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That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. Well, our friend Dale Vermillion is back with us today. He's author of The Mortgage Maze, the simple truth about financing your home. Dale, always great to have you with us, my friend. Great to be here, Rob.
Thank you so much. Dale, how would you describe the trend in mortgage rates these days? And I guess the follow on to that is, is there one? Yeah, you know, it's actually more stable than it's been in some time. Last year was incredibly volatile.
As you know, at the end of last year, we were at one point almost over 8%. It steadily climbed down at the end of last year, beginning of this year. And, you know, it's been bouncing around the six and a quarter to six and a half rate mark pretty steadily. So we believe it's going to kind of stay there and then slowly climb down over the next several months until the end of the year.
Yeah. The Fed is expected to start lowering interest rates, perhaps starting next month. They've said maybe three decreases in 2024. Some analysts say it could be as many as six times totaling one and a quarter percent. In either of those scenarios, what impact might this have on mortgage rates? You know, it's interesting because the Fed rate doesn't have a direct correlation to mortgage rates. In fact, sometimes when the Fed rate goes down, mortgage rates go up and vice versa.
But it does with that large of a drop. We will see an improvement in mortgage rates. Fannie Mae just came out and announced that they believe that rates will be under 6%. Most of the analysts I talk to say rates will be under 6% by the end of this year. And what really is going to drive that more than anything is inflation. As inflation continues to drop and the bond market continues to improve, that's what we're going to see as improvements.
Yeah. What about home values, Dale? What do you think will happen with home values in the months ahead? You know, they are anticipating this year.
The projection just came out for 2024. We believe that it's going to be about a 3.2% increase this year compared to the 7.1% we saw in 2023. Part of that is because listing prices are going to drop this year to accommodate for affordability so that will have an impact on values. But we're still seeing prices go up. So still a good time to buy. Yeah.
So just appreciating a little bit slower. Certainly not seeing any depreciation in home values. What about inventory, Dale? I know this has been one of the issues that the lack of inventory has kept home prices up.
Yeah. You know, we saw at the end of January that inventory was up to 506,000. If you compare that to last year, it was only 472,000 and the low in 2023 was 240,000. So it's double what it was at its low point.
New construction has really been doing well and taking off. That's going to improve inventory. And if rates continue to climb down as we think they are, we really think we'll see those inventories jump up over 800,000 units by the end of this year. So it's going to get much better before the end of the year and create more opportunities for buyers. Yeah.
Very good. Dale, what would you say to someone who's thinking about buying a home in the months ahead? Should they sit on the sideline and wait out the reduction in interest rates? Do you think they should proceed if they're financially ready?
What counsel do you have? I think they should proceed if they're financially ready, if they can create an affordable payment, if they have a good down payment amount that they've got. Because look, the longer you wait and the more rates drop, the more you're going to see an infusion of people coming to the market trying to buy. And we'll be back to those competitive things like we had back in 2021 when 300 people were bidding on a home and they were going through the roof. So, you know, this is your time to get in right now.
Dale, final question. You know, we're seeing stories about renting being a better value than buying, at least right now, while home values are up and mortgage rates are elevated. What's your opinion on that?
My opinion is that's not the case. I mean, rents keep going up more than incomes do, so you've got instability there. You have no appreciation that you create whatsoever in a rental.
Even at 3%, it's better than zero. And the tax benefits are substantial to buying a home right now and offsets a lot of your costs. You combine all those things plus the fact that the average homeowner has 40 times the wealth that a renter has, you know, it's still the American dream. So I believe that owning a home is the best alternative for people today. Yeah, I think the key is make sure you are financially ready.
Don't stretch to buy a house you can't afford. Dale, we always appreciate your time, my friend. Thanks for stopping by. Thank you, Rob.
God bless you. That's Dale Vermillion, author of The Mortgage Maze. He's your go-to guy for mortgage questions.
Pick up a copy today. Hey, we're back with your questions on anything financial just around the corner. Stick around.
