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.
.org. So mortgage rates actually crept back up even after the Federal Reserve lowered rates by a half a point in September. We haven't yet seen the anticipated decline in mortgage rates, but that's okay. It gives you more time to get ready, especially if you don't have enough money to pay for your mortgage. I want to give a shout out to our friends at Movement Mortgage for a great article on faithfi.com about preparing for a home purchase.
We'll hit the high points here, and we'll also put a link to the article in today's show notes. First and obviously, determine what you can afford. Be wary of what a prospective lender or loan calculator tells you. It's wise to settle on a sale price and monthly payment that are less than what you can afford. Keep some margin in your budget.
Remember Proverbs 21-20, precious treasure and oil are in a wise man's dwelling, but a foolish man devours it. Next, set a savings goal for your down payment. While you don't need to put 20% down on a house, doing so has three advantages. It lowers the amount you'll have to borrow. It eliminates private mortgage insurance. It also gives you enough equity to sell the house if you have to due to a job loss or some other calamity. So if you don't have 20% saved, see how close you can get. Then, consider the incidentals related to the purchase beyond the down payment. Set aside something for property and pest inspections, moving expenses, and possible appliance purchases like a fridge or washer and dryer.
Depending on your area, the sellers may take that stuff with them. Next, check your credit. Average credit scores for home buyers typically run between 700 and 750.
Anything above 740 will often get you the best mortgage rates. Get your credit reports, check for errors, and dispute any mistakes you find. Pay down your balances below 30% of available credit. Pay all of your bills on time.
Those things will help raise your score. You must also say no to all credit card offers from here on out. Don't apply for or take out any new loans. Even if you end up not taking out a new credit card or car loan, just the so-called hard inquiries by lenders will lower your credit score.
I mentioned this one a bit ago, but it bears repeating. Lower your debt to income ratio. You might have an immaculate credit history and still be denied a mortgage if your debt is too high for your income. This applies not only to credit cards, but to any kind of debt. So for example, if you can pay off a car loan, do it.
Next, pay attention to your paper trail. Avoid transferring money between checking, savings, and retirement accounts for at least three months before applying for a mortgage. Lenders look at your transaction history to determine if the source of those assets is legitimate, meaning not borrowed. If you receive cash gifts before applying, it can put a wrinkle in the process.
Mortgage rules generally allow for this, but it's a good idea to speak to a loan officer before having those funds transferred. The requirements for documenting the receipt of those funds can often be quite specific. You'll have to show that the money is indeed a gift and not a personal loan that will have to be repaid after you purchase the home.
That could require getting a signed statement from the giver that the money is indeed a gift. If you owe back taxes and are on a monthly payment plan, try to get that paid off before applying. It adds to your debt to income ratio and makes it more challenging to qualify for a loan. It's also not something prospective lenders want to see. They're in front of any other creditors you might have except the IRS that can put a tax lien on your house, so get those paid off before you apply for a mortgage.
And finally, don't go anywhere job-wise. Your lender will take a hard look at your employment history. If you're considering changing jobs and buying a house, buy the house first.
A lender is more comfortable giving you a mortgage if you've been in your job for at least two years. So those are the steps to prepare for buying a home. You may still have questions about your home purchase, and we hope you'll contact the folks at Movement Mortgage for more information.
They can help guide you through the process step by step. And bonus, if you get a mortgage from Movement, you'll be helping to make the world a better place. A thoroughly Christian company, Movement, has given $377 million to philanthropic causes, including much needed infrastructure and education facilities in underserved areas in the U.S. Go to movement.com slash faith. That's movement.com slash faith.
We'll be right back. 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.com slash faith. Movement Mortgage LLC supports equal housing opportunity. NMLS number 39179.
For licensing information, please visit NMLS consumer access dot org. Frustrated by your health insurance? Confused by the network restrictions and increasing premiums?
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Take back control of your health care with the ability to choose a provider you trust with no network restrictions and savings of up to 40 percent. Learn more and enroll today at CH ministries dot org slash faith five that CH ministries dot org slash faith five. Thanks for joining us today on faith and finance. We've got time for more questions today. Something going on in your financial life you want to talk about? Give us a call.
