5 Things To Consider Before You Buy A House

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dot org. Most of today's renters say they'd like to buy a home, but a clear majority think they'll never be able to afford it. I am Rob West. It's certainly gotten more difficult to buy a house these days with soaring home values and interest rates, but certainly not impossible, especially if you're prepared. Today, five things to consider before you buy a house, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. That's just not true. This issue requires discernment. The conventional wisdom is not always correct and what was true in the past may not be true today. But God's Word is always correct and true. Proverbs 2-6 teaches for the Lord gives wisdom from his mouth come knowledge and understanding. If you've been trying to buy a home but haven't been able to yet, remember that God is rarely early and never late.

Pray and ask for discernment and wait on the Lord. Psalm 37-7 reads, By using the time you rent wisely, you'll be better prepared when the time comes to buy a home. The next thing to consider is the upfront costs of renting versus buying. When you rent, you generally have to come up with the first month's rent and a security deposit equal to another month's rent.

Well, that's a significant amount of cash. When you buy, of course, you'll need a down payment and you'll have to pay at least some of the closing costs. If you don't have 20% for a down payment, you'll also have to pay for private mortgage insurance. You can use a rent versus buy calculator, and there are plenty of them online, to determine which is better for you depending on circumstances in your area. Renting may be cheaper on a monthly basis than buying, for example.

You'll find that it may take five to seven years to recoup the closing costs of buying a home. So if you're not entirely sure you'll be in the home that long, keep renting and saving. Another thing to consider before buying is the condition of the market. Right now, home values and interest rates are very high.

I probably don't have to tell you that. However, the Federal Reserve has signaled that interest rate cuts are on the horizon, so again, it could pay to wait. Also, while home values remain high, the rate of increase is slowing. Zillow reports that one in four sellers lowered their asking price in June, the highest ratio for the month of June in six years.

Those numbers are a further indication that waiting can pay off. You also have to look at your monthly budget. Determine what your monthly payment would be for the type of home you'd like to purchase and compare that to rents in your area.

If your total housing payment is more than 25% of your take-home pay, you may have trouble staying on budget. That would make renting the better option for now. Okay, the next consideration in the rent versus buy question is largely emotional. So, for example, when you buy a home, you're likely to experience a sense of satisfaction. You'll also have the ability to personalize your home. You're free to decorate or remodel as you wish. You don't get that when you rent, of course, but you also have much less stress. You don't have to worry about home repairs and maintenance. If you're able, there's the satisfaction of putting some money in the bank each month.

So, again, it's not a zero-sum game. There are advantages to renting. Now, one final consideration, and this certainly isn't for everybody, is the idea of shared ownership. For example, two generations could own a home together and live under one roof. This could potentially allow each generation to afford more living space and amenities together than they could separately. According to the National Association of Realtors, multi-generational home ownership increased from 11% in 2021 to 14% in 2023. With more adult children still living at home, it's not that great a leap to shared ownership. Just something to consider.

So if you're struggling with renting or buying, consider these five things. As you think and pray through this, make sure to let the Lord into your decision-making process. Take your concerns to Him and ask for guidance.

He'll make the path clear. All right, your calls are next. 800-525-7000.

That's 800-525-7000. I'm Rob Lastin. We'll be right back.

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We're ready for you. 800-525-7000. That's 800-525-7000. You know, as we think about this topic of money, on the very first page of the Bible, we see the creation of human beings made in the image of God, who revealed himself initially as the creator of all things and the subsequent call of his image bearers to imitate him in a certain way by being productive. Human beings were commanded to be fruitful and multiply, and this was a command for productivity, which has stewardship implications. Thus, the concern for stewardship is rooted in creation, and we have the opportunity to take what God has given us and to use it for his glory alone, recognizing he's the creator and the owner of everything, and with that comes a great responsibility to be found faithful in managing what God has entrusted to us.

Well, we want to help you do that by looking to the scriptures, living with a biblical worldview in every facet of your life, including this area of money management, and we'd like to turn the corner now to whatever you're thinking about in your financial life. The calls are coming in quickly, but we've got two lines remaining. You can call right now at 800-525-7000. Let's go to Kansas to begin today. Hi, Andrew. Go ahead. Hey, Rob.

