525-7000. We've got lines open. Our team is ready for you, so you can call right now.
Let's go to Illinois. Hi, Daniel. Go ahead. Hey, how's it gone? Good.
Thanks for your call. Uh my question is I'm interested in purchasing a home. I'm currently working two jobs. to save up for a home. And my question would be If my income is approximately twenty thousand to twenty-five thousand per year.
Um what's the mortgage rate uh that I need to or should subscribe to? Like what do you recommend for someone who wants to buy a house for the first time? Like what's the What's the most appropriate rate to sign with? Yes, it's a great question. And it's challenging right now just because home affordability is really difficult.
We've got interest rates high for the mortgage, and we've got home prices high as well.
So the twenty five thousand, that's from both jobs that you're working combined? Yeah, yeah, and I even do side jobs like carpentry and construction side jobs. Um Yeah. But that's annual, so you're bringing in about 2,000 a month. Uh yeah, yeah, this is about eighteen hundred, two thousand.
Yeah. Okay. Yeah. I mean, so really what you want to do is look at your net pay.
So let's say your after-tax pay was $2,000. I mean, the challenge is I would really love for you to not have more than 30% go into your principal interest, taxes, and insurance.
So that's $600 a month, which is going to be really challenging just depending on what you're looking to buy.
So I think your focus right now should just be: let's not get overextended by trying to buy a home too quickly. Let's just focus on renting for now. Let's save where possible, starting with that emergency fund. Make sure you're not carrying any high interest debt. And then just start saving as much as you can for that down payment with a goal of 20% down of whatever that purchase price is and a mortgage payment, including taxes and insurance.
That's no more than 30% of your take-home pay. And that gives you a rough guideline so you could start looking around to see what's out there and figuring out: okay, if I, you know, if let's say by waiting. You know, you're able to get that down payment up, and maybe your income, you know, grows to where now you're making 30 or 40,000.
Well, you know, now all of a sudden you can do a thousand dollar a month payment instead of 600. But I think for the time being, I would just really focus on building up that emergency fund of three to six months' expenses, getting something going into a retirement account on a modest basis, and then just trying to plow as much as you can into that down payment fund and then work on letting your income grow over time and being patient on that home purchase. All right. Yeah, that that hits the nail on the head. Thank you.
All right, you're welcome. All the best to you, my friend. Thanks for calling. Hey, stay on the line. I'm going to send you Ron Blue's book, Master Your Money.
It's a classic. I read it coming out of college, and it was a game changer for me. It'll kind of give you a good overview of just all the key ideas on how you need to think about your financial life, both spiritually from a biblical perspective, but also practically in terms of investments and savings and debt and budgets and all the things you need to know. It's called Master Your Money by Ron Blue, and we'll send it to you as our gift, Daniel.
So hang on the line. Let's finish today in Chicago. Chris, go ahead. Hi, I have a mortgage for at about a 5.25 interest rate and I have two car payments. and a higher interest rate.
And um also um a medical bill. through Cherry that I would need to pay in a year or it would be at a high interest rate too. I have an offer from someone. I have a five FHA loan right now. I have an offer from one of the lending companies.
to consolidate all of this and refinance the mortgage. uh it would be at a six to five Uh but at the same time there would just be one bill. I'm wondering Um if you can give me some wise wise words. To direct me, what would be the best thing to do? Yeah, I appreciate that.
You know, I don't like rolling up debts, even though I agree with you, it does simplify things. I don't like rolling up debts and putting everything on the house because, you know, right now, if something were to happen, you know, and you lost your income, you had a major event happen, you know, you could be at risk of losing a car, but that's different than losing your home. And, you know, with the medical debt, there really is no collateral there. And as soon as you roll everything onto the house, you know, number one, you're increasing the interest rate.
So now you've got more going to interest by at least one percentage point per year. And then number two, you've got all the closing costs, which can run, you know, 3% to 5% of the mortgage value. How much do you owe on the mortgage today? Two eighty.
Okay. Yeah. I mean, so if let's say we rolled all that together, I'm just going to make up a number. Let's say it's $350,000. You know, that could run you $15,000 just in closing costs, not to mention the added interest of an additional 1% over the life of the loan on $350,000.
That could end up being tens of thousands in additional interest.
So I would, as much as I like the simplicity and I know that's attractive to you, I'd leave that mortgage alone. Let's not refinance it until you can reduce the interest rate by at least one and a half percentage points, you know, which would mean, you know, you would want to get that down to 3.75, which that's not going to happen anytime soon. And then I'd just focus on let's get that medical bill paid off within a year.
So dial back your spending, get on a budget. Let's focus on the medical bill so that doesn't jump to the higher interest rate. And then we'll go after the cars next. But I would not refinance this. As attractive as that might be.
Natalie, thanks for your call today. We appreciate having the opportunity to weigh in.
Well, folks, that's going to do it for us. We covered a lot of ground today. Really appreciate you being along with us. Hey, if we can do anything to serve you, don't hesitate to reach out at faithfy.com. You can download the app.
And while you're there, if you'd like to support our work, we'd certainly be grateful as a listener-supported ministry. Just click give. Thank you to Dan, Amy, Peter, and Taylor. We'll see you next time. Bye-bye.
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