Mortgage 411 with Dale Vermillion

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That's faithfi.com slash give. Now let's dive into the podcast. The Fed's scheduled to meet next week. Will it lower interest rates again? Hi, I'm Rob West. With one rate cut already on the books and perhaps two more coming before the end of the year, folks are wondering what effect will all of this have on mortgages and home sales? Dale Vermillion joins us today to talk about it, 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 journey. Well, Dale Vermillion is a frequent contributor here on the program, and if there's something he doesn't know about mortgages, well, we haven't found it yet. Dale's the author of The Mortgage Maze, the simple truth about financing your home.

It's probably the only book out there, at least that I know of, about home financing that's based on biblical principles. Dale, great to have you back with us. Always great to be here, Rob.

Thank you so much. Dale, last month the Fed lowered interest rates a half percent, double what was expected. It takes a while for rate cuts, of course, to ripple through the system, including mortgage interest rates. Has it had much of an impact on mortgage rates as far as you can tell?

You know, here's the deal. The interest rate drop was already embedded in that before that ever happened. We saw rates drop almost a full percent in the 30 days, 45 days preceding that drop based on the news that was coming. So it indirectly did affect that, but when the Fed rate goes down, it doesn't directly affect the mortgage rates because they're affected by the bond market and by inflation.

So we'd already gotten the benefit that was already baked in. Now we're starting to see rates kick back up again, and we saw them go all the way down to 6.06 at one point for the national average, back up around 630 right now to 640, bouncing in there. So we're expected to see rates probably stay in the low to mid sixes for the remainder of this year, with the hope that by the beginning of next year we'll see them in the high five percent rate.

All right, anything below five in 2025 in your view? Not anybody I talked to. I talked to a lot of experts about this.

I just was at three different national conferences, talked to three of the top analysts in the country. All of them believe that we will not see those kind of rates anytime soon. All right, Dale, as a result of these lower mortgage rates, are home sales picking up? You know, the interesting thing is we are seeing home sales are basically flat, although they're up seven percent over last year, but we are seeing mortgages for purchases. We saw locks go up almost eight percent and 36 percent over last year. So we're seeing some activity, but really where most of our inventory is going to need to come from is probably going to have to come from new construction and not so much from existing inventory. Unless we see that big rate drop where all of a sudden people get rid of what they call the rate lock effect, which is keeping people from selling out of their low rates, as soon as that happens we're going to see a flurry of activity and then a whole lot of purchases happening probably in 2025, 2026.

Interesting. Dale, what advice would you give someone trying to buy a house or refinance their current home? Should they go for it or do you think they ought to wait a bit longer for some reason? Well, you know, here's the deal. There's good and bad in every environment and the good news is rates are down a little bit. The better news is there is less activity by other buyers in the marketplace, which means it's easier to get into a home now than it's been for a long time. So those two factors work in your favor. The NAR settlement that came out recently, there's a little bit of drop that you can get potentially in real estate commissions, although we've really not seen a big change in that at this point. So when you combine those factors, here's the bottom line.

We talk about this all the time on the show. Start with a budget, determine what you can afford, and if you're renting today you would be better off buying as long as you can get within the payment you can afford because you're building appreciation, tax benefits, and all the other things that come with that. It really is, for many people, a decent time to buy because we do believe rates are going to go down in the next two years and you'll be able to refinance down at that point. For refinancing, you'd have to make sure that you've got enough rate drop to make a consequential difference in your payments. And here's the key, Rob, and I want to make sure everybody catches this, do not refinance and re-extend your mortgage term because then you're wiping out everything that you're gaining and you're paying back tens of thousands of dollars you shouldn't be. You always want to make sure that if you're refinancing your payments are going down and your term is at least staying worth that or getting less.

That's what makes a good refinance. All right, and as you remind us often in your book, Romans 13, Owe no one anything except to love each other for the one who loves another has fulfilled the law and that's what should guide everything that we do as a Christ follower and a steward of God's resources. Dale, thanks for being with us, my friend. Great to be here. Thank you, Rob.

That's Dale Vermilion, author of The Mortgage Maze. Back with your questions after this. 800-525-7000.

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This institution is not federally insured. Hey, it's great to have you with us today on Faith and Finance. In just a moment, we'll begin taking your calls and questions today on anything financial. The number to call 800-525-7000. Again, that's 800-525-7000. We've got lines open.