We'll help you process it through the lens of scripture. But help you make a practical decision, whether it's your lifestyle and your spending plan, reining in your spending, balancing that budget. Maybe it's investing for the future, given all the uncertainty. How do you save effectively?
Build up that emergency fund, pay off debt, improve that credit score, whatever it is. Call right now, 800-525-7000. We've got a few lines open.
Let's head to Minnesota. Hi, Ann. How can I help you? Hi, Rob. Just have a question today.
I would appreciate your thoughts on tithing from my portfolio gains or income. Hmm. Yeah, it's a great question. And I'm delighted to hear that you're asking about this because here's the reality.
Just one high level comment that we'll talk specifics. You know, most of our wealth is held on our balance sheet, not in the form of cash. So, you know, if we think about just kind of our total net worth, usually only about 10 to 20 percent is held in cash and cash equivalents. Most of it is in assets like stock portfolios, retirement accounts, our home, things like that, which just simply means that our greatest opportunity for giving lives over on our balance sheet.
The challenge is most of our giving happens in the form of cash, which again is the smallest category, if you will, of our net worth. So I love the idea that you're thinking about giving out of your portfolio because there's a real opportunity there. With regard to appreciated stock, you know, the significant play there is if you're in a taxable account. So this is not in a retirement account.
Now, if it is, we could talk about how you deal with that. But if it's in a taxable account, the idea that you would give then sell is really significant because it helps you to avoid any capital gains. And so essentially what you would do is make the gift direct to the ministry or charity of your choice. You want to give to FaithFi, you'd give the stock. The ministry would then sell it and use it for its purposes. You get the deduction based on the full amount of the gift.
And nobody pays any capital gains tax, which means you get a larger deduction and the ministry gets more money to work with. So that's option one. Option two is if you don't know where you want the money to go. But let's say you wanted to go ahead and make the charitable contribution against your twenty twenty four taxes, you could give the stock to a donor advised fund. So think about that like a charitable checking account.
You could open it any number of places. I recommend you open it with the National Christian Foundation. They call it a giving fund and essentially you'd open your giving fund. You could do it online at NCF giving dot com in about five minutes and then it would sit there just like a checking account. And then you could make the gift from your investment portfolio to your donor advised fund and then the asset could be sold.
So, again, no, no capital gains. And then it would sit there until you're ready to recommend grants out of it to your favorite charity or your church, something like that. And then through a few clicks of the button on NCF's website, they would issue a check to your ministry of choice. But anyway, those are a couple of options. Give me your thoughts on that and any follow up questions you have. Those are good thoughts.
I will need to consider those. In the past, God made me aware of there is an increase there. I should be giving. And so beyond my normal tithing, I've chose to look at that amount at the end of the year to see how much.
And then I chose to name it my generous giving. So out of that, then I just give cash out of my own personal account. But your ideas are helpful for me to consider those as well. So let me switch gears for a second because I talked about the tactical side of how you would do that, which is, again, calling your broker. If you manage it yourself, calling your custodian and just saying, listen, I want you to transfer 100 shares of XYZ company to my donor advised fund at NCF.
That's kind of the mechanics of it. Let's talk about how you might approach the amount that you'd give. Obviously, the starting point is, you know, to be in prayer about that. Ask the Lord, Lord, what would you have me to do? And he may lead you to do something significant there.
And if so, great. But if you want to apply the principle of the tithe to this account, that's another approach. And and the way you would do that is based on realized gains. And so you would perhaps take the year 2024 and say, OK, what realized gains did I have in this portfolio for this year? Because anything that you still own, it's unrealized, meaning you may have a gain in it.
But, you know, six months from now, it may be at a loss if all of a sudden the market were to turn down. And so rather than looking at the unrealized gains, you could say, what are those actual gains? I realized I bought something at one price.
It went higher. I sold it at a higher price. And when I sell it, that's an unrealized gain. You are excuse me, a realized gain. So you total up all of your realized gains for the year and then you apply the principle of the tithe. Then you'd take a tenth and you would give it to ministry or charity. So that's another approach where you would be essentially tithing on your investment gains.