Thanks for taking my call. Yes, absolutely. My wife and I were both in our 70s. We've been married 21 years and God has blessed us, but I got to thinking I'm a numbers guy and she's not, and odds are I'm going to probably pass away before she will. And I got to thinking for an emergency fund about putting so much away each month into a CD and do 12 CDs, and that way it's going to be like today, maybe about 5% interest every month, and she can, every month there'll be a certain amount come due that she'll have that she can get into if she needs it for an emergency, or if she needs to go a couple months out, she just loses a couple months of interest on it. I'm just wondering if that sounds like a good way to set up an emergency fund so it's just continuous on a monthly basis?

Yeah, I appreciate the thought behind it, Andrew. I think the only concern I would have is just how effective that will be down the road. So several years down the road, the interest rates may not be very attractive, and so I think that's why we ought to look at your total investable assets, carve out that emergency fund, and perhaps that's what you're talking about alone, but then think about the strategy that has a longer term approach for the rest of the assets. So just give me kind of a quick high level breakdown of the investable assets you have, and then the portion that you're talking about specifically with your idea of the CD ladder.

Well, our investable assets are a little over two mil, and like I said, God has blessed us very much because when we got married 21 years ago, we had a negative net worth, and I was looking at putting $10,000 a month into it. Okay, and how long would you do that? Just for 12 months? So you'd have $120,000 in, is that right?

Uh-huh, that's correct. And then you would just roll it, so you'd do a one-year CD every month, is that what you were thinking? That's what I would do, and that way if interest rates fluctuate or something, you can get out of it.

If there's something else that comes up that's better. Yeah, you certainly could do that. I mean, the interesting thing right now, if you were to go to bankrate.com and you look at, for instance, a high-yield savings today, which is completely liquid, and the same FDIC insurance, I mean, you can get up at 5% right now with high-yield savings, and that's going to be, again, completely liquid. You could put the whole $120,000 in that, and she'd have it available any day. With CDs, if you look out for a one-year CD today, what you're going to find is about the best you can find is that same 5%.

So they're about on par with one another. Now, the nice thing about the CD is you're locking it in for 12 months, and six months from now, that high-yield savings may be lower. So, you know, I think this could play out the way you intended. I think the question is just, you know, you're going to get to a place where these rates start to come down, and so that's when you may want to look for other things.

But I like this strategy, you know, as long as we're just talking about that emergency savings portion. I think to your point, though, about you being a numbers person and she isn't, every month she's going to have these CDs coming due, and if you're gone because the Lord has called you home, then her natural question is going to be, okay, what do I do with it now? And so I think in addition to what you're talking about, it's also pretty important that you, if you haven't already established a relationship with a trusted advisor who could walk alongside her and help her make these decisions moving forward, because although this might solve for the next 12 months, you know, it's not necessarily going to give her the ability to make good decisions in the future if this is an area that's just completely foreign to her. Does that make sense?

Yeah, it does. And we've got an advisor, I think, that would be very good for her. And I did that specifically for that reason is so that she'd have someone to fall back on to help. Got it. Okay.

Yeah. So I think your idea makes some sense. I mean, it's going to be somewhat labor intensive in the sense that you're going to have to do this every month and keep it going. I would say that just given where rates are right now, you know, you may want to start by just putting maybe half of what you're ultimately going to put in or a quarter of it in high yield savings because it is completely liquid and you're going to get the same rate. But then if you wanted to start beyond that, maybe 25% I'm suggesting or in this case, you know, 25% of 120,000.

Beyond that, if you wanted to start taking advantage of these high rates in the form of one year CDs 10,000 at a time, or maybe you take whatever's left of the 120 and divided by 12, you certainly could do that. I'm on board with this strategy. Just as long as she's got access to the information. She knows where the accounts are. She's got the passwords.

She's got that relationship with the trusted advisor. And there's a game plan for her beyond your life once these all come do but I like it. I'm on board, Andrew. All right. Thank you, sir.

I appreciate your help. All right. God bless you.

Let's go to Cleveland. Hi, Agatha. You've been very patient.