Thank you. If you enjoy this radio program, you're going to love all of the many different resources waiting for you at FaithFi.com and the FaithFi app. You'll find powerful wisdom, free podcasts, articles, videos, and more from leading voices such as Randy Alcorn, Howard Dayton, Ron Blue, and our own Rob West. Grow in wisdom and knowledge by connecting with a community of thousands of Christians striving to be good and faithful stewards at FaithFi.com or by downloading the FaithFi app. Welcome back to Faith and Finance. I'm Rob West.
Minnesota is where we're headed next. Hi, DJ. How can I help? Hi there, Rob. Thank you so much for taking my call. Of course. Thanks for all your expertise on such a wide variety of subjects. I'm a relatively new listener, so I've learned so much in the past maybe three, four months, so thank you again. Well, thank you for saying that. I'm glad to hear it. Yeah.
My question is this. I've been divorced for 10 years, since 2014, and in the divorce, it was decreed that we both kept interest in the house, and then a short time afterwards, I wanted to get out of that, allow my ex-husband to have complete ownership in the house. And so I filed a quick claim deed with the county that we lived in, and I've come to find out that that does not relieve me from the obligations on the mortgage. The county and everybody else accepts that with regards to what they are looking for, but unfortunately not the mortgage, and he is unable to refinance, unable to afford a refi at this time of the house. And I'm just wondering if there's any other options for me to be able to get my name off that mortgage.
It's been 10 years, and I'm nearly debt-free, so I'm just super excited about that, and having that would be just a real great thing. Yeah, no, I certainly understand that. Your lender is not legally required to take any action as a result of the divorce agreement, so that means they can hold you liable along with your ex-spouse, as long as both names are on the mortgage. So think about it from their standpoint. They are looking for recourse in the event that the mortgage is not paid based on the amortization schedule. And so even though you've transferred legal ownership of the home to him, you signed as a part of this mortgage to be personally responsible for the mortgage. Now, if they foreclose on it, they'll sell it, but if they don't recoup enough money in the sale, let's say they sell it at auction, then they want as many people as possible that they can come after to try to be made whole. So they just have no incentive to release you from that mortgage, and they're not required to do so.
So unfortunately, and I'm not an attorney, so it's always a good idea to talk to an attorney, but unfortunately there really is no way for you to get out from under this unless your ex can qualify for a mortgage and take out the mortgage in his own name, or the property is sold and the mortgage is satisfied. Yeah, I was afraid of that. Well, I was looking for any other options or anything like that. So unfortunately, I mean, I completely understand their point of view and why that is the case, but I had heard that there's perhaps some things that we could do as far as proving that I haven't paid on it for a number of years and the obligations and things like that. But I guess it all boils down to the real nitty-gritty of the legalities of it.
Yeah, that's right. I think the other approach would just be to approach the lender and ask for a release of the debt and see if they would be willing to do that. Generally, you will not get them to do that just because they have no requirement and incentive to do it, but it's not beyond asking and see if they would, without refinancing it, see if they would be willing to release from the debt because that, of course, doesn't happen automatically.
So you may want to pursue that with the lender and see if they would be willing to cooperate with that, but if they won't, then obviously you're just relying on your ex-husband to continue to pay on it and ultimately to either refinance it or to sell it. So I wish I had better news for you, DJ, but I appreciate your call today. Let's head to Florida Sebring. Hi, Iris. Go ahead. Yes.
Thank you so much for your job that you do. My husband and I, we have $90,000 and we don't know how to invest. We have no clue how to do investment. I was thinking in buying a property, but right now the way that the market is, it's almost impossible to find an affordable house. So we want to know what would be the best investment and secure one.
Yes. Yeah, it's a good question. And when we're talking about investing to seek a return, there's obviously a trade-off between risk and return or reward. And the more return or reward you're looking for, the more risk you have to take to achieve that. And so we look at it kind of on a spectrum and we say, okay, the most conservative, there's nothing that's risk-free, but the least amount of risk would be something like a bank product where you've got a bank CD or you've got a savings account where the US government is backing or guaranteeing the money.
And that's where the Federal Deposit Insurance Corporation comes in. And then we begin to move across that risk spectrum. And at that point, we might get into US Treasuries where we're buying US government bonds, bills, bonds and notes.