Our team is standing by. Perhaps there's that question you've been wrestling with in your financial life. We'd love to unpack it with you, help you think about it in light of biblical wisdom, because we know that God's word has a lot to say on this topic. 2,300 verses on money and possessions, and it really starts with this idea of lordship, that we are to surrender everything that we have to the Lord, recognizing he owns it all. Psalm 24, the earth is the Lord's and everything in it, the world and all who live in it. And then quickly following on the heels of the lordship idea is stewardship. We're to use God's resources to fulfill his purposes, and we have a high calling as managers of the money that God has entrusted to us by the King of Kings, and that's a high calling.

Genesis 2 15, remember the Lord God took the man and put him in the Garden of Eden to work and care for it. So we're to take God's creation and order it and improve it to be productive and to steward all that he has entrusted to us. And as a part of that, we're to give it away. Generosity is sharing that releases the world's grip on us. It removes the grip that money can have on us and have specifically on our hearts. And when we give, we calibrate our hearts to the Father. So if we understand those big ideas, all found in Scripture, that we're to transfer ownership to God and recognize his lordship, and then we're to be good stewards and try to create financial margin to fulfill God's purposes, and then we're to grow in the grace of giving and sharing, seeing money as a tool.

Well, we've now put ourselves in a position to view money through the lens of Scripture, which is really how we operate from a biblical worldview. Well, we want to help you do that in light of the very practical decisions and choices you're making each day. And so what's on your mind today? Give us a call. Let's take those calls at 800-525-7000. We're going to dive in today, beginning in Alabama. Hi Rose, thanks for calling.

Go ahead. Hey Rob, thank you for your program. I need to change investment companies. I've been with Vanguard for a few decades, I think, and it's transitioning to a digital company and won't maintain clients who don't want to have their accounts online. And I want to ask if you can recommend a company who can provide what I need. I need a directed beneficiary program where I can have beneficiaries on each account. And I need a company with a simple qualified charitable distribution process where I can just call and give the name of the charity and the amount of the contribution, and a check is written out to the charity and mailed to me, and then I donate it to the charity. I see.

Yes, ma'am. Have you looked into Charles Schwab by chance? I have. They only have certain accounts that are eligible for the directed beneficiary program. Only certain accounts there.

Okay, got it. And so that doesn't meet your total needs because there's some accounts that they're lacking that you need? Yeah, I have beneficiaries on every account that I have, and I don't want to have to convert it to whatever they call it, some special. You have to convert them to some special accounts.

It's too complicated. Yes, ma'am. It looks like you have one beneficiary list for all of your accounts combined. Okay. Yeah, you should be able to stipulate the beneficiaries per account.

Those were going to be my two recommendations, Schwab or Fidelity, just because they get routinely very highly rated on customer service, and they tend to be lower on the fees. Let me just clarify. You manage all of this yourself. Is that right, Rose? Yes, sir. Okay.

Yeah, very good. I might revisit with Fidelity exactly what you're looking for, unless you feel like you've already exhausted that option, just to see if they wouldn't be able to accommodate you specifying the beneficiary separately, because you should be able to name the beneficiary by account, and I wouldn't expect you to have to make any changes from what you have right now already in place at Vanguard. Now, you may have to redesignate them as you fill out the account formation paperwork electronically or in print, but once it's done, it should be set, and it should be able to be done at the account level as opposed to at the global level. And so, do you feel like that perhaps there's more there if you investigate it a bit further, or do you feel like you've already looked into that as much as you can?

No, I agree with you. I just looked at their form online. I can actually call them in and see if... Yeah, very good. I think that would be my next choice, Rose, just because I'd rather you be with a national firm that's highly rated, that has a good fee schedule, low fees, with a nice digital platform that you can access if you want to do this online, but also with a toll-free customer service line that you can call if you'd rather do everything through the phone. So, that would be my next choice for you to explore a bit more. Yeah, I definitely don't want to be restricted to online communication.

That's why I'm leaving Vanguard. I see. Yeah, so you should be able to do this all through the customer service center. Okay, well, thank you very much. You're welcome, Rose. I appreciate you listening and calling today. May the Lord bless you. If we can help you further, don't hesitate to reach out. Hey, let's go to Illinois.

Hi, Mary. Go ahead. Okay, so I have investments already. I have a financial advisor, and I'm going to have a meeting in a couple weeks with her, but I was listening to one of your shows, and you were talking about making sure our investments are invested in companies that align with God's plan. Yeah. So, I was wondering if you have information or if you could refer me to a site or something to know what companies I would want to invest in if I'm not already in those now with my finances already, my investments already. Absolutely.