But I think there's an opportunity to give far beyond that. You know, New Testament giving is giving that's given freely, not under compulsion. It's giving sacrificially like the, you know, the example of the widow that we see in the New Testament. It's giving that's proportionate to what God has entrusted to you. And, you know, as we think and pray about that, God may lead you to give a substantial gift far beyond what would be considered a tithe. But, you know, I just wanted to give you that in terms of how to think about either tithing on your realized gains in the portfolio or just giving outright gifts far beyond a tithe as the Lord leads, if that makes sense.
Yes. And for all the years that I have invested, it wasn't until some years ago that God brought that to mind and laid it on my heart. And I just thought in listening to your program, maybe it would be best just to get your input and then I can perfectly move forward. Yeah, I think that's right. Well, I love the direction you're headed here, Ann.
I'm confident. You've got, you know, God's heart is that we're to be a generous people. I believe that in part why he has entrusted to us what he has because he owns it all and he's given it to us to be his money managers. What we see throughout the Council of Scripture in the Old and New Testament is that money is a good gift and we're to use it to enjoy. It says in First Timothy, we're to provide for our families and ourselves, but in part it's also so we can give and meet the needs of others and love our neighbor and invest in those causes that are on the heart of God doing the work in the name of Jesus in your community and to the ends of the earth. And so the fact that you're thinking about how do I take a portion of what God has given me even in my stock portfolio and give it away is something the Bible certainly affirms. Thanks for your call. By the way, here at Faith and Finance, we want to not only give you a godly counsel on this program each day, but we want to help you find a community of godly folks who can come alongside you because we realize that part of your stewardship journey is seeking that wise counsel along the way.
That can come in many forms. If you're in credit card debt, reaching out to our Friends of Christian Credit Counselors. If you need help with making sure you have offset the cost of healthcare and you can do that in a way that's affordable, Christian Healthcare Ministries can be a great resource. If you're looking for a professional advisor and you want somebody who shares your values, who's met high standards and character and competency, and they've had a pastoral reference and a client reference and a regulatory review, well, that's the Certified Kingdom Advisor designation. It's our go-to here for godly professionals that can serve you.
You can find a CKA in your area when you go to faithfi.com and click find a professional. I hope that's helpful for you. We're going to take a quick break, come back with more questions just around the corner.
Again, a few lines remaining open, 800-525-7000. We'll be right back. We'll be right back. A short video webinar about that is available at soundmindinvesting.org. Financial wisdom for living well, soundmindinvesting.org. Great to have you with us today on Faith and Finance.
I'm Rob West. We're taking your calls and questions today. It looks like we have three lines open, 800-525-7000. That's 800-525-7000.
To Chicago. Hi, Linda. How can I help? Hello. Thank you so very much for taking my call. I have a question related to long-term insurance. I thought I heard you discussing with a caller maybe over three weeks ago that you could borrow from your long-term health insurance policy. No. Typically, there is not a way to – are you talking about long-term care insurance? Yes. Yeah. No, there is generally not a way to do that. What is your specific situation? Do you have a long-term care insurance policy right now? I do, and I'm so sick and tired of it, and every time I look, it goes up higher and higher. So that particular day, I was very, very busy. But I thought I heard a discussion about that you could do this, and it's taken a turn. I started to just leave it alone, but I said, no, I'm going to try to find out for sure if you can do this or if you cannot do it. Yeah.
No. Typically, you cannot with traditional long-term care insurance, which is likely what you have. They don't build up cash value over time that you can borrow against, which is a feature of a whole life insurance policy. Now, there are such things as what are called hybrid life insurance policies with a long-term care rider. And basically, it's a life insurance policy at its core, a whole life policy, which does build cash value, and then they combine that with long-term care insurance benefits. And so what happens is it provides both a death benefit that you're passing, payable to a beneficiary, and long-term care coverage. And if you need long-term care, funds are drawn from the death benefit amount. If not, then your beneficiaries receive the death benefit upon your passing. And these can have a cash value component that grows over time, similar to whole life insurance, and then potentially you could borrow against that.