And again, we have the backing of the US government. So although it's not risk-free, it's as close to it as you're going to get. And then you can continue to move down that spectrum and you might get into corporate bonds, high quality AAA corporate bonds, major multinational companies, some of the biggest in the world that are issuing bonds that are very safe.
And they pay a little bit better interest rate than you might get in the government bonds. And then you continue on down the line into stocks where you get a partial ownership in a company, but the performance of that stock is subject to the performance of the company. And what will it somebody's willing to buy that share of that company from for you.
And there's all kinds of other, you know, asset classes, gold, like the precious metals, real estate, you mentioned that there's commodities, oil and gas. So, you know, I think the key is to first of all say, okay, what is our time horizon for the money? Is it money we need, you know, immediately liquid right now, so that I would call that your emergency savings? Is it money we need in less than three years? And I would still put that in the most conservative category, or is it money that, you know, we don't need for 10 years or more. So even once you reach retirement, you know, if the Lord tarries and you're in good health, you know, at 65, you probably need this money to last for three decades. So you still have a long time horizon, even though you're, you're retired at that point. And I think the key is to kind of match up the time horizon and the appropriate risk level with the investment strategy. With $90,000, that's a lot of money, I'd probably carve out your emergency savings, put that in a savings account, so it's liquid and safe.
And then if you wanted to invest the rest, because you had the time to do it, well, that's where I would, I would seek the help of a financial advisor or an investment advisor. Does that make sense? Yes.
Yeah. And so what I would probably do, Iris, is reach out to a Certified Kingdom advisor there in Sebring. And you can do that on our website at faithfi.com. That's faithfi.com. Right there at the top of the page, it says find a CKA. And I would, I would reach out to maybe two or three Certified Kingdom advisors, interview them, you and your husband, find the one that's the best fit, ask a lot of questions. They should ask you a lot of questions so you can get to know each other, find out how they're compensated, explain what you're trying to accomplish and see if it might make sense for you to hire somebody that for that portion where you want to go beyond savings and actually invest it, you'd have an advisor that's making those decisions for you.
With your goals and objectives in mind. Again, that's faithfi.com. Thanks for your call.
We'll be right back. You can find out more at movement.com slash faith movement mortgage LLC supports equal housing opportunity in MLS number 39179. For licensing information, please visit NMLS consumer access.org. We are grateful for support from Praxis Mutual Funds. Praxis Mutual Funds has seven impact strategies that are designed to create positive real world change. More information is available at praxismutualfunds.com. The fund's investment objectives, risks, charges and expenses are contained in the prospectus and summary prospectus. This and other information is available at praxismutualfunds.com. Investments involve risk.
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I'm Rob West. All right, it's time to take your calls and questions today on anything financial. The number to call is 800-525-7000. The calls are coming in, but still a few lines open. We'd love to tackle what you're considering today.
800-525-7000. So many folks thinking about getting their financial house in order as we begin 2024. That often involves a plan to get out of debt. And certainly near the top of the list is once and for all getting on a spending plan and maintaining that spending plan throughout the year, which is more important now than ever, especially given high inflation that's been mounting over the last few years. And perhaps some tweaking is necessary in your budget.
I know it has been in ours as we look at starting a new year at the West household. So if you'd like some help with that, we'd love to be a resource. The FaithFi app was designed for that purpose alongside the community where you can post questions, get encouragement, as well as all of our content. There is a money management system in there built around Larry Burkett's tried and true envelope system, but in a modern, beautiful, simple interface where you can set up your plan for the month, you can fund your envelopes automatically through the app. And you're not actually moving money, but you can see the money in the app allocated to each envelope.
And the key there is it lets you know how much you have left to spend in each budget category so that you can make real time corrections throughout the month. It's all there in the FaithFi app. Just head to our website, faithfi.com.
That's faithfi.com and then click the app button or go straight to your app store, Google Play or Apple and search for FaithFi and you can download it today. All right, we're going to dive in. Again, four lines open, 800-525-7000.