Yeah, I'm so glad you asked this question, Mary. You know, more and more, we're seeing really world-class compelling investment options that are built to align with biblical values. I mean, they're still pursuing a very attractive return and creating a lot of compelling risk-adjusted returns for their investors, but making sure they avoid companies who are misaligned with their values and looking to embrace companies that specifically are creating human flourishing. You can find a list. I'll give you a website, faithandinvesting.com. Let me say it again, faithandinvesting.com.

It's a free PDF to download. Take that list of funds and compare it to the ones available in your 401k. By the way, we do have a few lines open still today. We are taking your calls and questions on anything financial, 800-525-7000. Let me take this opportunity before we hit that next break to remind you that, you know, one of the most common questions we're getting right now is from folks saying, I just can't make the budget work.

In fact, what our coaches are telling us, we have certified Christian financial counselors that are a part of our team that work with a lot of our listeners free of charge, just as a part of our ministry. And they're telling us, they're even seeing a rise in the number of families that are buying homes together because of the dramatic rise in housing prices. That's the only way they can make the numbers work. They're actually going in saying, well, we'll divide, you know, we'll use the kitchen together. Maybe we'll take the top floor. You take the bottom floor and let's go.

You know, it's just really difficult out there right now. Well, one of the ways to stay on budget if you're struggling is to have a spending plan and a system to control the flow of money. I would recommend that you check out the FaithFi app. You'll find it at faithfi.com.

It's based on the tried and true envelope system, but in a modern, beautiful, simple expression right there on your smartphone. Julie and I use it every day and there's no way we'd know what was left in eating out or in my girl's clothing fun without the FaithFi app. So download it today from your app store. Just search for FaithFi.

We'll be right back. Have you downloaded the FaithFi app yet? You need to do that today because this is going to make your life easier. Yes, you can manage your money through the in-app envelope feature, but also plan out future goals.

I want to buy a house in five years and I'm on track to do that. Here's also what I like. You can connect with people around the country. It's like social media, but better. Ask a question, get an answer, and share what you're learning about money and investing. So why don't you grab your phone right now and download the FaithFi app? We're grateful for support from Guidestone, whose diversified suite of investment solutions align with Christian values to create positive change in the world. More information is available at GuidestoneFunds.com slash faith. Investing involves risk, including potential loss of principal. Carefully consider the investment objectives, risks, charges, and expenses of Guidestone Funds before investing.

They're distributed by Foresight Funds Distributors, LLC, which is not an advisory affiliate, a registered investment advisor, nor do they provide investment advice. Great to have you with us today on Faith and Finance. Here in our final segment, I've got room for perhaps one or two additional questions. That number to call to be on the program today, 800-525-7000. Whatever you're thinking about in your financial life, we'd love to tackle it with you. 800-525-7000.

Kansas City is where we're going next. Hi, Joe. Welcome to the broadcast today.

How can I serve you? Yes, sir. I appreciate it. I appreciate your programs and to you all the time. Thank you.

You used to listen to Larry Burkett years ago. My question is I have two insurance policies and they are burial policies from my wife and I. They're about $200 between the two a month.

And I'm just questioning, they're $25,000 each. I'm just questioning whether I would be better off just to take that money and add it to my investments, the 401ks or whatever, or am I better off keeping the insurance? I'm 63. My wife is 65. You know, we're in pretty good health, but I hope we have a few more years before that would be necessary.

Sure. Let me ask you, you said there's $200 a month for both, $50,000 in total death benefits. So you're spending $2,400 a year on this. Is this a permanent policy where there's a portion of it that's going into a savings account or is it just purely for the death benefit? It's just for the death benefit.

Yeah. I mean, that's really expensive for a very little bit of death benefit. I mean, $2,400 a year. How long have you been paying on this? Probably about three years.

Okay. So you've got $7,500 in. I mean, if you all were to live, you know, another 10 years, you know, you'll have another $25,000. That's $35,000 of the $50,000. And that's if both of you pass away in 10 years. So I guess my question is, I'm always careful to say, yeah, just drop the policy because, I mean, if something were to happen to you, I want to make sure there's not a legitimate risk there. But let me ask you, if one of you were to pass away, the Lord were to call you home, are there assets there that could be tapped to pay for the burial and funeral expenses? Or is there a legitimate need there?

There is. I have a four, well, kind of a, let's see, I have an IRA that's about 60,000 and then a 401k that's, I've got 15. My wife has a couple that are in probably the 40 range. So there's about what, 120 total assets there.

I'm a retired firefighter. So I receive a pension and my wife would get half of that at, you know, at my leaving. And then she would have social security.