So it does provide a little bit more flexibility, even though they might not have as many features, and it might be a little more expensive overall. That would be the type of policy you'd have to have. But if you just have a straight long-term care insurance policy, there would be no ability to borrow from that. Now, what you're pointing out here, Linda, and I hate this, is just a growing frustration on the part of many policyholders, which is that just because of the dramatic rise in the cost of health care, their policies, their long-term care insurance policies, are following suit. And so they're seeing pretty significant increases, and so what they're having to do is either absorb that into your budget, which is challenging if you're on a fixed income for sure, or begin to ratchet down the benefits. So maybe your daily benefit, if you needed to collect on it, would go down. Or you might remove the inflation rider, or you might increase the waiting period for when it kicks in after you meet the qualifying conditions to be able to collect on it. So those are the kinds of things you can do to right-size it, but unfortunately it is a challenge of these policies. Increasingly so is that people bought them at a point when they could afford them, and now essentially they're getting so expensive that they can no longer afford them in their current form.
But to get to your original question, if you have just a straight long-term care insurance policy, you're probably almost certainly not able to borrow from it. Okay. That was a lot of information. A lot. But I might look into it with my person or with Ameripri.
Because it is really eating me up. But I thank you so very much for your time and for the information. I enjoy the program thoroughly. Thank you, Linda. I appreciate you. God bless.
Let's go to Wheeling, Illinois. Hi Nancy, how can I help you? I recently was fortunate enough to get in with a biblical counselor who also does debt counseling as well. And she put me on to the snowball method and just a lot of prayer, and I felt very convicted to stop living on credit cards. And so it's been a couple months since I used a credit card. I don't really have much income. I make about enough to pay the minimums on the snowball method. But I have this $10,000 socked away. It's in a CD right now.
It's been there for a couple terms. And I'm starting to wrestle with whether or not when it comes to again, I should use that to pay down debt. Yeah. So do you have an emergency fund, Nancy, separate from the $10,000 you have in a CD? I'm working on it, but it's going to take a long time for me to get that in and still make my minimums.
I think by the time I would get it to $1,000, I probably, the CD will be due and I could probably use the interest that I've made, which will be about $1,000 to fund that as well. Yeah. Very good.
Yeah. I think you've got a couple of options here. I mean, one would be I mean, at the very least, I would put the $20,000 into a debt management program and get the interest rates down. So our friends at Christian Credit Counselors could help you. And basically they would the accounts would be closed. You'd start paying through them. But the real benefit is that the interest rates would drop. Right now, the average interest rate on a credit card is 20 plus percent.
They would drop to somewhere between zero and eight percent likely, maybe as high as 12. So now that that same monthly payment you're sending or something similar would be going a lot more to principal. And then you could let the CD mature. I wouldn't put 100 percent of it toward the debt repayment. But even on the debt management program, you could take a portion of it and accelerate the payoff if you wanted to. But I would make sure you keep at least one month's worth of expenses. And, you know, and then if you could pay some of them off entirely and then keep get all that monthly payment going to snowballing the others, then you'd get it paid off much quicker. And then we'd have money to start redirecting, hopefully a good bit more to redirecting back toward building up your emergency fund, which might happen much quicker. That would probably be the direction I would head. Does that make sense?
Yeah, it does. And I just want to say that I am so happy to not have money and not use credit cards. I mean, I've never been happier now that I stopped and I don't have money and I have to go to the dollar store. But you know what?
It is so freeing. Yeah, I can imagine. Well, let me ask you, what are you using a debit card or are you using cash in envelopes or what are you doing? You know, I live with my son and my husband and they have completely separate money than mine. And so I they buy groceries and they do it all. So basically whatever money I get is going towards paying debt right now. You know, and I also sell things on eBay so to give me a little pocket money. So I really, really don't have any money, but I'm OK with that.
It really feels OK. All right. Well, thanks for sharing your story, Nancy. I hope this was helpful. Our friends at Christian Credit Counselors will take good care of you. Christian Credit Counselors dot o r g. Folks, that's going to do it for us. So thankful for the folks that make this possible every day. Sandy and Devin and grateful for Jim Henry as well. And everybody here at faith five.
Hope you have a great rest of your day. And by the way, if you'd like to support faith, find the faith and finance broadcast. You can do that online quickly and securely at faith five dot com. Just click. Give. Lord bless you. Bye bye. Faith and finance is provided by faith by and listeners like you.
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