Go ahead. So I received two checks every month, I retired from the United States Postal Service and I was a civil servant as well. So my question to you is, I'm like everybody else, I thought that I paid taxes on this money.

When I was making it, and I did file in, I stopped working at 69 the beginning of COVID in 2020, and I filed for the year before, and I filed in 2021 but I didn't file 22 and I haven't filed 23 because I want to know why. I have to. I'm not understanding that. And thank you for your answer. All right.

Very good. Well, you never stop paying taxes. The question is, do you have enough income that would trigger attacks depending on what your income sources are? And with a government pension and Social Security benefits, your income is probably high enough that you owe taxes. And that's just the way the system works. So I wouldn't be concerned about it.

I mean, you may have a little bit of interest and so forth. But the key is that you find out if you have any tax liability that's owed. And if so, that you get on a plan to either pay it back over time with a payment plan or you just write a check and get it taken care of. So what I would do, Agatha, is reach out to a CPA to get your taxes in order. And if you need to, you could request a payment plan with the IRS. And so if you have a CPA, you could reach out to that person.

If you don't, you could contact a certified kingdom adviser in your area on our website at faithfi.com and ask for a referral. Or you could go down to a local office. There's even some free solutions available. You could find those at IRS.gov. If you have a fairly simple situation, you can take advantage of those. But unfortunately, you never get out of having to owe taxes.

It's just whether or not you have enough income that triggers the tax. And that's going to come down to what that total amount is. So hopefully that clears it up for you, Agatha. Thanks for calling today. We appreciate it. All right.

A quick break and then back with more of your questions just around the corner. Call right now, 800-525-7000. We'll be right back on Faith and Finance. Join our community and share your expertise with clients looking for someone who shares their faith and values. Find more information at Kingdom Advisors dot com slash get certified. We are grateful for support from the Eventide Center for Faith and Investing. ECFI is an educational initiative of Eventide Asset Management that seeks to help Christians understand and practice biblically faithful investing. They do this through their podcast and online journal featuring articles from industry thought leaders and their course called Discover God's Story for Investing. More information is available at faith and investing dot com. That's faith and investing dot com.

Thanks for joining us today on Faith and Finance. I'm Rob West. We're taking your calls and questions today. The number 800-525-7000. Let's go to Miami. Hi, John.

How can I help? Hi, Rob. Thanks for taking my call. My question is, when should I stop contributing to my 401k? When should I consider it to be fully funded? I'm 63 and I'm thinking I have a couple of life events coming up. I'm thinking about taking some distributions for my son going to college and building a house to retire in.

Yeah. Well, in terms of when it's fully funded, I mean, that's really a planning. First, it's a prayerful consideration and then it's a planning consideration because what you're talking about is defining your financial finish line. And, you know, that's a function of you praying through God. What lifestyle has you called me to?

And how much do I realistically need to fund that lifestyle? And what other goals have you placed on my heart? What giving goals do you have? What other, you know, other needs and family goals do you have?

You mentioned a few of them today. And I think you've got to discern, perhaps with a financial advisor who can help you process this. You've got to discern, you know, what is that financial finish line where you would say, at this point, I've reached enough because, you know, I don't want to slip away from provision, which is providing for yourself and your loved ones into protection, which is this idea that I'm going to over accumulate to offset, you know, every potential contingency. And then we're trying to take the place of God, which is ultimately recognizing he is our provider. And so it's finding that balance between provision and, quote, protection and recognizing ultimately we're going to trust God. Let's let's save a reasonable and appropriate amount based on a thoughtful prayer and planning process. But there is a number, I think, for each of us that says this is enough. And we can see how, based on the guaranteed income streams we'll have with Social Security and a realistic withdrawal rate, you know, on the accumulations of your 401K and other retirement savings, that you could say I'm done and now I'm going to pursue other goals. I'm going to give more. I'm going to bless my family members. You know, I'm going to enjoy some of it, those types of things. Does that make sense?