Lancaster, PA, WDAC. Hi, Steve. Go ahead, sir. My wife and I, we tithe cheerfully and a little bit above, but her opinion is the tithe should go directly to the home church and I think that if you're giving cheerfully where you see need in the ministries or wherever it might be and you're giving in the spirit of the Lord, that that should count to your tithe. Do you have an opinion on that? Yeah, I have an opinion and that's all it is because I think ultimately, Steve, and I appreciate the question, ultimately this is between you and your wife and the Lord.
You know, you're right. New Testament giving is giving cheerfully, it's giving freely, I would say it's giving systematically, but also sacrificially. We see that clearly modeled when Jesus celebrated probably the most famous giver in the Bible and that was the widow.
We don't know her name, we just know she gave out of her poverty and so I think those are the keys. This is not about checking a box or being legalistic. It really is an act of worship, an overflow of our gratitude toward the Lord for the grace that he's extended to us, starting with our salvation. And so, again, I think that's between you and the Lord. Now, clearly God's plan, Plan A, is the local church. And I think we see clear precedent in Scripture that we are to give to support the work of the local church, so that's why I, this would get to where my opinion comes in, why I would start with the tithe going to the local church and then I'd look at that as a beginning point. You know, my friend Randy Alcorn, the author, calls that the training wheels of giving and so if we're starting with that systematic guideline of giving a tenth of our increase to the local church, then we begin to give beyond that more sacrificially as the Lord leads. That's where helping those in need comes in, you know, along our path, maybe supporting the work of a Christian ministry or charity, that type of thing. But at the end of the day, I would say it's ultimately between you and the Lord. Okay.
And then the second question is, again, a more technical question. My wife tithes religiously, pardon the pun, on her gross income from her work as a nurse. I've been self-employed for almost 40 years and mine is many shades of gray. But on her Social Security payment into a fund, whether it's coerced or not, I've raised the point that she's paying into a fund and when you get a Social Security payment back when you retire, you're basically getting your own money back that she's already tithed on. Do you think that that could be a proper observation of that or is that something that should just go by the wayside? Yeah, no, I think it's perfectly appropriate to take that approach.
You know, I would say, first, you pray about it and say, Lord, what would you have me to do? Second, I think there really are two approaches to this and you've each touched on them in your different viewpoints. One is the simple method, which just says everything I receive is a gracious gift from God and so I'm just going to tithe on the entire Social Security check and an act of worship and thanksgiving to the Lord. There is another approach, and I think you're hitting on it, where you try to establish, in my view, you could, you know, it's a little more complicated, but you'd establish a percentage that represents the portion of every benefit check that is returning what you paid in. And the percentage, the remaining amount that you're receiving beyond that, which could be considered the growth in it.
And so one way to do that would be you could look at your benefit statement, which is available at myssa.gov, and they'll show you the total amount you paid in during your working years. And then you could estimate how much you would receive back over the course of your lifetime and you could use your life expectancy as that number and then say, okay, if I paid an X amount and I'm going to receive over the course of my life Y, then you could establish a percentage that says X percent is the amount that I'm being, you know, returned to me and Y percent is equivalent to essentially what is the gain. And then that portion you could tithe on it because that would be your increase.
Again, that takes a little work, but I think it would be a perfectly appropriate approach. Does that make sense or did I lose you? It certainly makes sense.
It kind of gives you a little bit of justification for what I feel, even though we're blessed enough that I'm probably not going to do it. Neither one of us are collecting Social Security yet. I was just analyzing because yesterday on your program where we listened here, you were talking about Social Security and I'm like, that's a fund. That's what you paid into.
Yeah, that's exactly right. And clearly, you know, through those FICA taxes that went in. But keep in mind, it gets even a little bit more complicated because if she was a W-2 employee, remember half of the FICA taxes, which includes Social Security, was paid by her employer. So she only paid half.
So it does get a little complicated there when you begin to look at it. And so that's why I think this other approach of just saying, you know, Lord, I can never out give you and everything I received comes from your hand. And so I'm going to give freely and cheerfully and generously. But I certainly wouldn't minimize, Steve, your perspective on this because you're exactly right.
You know, she has been tithing on the gross and therefore at least a portion of what's coming back through her benefit check she's already tithed on. Hey, God bless you, my friend. Thanks for listening to us there in Pennsylvania. We appreciate it.
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