So it's not like we'd be without, without anything. That's kind of what I, as I started putting the numbers together, it's kind of where I came up with, maybe it'd be better off. And then I could do that tax deferred, just put that money in, save or put that money in, you know, up. And yeah, I mean, I'd feel personally a lot better, as long as you just recognize you're losing that debt benefit. So if you, one of you pass away tomorrow, there's no 25,000, which means now you're going to have to come out of pocket for those burial expenses.

But I think the likelihood of that, and I mean, that's a very low risk, although none of us know the day or the hour, the Lord will call us home, but that's a very low risk. And the idea that you could get another, you know, roughly $2,500 a year going in on a tax deferred basis that you all could have full access to, you know, when you need it, that feels like a much better use of that money for me. I think I agree with you. Could I ask you another question while I have you on the phone? All right, today only we're given two questions. So you go right ahead. Okay. Well, I know you talked about a, when you give, I forget what you call it, like you give your money out of say a 401k, where you don't you don't have to pay taxes on that.

Yes. What is that called again? Yeah, it's not a 401k. So it's a qualified charitable distribution, which is probably what you're referring to, but it only applies to an IRA. Now, here's where it indirectly relates to a 401k is most people save in their 401k during their working years. Then when they retire and separate from service, they roll that 401k out to an IRA, cause that's not a taxable event. It keeps it in a tax deferred environment. And then once you're 70 and a half or older from an IRA, not a 401k, but from an IRA, you can do a qualified charitable distribution directly from your IRA to a not-for-profit 501c3 ministry or your church. And that is not added to your taxable income.

It's the only way to get money out of an IRA without paying tax on it. Is that you have to do that in a lump sum one time a year or is that? No, no, no, you can do it as many times as you want.

You could do it on a monthly basis. You just can't go over the limit for the year and you do have to be 70 and a half at a minimum. But as long as you're 70 and a half, the maximum for the year is $105,000.

So you got plenty of room and you could do it in as many payments as you want or one lump payment. It just can't be more than 105 total. Right. Okay. But you got to be 70 and a half.

You got to be 70 and a half in order to do it. Yes, sir. Okay. Thank you very much. I thank you. Thanks for taking the second question.

I was joking, but you're very welcome. Thanks for calling and thanks for mentioning the late Larry Raquette. We always love talking about Larry. All right, let's go to Hawaii. Beautiful Hawaii. Hi, Lori. How can we help? Hi Rob. Aloha from Hawaii.

Yeah. Thank you for taking my call. I just wanted to ask where at the point in our lives where we need to downsize. And so I was wondering if when we sell our house, which is our primary residence and we want to purchase another house, do we need to tithe on our sale prior to investing in another primary?

I love this question. You sound like a wonderful, generous Saint and Christ follower. And I'm thrilled to hear that, you know, here's the way we approach giving. If you want to apply the principle of the tithe, you would apply it to your increase. So the question would be with the sale of any asset, including your home, what is my increase? And your increase would be the difference between the selling price and the purchase price. And so you would take the selling price, you would subtract your purchase price. And then if you all made any major improvements to the property that increased the value, like you added a bathroom or you put an addition on, not maintenance, but real improvements, then you'd subtract that as well. And then you'd be left with your true increase in the value of that asset.

Just happened to be where you were living, but it's an asset. And if you wanted to give a tithe to the Lord on the increase, which is how we talk about the tithe that was based on the increase, that's the number that you would apply the 10% to. Does that make sense?

Yes, I understand. Selling price minus the purchase price when you originally bought it, minus any improvements equals the gain or the increase. And then you would give 10% of that away. Now you can't out give God, and if the Lord were to lead you to give 10% of the entire thing, go for it. But if you're trying to apply the principle of the tithe, you would only look at what is my true increase on this asset? And that would be the calculation to determine it.

And then you'd get 10% of that number. Hey, Laurie, thanks for calling today from Hawaii. We appreciate it. We appreciate it. God bless you. Well, folks, that's going to do it for us.

We covered a lot of ground today. Let me finish with this. When we think about a biblical worldview of money management, it starts with lordship. God owns it all. And then stewardship. Money is a tool to accomplish God's purposes. I think right behind that is generosity.

Giving breaks the grip of money over our lives. I hope you think about that today as you think about your role as a steward. A big thanks to my team today. Couldn't do it without them.

Autumn on phones. Devin, my producer, Jim on research and everybody here at Faithfi. If you want to support our work, go to faithfi.com and click give. We'll see you tomorrow. Bye-bye. Faith in Finance is provided by Faithfi and listeners like you.