Yes, it does. OK, if you want somebody to walk with you in that process, I'd recommend that you connect with a certified kingdom advisor. This would be somebody who really understands the heart of God and the scriptures related to money, but also, you know, somebody who can help you calculate the financial side of this as well. And I think that would be perhaps a next step for you as you consider this. If you wanted to reach out to a certified kingdom advisor in your area, you could do that on our website at faithfi.com. Thank you so much for your call today. We appreciate it. Let's go to Ohio and welcome Roger.

Go ahead, sir. Thank you. I am going to retire in a week. I worked for Ohio Public Employee Retirement System or not for them, but through them. And when I retired, I went back for a second for a reemployment. And this retirement, they contributed for me the amount that I would have normally had put into my retirement system. But it goes into a money market because I am a reemployed person at the next week. I would be happy and entitled to a money market result of pay out. And it's it's not a lot of money.

It's only about fifteen thousand. But I can take it one lump sum or I can take it over a period of time of my lifetime or I can take it over a period of my wife's lifetime as a survivor. And I'm not sure if there's other alternatives or if there's something else I should consider.

Yeah. Well, yeah, this is a planning decision. And I think, again, this is where you, like the last caller, could benefit from an advisor's counsel, because it's really there's a math equation there that would say, OK, what is the lump sum? And then what is the income stream that would continue for your life or the life of you and your wife? And based on what that income stream is, we can determine what is the present value of that future income stream. And that will tell us whether the lump sum is a good deal or not. And, you know, I think spending some time and perhaps paying somebody to help you just kind of make that decision, not only determining is the income stream appropriate or does it make more sense to have the lump sum? And then looking at that in light of your overall plans for this season of life makes a lot of sense, just because, you know, there's a lot of other considerations to factor in here. What other income sources do you have?

What does your income look like, you know, in retirement, Social Security and otherwise? So I think you're wise to just give this some careful consideration. You want to understand kind of which is better on paper, but then you want to look at it in light of your overall financial planning. So what I would recommend you do, Roger, is connect with an advisor there in Ohio. We've got some great ones, some certified kingdom advisors, and many of them will work with you on a planning basis, just with an hourly charge to help you kind of look at this next season of life.

And among other things, make this decision on this income stream. In order to do that, just head to our website, faithfi.com, and click Find a Professional. But I hope that helps you, sir. We appreciate your call today. May the Lord bless you. Let's go to North Carolina. Bill, you'll be our final caller today.

Go ahead. I'm considering doing a home refinance as opposed to a HELOC loan. And I currently have a mortgage in the amount of $244,300, and that's two and a quarter percent. And if I refinance, it's going to go to something like six and a half, seven percent and $2,200. I just don't know if this is a smart move. I need to get about $50,000 cash out of this house if possible.

Yeah. Yeah, I wouldn't touch that current mortgage. I mean, that's a phenomenal interest rate. You know, even if you did a 15-year fixed, yeah, I mean, they're pushing seven percent right now, but I think 6.8 is probably pretty typical right now. So what I would encourage you to do, Bill, if there's no other way for you to pay for this by delaying it and paying it out of current cash flow or something like that, I'd probably go the home equity line of credit route. I wouldn't touch that $244,000 at two and a quarter. Not only are you going to probably more than double that rate, but you're going to have the expenses of refinancing that loan on top of it, which can be three to five percent of the mortgage value. So I'd leave that right where it is and then get that home equity line of credit, which, by the way, as rates will come down, the variable rate on that home equity line of credit will come down with it and then just try to get it paid off as quick as you can.

Does that make sense? Yes, but that home equity line of credit could also go up as interest rates go up. Can it not? It can. I just don't see rates going up much above where we are today.

I think we're pretty much at the peak. But if you wanted to lock it in, you could go a home equity loan. I just think you have a much better likelihood of rates coming down.

But at the end of the day, whether you do the loan or the line of credit, I wouldn't do the refi. Hey, thanks for your call, sir. Unfortunately, I'm out of time. God bless you. Well, folks, thanks for tuning in today. We're so thankful for you inviting us into your story and asking your questions for your kind remarks about the program. I couldn't do this without the amazing team. We had Dan Anderson today, Amy Rios, Gabby T and Jim Henry, plus the entire team here at Faith Buy that makes this happen every day. On behalf of them and so many more, I'm Rob West and we'll see you next time. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.